Easily recoverable oil wells exist no longer in Iran or anywhere else in the world. Nonetheless, given the natural decline in the oil recovery of wells, it is necessary to manage wells so as to maximize their current pure value. That would become possible only by applying modern EOR methods. Due to the sanctions imposed on Iran’s petroleum industry, local knowledge-based companies are expected to help rehabilitate low-yield wells.

Iran has 5,500 oil and gas wells in 400 hydrocarbon fields. Rehabilitation of low-yield wells would provide capacity for the supply of an annual 80 million barrels of oil with minimum investment. 

Due to the possibility of rehabilitation of about 70 idle oil wells by adopting well-scale approaches, one can expect local knowledge-based firms to enhance output from these wells by 120 kb/d within five years by investing only €1 billion.

Well production investment is one of the quickest and lowest-cost ways of enhancing crude oil production in the world. Oil recovery from a new well requires on average $10 million in investment. But with $1 million investment in rehabilitation of low-yield wells would cut costs by about 90%. 

NISOC to Rehabilitate 33 Wells

Mohammad Hossein Ghazal, deputy CEO of National Iranian South Oil Company (NISOC) for petroleum engineering, said rehabilitation of low-yield wells started two years ago, adding: “Since rehabilitation of some wells requires application of specific technologies, we have to import them first prior to entering the production phase.”

“Thirty-three wells have been selected for the implementation of this project. Among them are wells that no recovery from which has so far taken place. There are also wells with an output of below 1 kb/d which may be increased,” he said.

Ultrasonic EOR

Iranian knowledge-based companies plan to use various methods such as stimulating the well or using jet pumps to rehabilitate wells, but among these methods, the ultrasonic method is to be used for the first time in Iran.

Mohammad-Reza Jalali, the CEO of a local knowledge-based company, pointing out that the use of ultrasonic tools to enhance oil recovery has come to fruition for the first time in the Middle East in Iran, said: “We are currently pursuing the optimization of this well-based method because in this method, we receive the wells properties on a phased basis in order to be able to simulate the well.”

Referring to his company’s background in supplying downhole tools and undertaking ultrasonic projects for National Iranian Drilling Company (NIDC), Arvandan Oil and Gas Production Company (AOGPC) and NISOC, he said: “The ultrasonic EOR method is more cost-effective than hydraulic fracturing which is high-risk and costs $3-5 million. By applying the ultrasonic method, higher quality may be achieved by lower costs and risks.”

Only 30% Recoverable

Iran holds 1,200 billion barrels of oil equivalent in 400 oil and gas reservoirs. Currently, less than 30% of existing resources could be recovered using available technologies.

A review of the experiences of countries and oil companies in the world in the implementation of “Inactive Wells Rehabilitation Plan” shows that this plan can be quite attractive from an economic point of view during the period of declining oil revenues and increasing risk of new discoveries and developments.

As a result, considering the limitation of investment in Iran for the development of oil fields and maintaining and increasing production, this plan could be implemented in Iran. Of course, expert studies of this project have not been presented to media and have not been evaluated, but according to the Minister of Petroleum, by implementing the plan to rehabilitate inactive wells, 80 million barrels could be added to the annual oil production capacity of the country.

About 34% of wells drilled in Iran are closed, which is a high percentage and of which 14% is mothballed with no possibility of rehabilitation. For a variety of reasons such as high water production or high gas percentage, these wells are inaccessible.

Rehabilitation Contracts

Mohammad Saber Karambeigi, a deputy head of Petroleum Industry Innotech Park, expounding on the procedures of cooperation in the rehabilitation of low-yield wells, said: “Companies providing drilling services and venture capital institutions must provide up to five proposals of oil wells to Innotech, then the technical details of the plans will be reviewed by the technical and economic working group and the names of the companies whose proposed plans will be reviewed.”

“Innotech will sign a contract on behalf of NIOC by creating capacity and introducing various dimensions of the contract with companies providing drilling services and venture capital institutions, because Innotech is authorized by NIOC to steer rehabilitation plans. This is despite the fact that in the past, access to the country's oil and gas wells was almost difficult or impossible for companies providing drilling services,” he added.

Noting that oil wells rehabilitation agreements differ from buyback or IPC, he said that a new model of contract would be developed with a view to making the petroleum industry knowledge-based.

Studies have been conducted on about 200 closed and low-yield wells previously run by NIOC, and approximately 80% of wells are closed due to the following reasons: high water production (about 35% of closed wells) as well as problems related to the well bore itself (about 30%); downhole pressure fall-off (about 15%). Of course, according to experts, statistics and figures can be presented even in a general and detailed manner in this field, and the case of each well and its production history should be examined separately.

For instance, at Iranian Offshore Oil Company (IOOC) level, out of the total number of closed wells, which are about 120 wells, only 10 were identified as technological candidates for rehabilitation. As a result, if the cost of working on a well is, for example, one-fifth of drilling a new well, and the expected return or significant production is guaranteed, it is definitely economical to do more research and operational work on the well to rehabilitate it.

But the important point is that we should not expect a large percentage of closed wells to return to the production circuit again with technological methods.

On the other hand, it should be noted that the restoration of closed wells requires strengthening the capacity of domestic companies, because although it is possible for knowledge-based companies to have good technical and specialized capabilities, not all of them have the executive and operational power on the well, and in case of contract and licensing round, they are forced to use the power of operating companies in the field of operation management to implement their own ideas.

$700mn Credit

Rehabilitation of low-yield or moth-balled oil and gas wells could be a low-cost solution for the development of the country's oil industry, specifically when the main operators of this project are local knowledge-based companies. Iran’s Economic Council has earmarked $700 million in credit for rehabilitating low-yielding and inactive wells for the annual production of 80 million barrels of oil, and after the call for tender and through legal procedures, nearly 40 companies have declared their readiness to implement these projects, which if the technical proposal is approved economically, the contract for the development of low yield wells will be signed.

If the final recovery rate of oil fields in Iran could be enhanced by one percent through investment and new technologies, we may witness the rise of the country’s foreign exchange earnings. For instance, if the final recycling coefficient of the three fields of Ahvaz, Bibi Hakimeh and Rag Sefid increases by one percent, at least $40 to 50 billion will be generated for the country.

NIOC managers estimate average oil recovery rate at 28%. Therefore, by adding 1% to this rate, the country’s recoverable oil reserves would increase by 8.78 billion barrels, i.e. $450 billion in value. Even if 50% of this amount is spent, more than $225 billion in revenue would be earnt.

Courtesy of Iran Petroleum