Arvand and Phase 3 of Darquain are among these projects.

Darquain field will have a 200,000 b/d share in the above figure. Darquain which lies in Khuzestan Province is 45 kilometers north of the city of Khorramshahr and 100 kilometers south of the oil-rich city of Ahvaz. The field is expected to see its output exceed 220,000 b/d once phase 3 development is fulfilled.

Darquain is one of the 49 oil fields introduced for investment under the Iran Petroleum Contract (IPC) model.

Darquain which was discovered in 1964 following drilling one exploration well, holds over 5 billion barrels of oil in place, 1.3 billion barrels of which is recoverable. Darquain’s oil is light with an API gravity of 39. The oil produced at this field is delivered to the Ahvaz-Abadan oil pipeline.

According to estimates, the investment required for the development of Darquain-3 amounts to $1.5 billion. Darquain-3 envisages operating the Ilam and Sarvak reservoirs, as well as the untapped part of Fahlyan. To that end, water and gas would be injected into the Sarvak reservoir and gas would be injected into the Fahlyan reservoir.

Furthermore, 31 oil wells, 6 gas injection wells, crude oil processing facilities including pipelines, processing installations, gas compressors, infrastructure including crude oil storage tanks and roads are among other activities under way at Darquain-3.

Darquain-1 and Darquain-2 were developed by Italy’s Eni under buyback deals. A state-of-the-art technology – simultaneous oil and associated gas injection – is being used there.

In August 2011, an agreement was signed with an Iranian consortium for the Darquain-3 development after Eni quit cooperating with Iran due to international sanctions. But the Iranian consortium failed to handle the project and the project remains open to international investment.

In phases 1 and 2, oil was recovered from Fahlyan formation. In phase 3, oil recovery from the Ilam and Sarvak layers will be done, as well.

Darquain-1 came online in 2005. Darquain-2 required $1.3 billion in investment and demining 7.5 million square meters. Darquain-2 came online in February 2011.

Darquain-3 was expected to become operational within five years. Three years have since passed and the field is still far from startup. According to plans, in the first stage, 14,000 b/d of light crude and in the second stage, 46,000 b/d of heavy crude will be extracted from Ilam and Sarvak layers.

Darquain-3 targets the heavy crude layers of Ilam and Sarvak and the undeveloped part of Fahlyan. Eni completed feasibility studies on this project and submitted its results.

The findings of Eni studies indicate that the heavy crude in Ilam and Sarvak layers were recoverable. Due to the heavy crude oil content, the third phase is totally different from the first and second phases.

Arvand Awaiting Investment

Until a couple of years ago, development of the oil and gas fields  that Iran shares with neighboring countries had been slowed due to financial and technical impediments in Iran, thereby helping neighboring nations make big gains.

Iran has shifted its focus on the development of joint oil and gas fields located mainly in South Pars and West Karoun. In the West Karoun area, Iran shares oil fields with Iraq. Three West Karoun oil fields recently started production.

The fields shared with Iraq have been proposed to foreign investors for future cooperation. Foreign companies may sign agreement with Iran based on the content of IPC.

Arvand oil field which is located 50 kilometers south of Abadan in Khuzestan Province is one of these fields in question. The field lies at the entry of Arvandroud River and is 42 kilometers long and 13 kilometers wide.

Arvand is estimated to contain one billion barrels of oil in place with a recovery rate of 15%. Arvand also holds over 14 bcm of dry gas and 55 million barrels of gas condensate.

Discovered in 2008, the Arvand field lies along Iran-Iraq border. Drilling had started in Arvand in 2006 for the purpose of estimating the hydrocarbon potential of the formations in the Khami and Bangestan centers.

Four well logging operations were carried out in Fahlyan formation to prove the existence of oil and gas in that formation. The Fahlyan formation holds light crude oil with API gravity at about 44.

Arvand oil field is administered by Arvandan Oil and Gas Production Company (AOGPC) whose production is estimated to reach 1.4 mb/d by 2025.

AOGPC is estimated to have the highest oil and gas production rate in the coming decade. A major facility inside this field is a 165,000-barrel-per-day processing unit. This treatment unit was built by National Iranian Oil Company during years when Iran was under sanctions. A variety of crude oil may be processed at this facility. Thanks to the existence of this treatment facility, the return of investment will be fast. Any investment in the development of Arvand oil field will have a good rate of return. The short distance between the Arvand field and the treatment facility is an indicator of the fast development of the oil field.

Several years ago, an agreement was signed between AOGPC and the Iranian Offshore Engineering and Construction Company (IOEC) for the development of the Arvand oil field, but the agreement was never implemented due to financial and other problems.

The Arvand oil field is expected to produce 5,000 b/d of oil in the first phase, which would reach 20,000 b/d in the final phase. The investment needed for the development of this field stands at $135 million, which is likely to increase. The API gravity of oil in Arvand varies between 39 and 43. The Arvand oil is planned to be delivered to the Abadan refinery.

Iran and Iraq share eight oil fields along their joint border with combined recoverable reserves of 14 billion barrels. The fields are Dehloran, Naftshahr, West Paydar, Azar, Azadegan, Yadavaran and Arvand. They have different names on the Iraqi side. Nine percent of Iran’s crude oil reserves exist in the fields shared with Iraq.

As recovery from jointly owned fields leads to migration of hydrocarbon, NIOC officials are concentrating on the development of such fields.

Courtesy of Iran Petroleum