Shell – A new era for Shell in Syria
Shell first engaged in exploration activities in Syria in 1949, whilst Shell began production of hydrocarbons in the country with the formation in 1985 of Al Furat Petroleum Company (AFPC) – a joint venture between Shell, the Syrian Petroleum Company (SPC) and Bergomo (a joint venture between the Oil and Natural Gas Corporation of India and the China National Petroleum Corporation). Oil production from AFPC peaked in 1990 at 400,000 barrels per day (bpd) of oil but, as with all mature hydrocarbon resources, production has steadily declined to today’s level of some 145,000 bpd of oil and 160 million standard cubic feet per day (scfd) of associated gas. To maximise recovery from AFPC’s mature and depleted reservoirs, Shell is working in close partnership with SPC and Syria’s Ministry of Petroleum and Mineral Resources to use a range of Enhanced Oil Recovery (EOR) technologies to maintain production levels and recover as much oil in place as is technically viable.
In 2006 Syria Shell was awarded two exploration concessions, covering 14,000 square kilometres in the southeast of the country, so bringing in a new era for Shell in Syria. Syria Shell is the largest foreign investor in the country but the company has not restricted itself to business investments. It has invested in a wide range of social initiatives, from educational and training projects to the construction of a hospital, and from road safety campaigns to contributions to help preserve Syria’s rich cultural heritage. ‘Shell in the Middle East’ goes to Syria to meet some of the key players in AFPC and Syria Shell…
“Syria Shell Petroleum Development [SSPD] has recently been awarded new contracts for exploration activities in two blocks, covering 14,000 square kilometres, in the South Syrian Platform, which is adjacent to the Iraqi and Jordanian borders,” says Campbell Keir, Shell’s Country Chairman in Syria, General Manager of SSPD and of Al Furat Petroleum Company (AFPC).
“Syria Shell is today a lean operation with just 50 staff, who make up an excellent team, of which I am very proud. Despite some cuts in staffing levels over the last three years, I believe that staff now feel secure and feel a part of the global Shell business. Meanwhile, AFPC – our joint venture with the Syrian Petroleum Company [SPC] and Bergomo – is the company which produces the oil and gas and has a staffing level of some 3,500 people.”
When Campbell took up his role three and a half years ago, it was generally thought that Shell was considering the possibility of relinquishing its assets in Syria.
“But this was not true,” he says. “In fact we engaged in a turnaround strategy to look for new business opportunities and to demonstrate our commitment to Syria through our sustainable development programme and social initiatives.
“This strategy has proved to be very successful. AFPC has exceeded its production targets for the last three years at lower-than-planned costs, which makes AFPC’s production results world class.
“Nonetheless, production is declining so we are studying in detail the introduction of Enhanced Oil Recovery [EOR] technologies, such as high pressure air injection. We are also examining development opportunities of some of APFC’s smaller and more difficult fields, such as the Ashola field, which contains hydrogen sulphide [H2S] gas.”
Campbell goes on to say, “HSE [Health, Safety and Environment] standards are extremely important in the oil and gas business and I am very proud of AFPC’s recent record achievement of 16.2 million man hours without any LTIs [Lost Time Incidents]. Within the Exploration and Production Business of the Shell Group, and its joint ventures, this was a global record.
“However,” he adds “despite our excellent record of LTIs, road safety is still a major concern and is the number one issue when it comes to HSE.
“Another major challenge we are facing in Syria is the annual loss of 10 to 15 per cent of our most experienced employees every year from AFPC. This is due to the strong demand for staff to go and work in the Gulf countries where salaries for technical staff can be as much as 10 times higher than in Syria. As a result, we spend a lot of time and effort in training and development, with its substantial associated costs, and we are also looking at ways to improve salary and benefit levels,” he says.
During the last three years Syria Shell has re-established good relationships with all its key stakeholders in Syria, especially with the Government, by providing sound commercial and technical advice in its business activities. In addition, Syria Shell has contributed to a wide range of social projects to help meet the Government’s aspirations.
Campbell elaborates, “Just one recent example of this has been the training of Syrian primary school language teachers to teach English as a foreign language. We have also launched Shell’s LiveWire programme, called Intilaaqah in the Middle East, which is designed to train and support young entrepreneurs to establish their own businesses.
“So,” he explains, “by delivering on our promises at AFPC we have developed sound relationships which have opened up other business opportunities and one result is that we now have two new exploration blocks.
“Whilst there is little data on the sub-surface formations of these two new exploration blocks,” says Campbell, “we have received a lot of co-operation and some existing data from SPC which is currently being evaluated. An aerial gravity survey of the two blocks will begin in May and this will be followed by 2D seismic surveys, starting in June and July. Once completed, 3D seismic will be shot over the most prospective areas. Syria Shell has committed to a four-well drilling campaign, with two wells in each block, in late 2008 or early 2009.
“New exploration activities aside, Shell is also in discussion with the Ministry of Petroleum for a Technical Service Agreement for a performance improvement study on Syria’s existing two refineries. This could, if implemented, save the Syrian Government up to two million euros [US $2.6 million] a week in improved throughput and lower costs.
“Shell is also looking for other business opportunities in Syria, including in gas and downstream operations, following the changes in investment and foreign banking regulations here in Syria. Generally speaking, the people in Syria are very nice and friendly and it is easy to do business here, with the Government always ready to help solve problems.
“So, I am pleased to say, we have moved from a situation where people were expecting Shell to leave Syria to a time when we are about to enter a new and exciting era of partnership between Shell and the Syrian people, and I am extremely optimistic about the future,” Campbell concludes.
“AFPC is experiencing a decline in production but we are doing many things to stem this,” says Said Hunedi, Chairman of AFPC.
“AFPC started production many years ago and during the last 20 years the company has produced in excess of two billion barrels of oil for the benefit of the Syrian economy and its people. This represents a 40 per cent recovery of the oil in place in AFPC’s concessions and we plan to recover a further 10 per cent over the next 10 years.
“This will make AFPC’s recovery of oil in place world class, but after 20 years of production it becomes ever more difficult to recover oil and gas from these depleted reservoirs.
“AFPC is doing well to maintain its production targets, when compared to other oil and gas producing companies of the same age and condition. Our main objective is to fight the decline in production and maintain existing production levels by using ever more efficient methods of development, such as Enhanced Oil Recovery [EOR] techniques, and by developing some of our smaller and more difficult fields, which may have been overlooked in the past. There is still a lot left to do.
“Net oil production is currently running at around 145,000 barrels per day [bpd] of oil but we are handling over one million bpd of liquids. This is because we are injecting approximately 600,000 bpd of water as part of our water injection programme and producing 300,000 bpd of water, as well as the 145,000 bpd of oil,” he explains.
AFPC’s concessions cover a very large area and its activities are supported by a dedicated power plant, a gas plant and a large infrastructure consisting of roads, pipeline networks, gathering stations and three major operations centres based at the Thayyem, Tanak and Omar fields.
Its operations are situated in the eastern province of Deir ez Zor, close to the Iraqi border in the fertile Euphrates valley, from which it supplies oil and gas to Syria’s national distribution and export network of pipelines.
Said goes on to say, “A major issue for the future is to ensure that AFPC’s infrastructure is properly maintained and upgraded where necessary. A lot of our facilities and plants use equipment purchased over 20 years ago and so it is a challenge to replace spare parts to maintain plant and equipment, especially in light of the US sanctions which were imposed on Syria in April 2004.
“Like many other oil and gas companies in the Middle East, staff development and retention is a key issue. This is mainly due to the boom in business in the Gulf, where many staff have been recruited to work for much higher salaries. AFPC staff have been well trained and developed over the years, according to the standards of our international partner Shell, and this has led to the loss of many hundreds of well-trained staff.
“So, in some areas, such as administration, we are over-staffed but in others, such as technical and engineering disciplines, we are under-staffed. As a result, we are placing a great deal of importance and focus on the optimisation of our existing staff and on training and development opportunities,” he says.
“AFPC’s existing fields probably have another 10 years of production life. However, with the development of new exploration areas by the Shell, it is hoped that AFPC may be considered as the production company for these new blocks should hydrocarbons be discovered in commercial quantities.
“However, in the short term, the future of AFPC will be determined by the use of EOR and other technologies to continue production,” Said concludes.
“AFPC’s established operations are situated in the far east of Syria, near the Iraqi border in an area known as ‘the AFPC concessions’.
This area includes 28 different production fields located on either side of the Al Furat [Euphrates] River,” explains Neil Dunkley, Operations Field Manager for AFPC.
“Production levels today are running at 145,000 barrels per day [bpd] of oil and 160 million standard cubic feet per day [scfd] of associated gas. In its 20 years of operations AFPC has drilled in excess of 800 wells, of which 300 are still in production today. In addition to these producing wells, AFPC has a further 90 wells which are used for water injection.
“The AFPC concessions are operated from three main production centres, Thayyem, Tanak and Omar – Omar being the main operations and field management centre. Situated around each of the three production centres are a number of oil and gas gathering centres, where first phase separation is undertaken and the oil and the gas are sent by pipeline to the processing centres before entering the main export pipelines.
“Production levels from the three main centres are currently running at around 15,000 bpd of oil from the Thayyem operations centre, 55,000 bpd of oil from Omar and 75,000 from Tanak, whilst most of the gas comes from the Tanak and Omar areas.
“Oil is delivered to Baniyas on the coast, whilst gas is compressed and delivered to Homs, from where AFPC operates a gas distribution centre for onward delivery of gas to the country’s industrial facilities, such as fertiliser and cement plants and power stations.
“At the Omar field centre there is a gas plant with an LPG [Liquefied Petroleum Gas] production facility from which LPG is distributed nationwide by road tankers,” says Neil.
Khaled Al Oulege, Joint Operations Field Manager for AFPC, goes on to say, “Currently, AFPC is engaged in Production System Optimisation [PSO] to enhance the recovery of oil and gas from existing wells and fields, and is less reliant on new oil and gas for its production levels. In the past AFPC had as many as eight rigs drilling development wells at any one time, but today we have just two rigs drilling development wells and two workover rigs.
“For some time now we have been using EOR technologies and are examining other new technologies to maximise oil recovery. We are being strongly supported by our partners in Shell, who have a team working to leverage Shell’s international experience in Enhanced Recovery technologies for the benefit of AFPC. A small team of Shell expatriates work as Technical Consultants to support the National workforce.
“A further development in this area will be the establishment of AFPC’s own EOR team in Damascus later this year. We have benefited in the past, and continue to benefit today, from the use of the Shell-backed Technical Study Centre in Damascus. The Centre has helped us achieve above-target production performance during the last three years by helping us identify new productive targets in which to drill new wells, and this has greatly improved our success rate.
“The true successes we have had in the field have been achieved through PSO. This has meant going back over existing wells and examining various technologies, such as re-perforating the reservoir, water shut-offs and chemical stimulations, to determine which are best suited to improve production.
“Water injection is another technology which we have been using throughout our operations and has been one of the keys to success in helping AFPC reduce its decline in production. Water injection involves the drilling of several water injection wells around a producing oil well.
Water is then injected into the reservoir to encourage the flow of oil towards the producing well for increased production,” says Khaled.
Neil adds, “AFPC also has a major training centre at the El Ward production centre, which has been converted into an industrial training centre. Here we carry out language, computer and technical training courses for staff at all levels.
“Our staff are key to AFPC’s success and the company places a great deal of importance on staff career development and training. We have over 2,300 staff in the field and an additional 2,500 contractor staff engaged in transportation, drilling, well services, maintenance and engineering.
“The imposition of US sanctions in April 2004 has meant that AFPC has had to change its procurement strategies as we can no longer purchase equipment with more than a 10 per cent US content. To a certain extent, this has benefited the Syrian economy because we now look to local suppliers and manufacturers to provide the materials and equipment we require.
“Although production is declining at AFPC, we are still looking forward optimistically to some challenging times ahead,” Neil concludes.
“Syria Shell signed a contract in 2006 for two new exploration blocks in the South Syrian Platform, covering an area of some 14,000 square kilometres,” says Vince Holtam, Technical Manager for Syria Shell Petroleum Development (SSPD).
“The area has some existing 2D seismic data which was shot many years ago and which, as part of the agreement, Shell will re-process to improve its quality. Survey operations will begin with an aerial gravity survey of both blocks, which will be followed by a 2D seismic survey which will shoot 1,350 linear kilometres.
“This is a very exciting development for SSPD and we hope to spud the first of a four-well drilling campaign in late 2008 or early 2009.
“However,” says Vince, “whilst the new exploration programme is very exciting we have a lot of new developments in the existing concessions of our joint venture operating company AFPC.
“As production has declined, our activities have been restricted to conventional recovery opportunities, such as infill drilling and near field development. In the last 12 months, however, we have tried to rejuvenate AFPC’s portfolio with various new projects, one of which is an EOR project. We will also be increasing our focus on some carbonate reservoirs which, to date, have been underdeveloped.
“This EOR project will use high pressure air injection techniques. This means drilling air injector wells into the reservoir which, through various processes, improves oil recovery by between 3 to 10 per cent. This programme has been under study in our laboratories in Rijswijk in The Netherlands and at Calgary University in Canada, with a view to implementation in 2010.
“We are also planning a pilot to develop some very shallow and viscous reservoirs with a hydrogen sulphide [H2S] content in excess of 2 per cent. In the past, these reservoirs were not considered for development as H2S in a concentration of over 0.1 percent can be fatal to human beings,” explains Vince.
“As a result, HSE issues with regard to drilling and production operations are extremely important. In addition, H2S is very corrosive and its effects on equipment and infrastructure, such as pipelines, must be very carefully monitored.
“We have carried out initial seismic data reviews and are currently evaluating results before drilling three pilot test wells later this year.”
Vince then moves on to say, “The Shell-sponsored Technical Study Centre continues to be a key factor in our plans and the studies are now focusing on the carbonate and EOR projects. Last year we completed the first study where 100 per cent of the team from the Study Centre were Syrian Nationals.
“In 2003 AFPC was awarded the Deep and Lateral Contract, which extended our area of operations to all hydrocarbons within AFPC’s contract areas. This contract called for a 10-well commitment and we have just completed drilling the 10th well.
“Currently, approximately 20 per cent of AFPC’s production is coming from the 10 wells drilled under that contract and a further 25 wells which were drilled over and above the commitment wells as either delineation or appraisal wells. More wells are planned for the future.
“So, with discussions under way with the Government to extend AFPC’s existing contracts, we are entering a new phase in Syria for Shell and for AFPC,” Vince concludes.