Exploration and Production
Chevron has a long record of developing oil and gas in the Middle East, dating back to our earliest discovery in Bahrain in 1932. Kuwait's Burgan Field, the world's second-largest onshore oil field, was discovered in 1938 by Gulf Oil, which later merged with Chevron. Following nationalization of this field by the government of Kuwait, Chevron subsidiaries continued to provide assistance to Kuwait Oil Company through technical-service agreements through the end of 2008.
The Chevron-led consortium competing to develop Kuwait's northern fields ended in May 2010. However, Chevron has an extensive history in the region and continues to be active in Kuwait, and we are a major partner in the onshore Partitioned Zone (PZ) between Kuwait and Saudi Arabia.
Maximizing Resources in the Partitioned Zone
Companies that later became part of Chevron have been producing oil on behalf of Saudi Arabia in the PZ since 1949. Chevron has a concession with Saudi Arabia to operate the kingdom's 50 percent interest in the hydrocarbon resources of the onshore area of the PZ between Saudi Arabia and Kuwait. The concession expires in 2039.
During 2010, 67 wells were drilled in the PZ, and 1,062 were producing at the end of the year. Development drilling, well maintenance and numerous facility-enhancement programs scheduled for 2011 and 2012 are expected to partially offset declines in overall field production.
In 2009, first steam injection began at the Large-Scale Pilot Steamflood Project for the First Eocene reservoir at the Wafra Field in the onshore PZ. Steamflooding involves injecting steam into heavy oil reservoirs to heat the crude oil underground, reducing its viscosity and allowing its extraction through wells. This project was preceded by steam stimulation of some wells, followed several years later by a small-scale test. The entire development project is designed to determine the technical and economic viability of thermal-recovery projects in the Wafra Field.
The Large-Scale Pilot phase of the project required drilling 16 injection wells, 25 producing wells and 16 observation wells and installing water-treatment and steam-generation and distribution facilities.
The $340 million pilot, which is the third test phase for the steamflood project, is expected to lead to full-field steamflooding of the First Eocene reservoir. This would mark the first commercial application of conventional steamflooding in a carbonate reservoir anywhere in the world.
A carbonate reservoir is an oil or gas trap formed in reefs, dolomite and certain types of limestone. Typically, carbonate reservoirs are highly fractured and not conducive to steamflooding on a large scale. However, the carbonate Eocene reservoirs at Wafra have unusually favorable properties and offer a highly promising opportunity for steamflooding.
The company is evaluating data gathered from the First Eocene pilot project. In 2010, the pilot project was injecting steam, and production had increased 600 percent over the production rate before steamflooding. In September 2010, a small-scale steam injection test was initiated in the Second Eocene reservoir. Test results provide support for undertaking the Second Eocene Large-Scale Pilot Steamflood Project.
During 2010, alternatives also were studied for the Central Gas Utilization Project, and the preferred alternative for development was selected in early 2011. The project is intended to improve natural gas utilization and eliminate continuous natural gas flaring at the Wafra Field. A final investment decision is expected in 2012.
Refining
Under an agreement signed in 2003 with the Kuwait National Petroleum Co. (KNPC), Chevron's technical, operational and managerial employees shared their knowledge with employees of KNPC's three refineries. That agreement ended in 2010.
Chevron licenses refining technology and supplies catalysts to KNPC refineries through our subsidiaries, Advanced Refining Technologies LLC and Chevron Lummus Global LLC.
Shipping
Saudi Arabian Chevron (SAC) operates a storage and marine export facility at Mina Saud in the PZ.
In 2010, we marked our eighth consecutive year with no reductions or delays in scheduled tanker loading, no lost-time incidents, and no spillage attributable to SAC operations. A total of 71 tankers were loaded at the company's crude oil shipping terminals, handling a volume of more than 43.2 million barrels of Ratawi and Eocene crude.
Updated: May 2011
Cautionary Statement