Hamid Bovard, managing director and vice-chairman of the board of Oil Exploration Operations Company (OEOC), talks to TOGY (The Oil & Gas Year) about Iran’s oil and gas exploration services market and the characteristics and challenges of the country’s geological and topographic landscape. OEOC is Iran’s largest and oldest provider of geophysical and other upstream services.
What are OEOC’s main activities?
Our core business is in geophysical operations, particularly seismic surveys for hydrocarbons exploration. OEOC has by far the longest background in this field compared with other Iranian geophysical contractors. Therefore, we are the oldest and most experienced Iranian company engaged in these fields and currently active in Iran.
Apart from domestic market, OEOC has been active in Central Asian countries’ seismic markets including in Uzbekistan and Kyrgyzstan and successfully completed several operations for internationally reputable companies such as Petronas, Lukoil, Zeromax, Daewoo Energy and Santos.
The second major activity we have, apart from geophysics, is well services, which is also very important in the oil and gas industry. As you might know, there are about 20 different services all under the banner of well services activities. OEOC offers about 10 of these services and is extending its activities to cover the whole range of services in this sector.
How is the company providing these other 10 services in the market?
OEOC performs the rest of the services as joint venture with other companies. Our plan is to step by step increase the services we are offering and eventually offer 100% of the package on our own. The 10 services we offer, out of the 20 mentioned, are the main services needed in the industry. Currently, 30% of the domestic market is covered by OEOC. This year, our goal is to increase our share of Iranian market to 35%.
Do you have plans to expand internationally?
We are trying to develop our business outside of Iran and in particular in regional countries. In geophysical services we are well known in Central Asia and the Middle East, but for well services we are just trying to extend these kinds of activities outside of Iran.
Right now we are the only company in Iran that has two sizeable seismic contracts. We are also close to securing well services contracts in the Persian Gulf.
What’s more, we are expanding into various offshore services such as underwater infrastructure positioning, installation and maintenance to provide services in Persian Gulf hydrocarbons fields.
Recently we have started to provide services in reservoir engineering and now we are establishing a new department for the purpose of advancing our capabilities in reservoir characterisation.
How would you characterise the strengths of Iranian geophysical companies?
Most Iranian reservoirs are made of carbonate rocks with complex geological and stratigraphic structures and in many cases consist of various reservoirs with very different characteristics all present in one field.
More than a century of experience in hydrocarbons exploration has resulted in the Iranian oil industry producing highly knowledgeable experts in all sectors and at all levels, including geophysical operations; who are capable of meeting challenges of today’s high-tech oil industry.
A geophysicist that gains experience here can easily translate this expertise to other more conventional reservoirs. International companies we have been in contact with say that the geological and geophysical expertise of Iranians is impressive.
To put it metaphorically, for a mountaineer who is used to climbing very steep mountains, walking or even running on flat land is very easy.
You mentioned that Iran’s reservoirs are complex. Could you expand on that?
I will provide an example: During my work as managing director of National Iranian South Oilfields Company, we had to deal with the Marun field, which is in southwest Iran, where the wellhead pressure is very high. A highly specialised team of experts was needed to control this pressure. In that particular field we developed three different reservoirs with different depths.
The most famous Iranian reservoir in the south, Asmari, is about 3,500 m deep, with a wellhead pressure of over 5,000 psi (345 bar). The second one is the Bangestan formation, which is less productive and contains H2S and is between 4,500-5,000 m deep and the third one, Khami, reaches down to 6,000 m and has 15,000 psi (1,034 bar) wellhead pressure.
What kinds of challenges do you face when operating these kinds of reservoirs?
Now you can imagine how difficult it is to deal with these three reservoirs. We encounter various unforeseen problems. With some you have loss, and with some you have flow, which makes it too complicated. You have to be as precise as a surgeon.
Studying and understanding such a complex structure is even more difficult than drilling. It is not easy to develop a dynamic model for such structures. For some layers, you have to model as high pressure, and others as low pressure, and combining all of them to make a computer model is very difficult.
You normally have a geologist, driller, engineer and a reservoir engineer working together to understand the structures. We say that geologists are very important as leaders because they are the ones that specify which layer we are in and then we can plan based on that information.
This team co-operates in order to set the parameters for the reservoir work. We worked very hard and have been successful in drilling in that area despite the pressure levels we mentioned. That means that our experts are very well trained in working on various problematic reservoirs. As a result, you can find Iranian oil and gas exploration experts working in many foreign countries.
What is the development progress of these reservoirs?
We succeeded in developing all three reservoirs. Marun is not the only complex field we have. The variation of reservoirs in Iran is very high, we have, for example, Ahvaz field, which is a high-yielding reservoir with a high recovery rate at more than 57%.
Some reservoirs have oil that is as viscous as tar. There are no two reservoirs alike and that is why there are so many experts specialised in various field characteristics. Iran is one of the countries in which most of the reservoirs are carbonates, while most countries have sandstone reservoirs.
How do Iran’s reservoirs compare to those of neighbouring countries?
In neighbouring countries of the southern coasts of the Persian Gulf, the dominant reservoir rock is sandstone with shallow depths ranging from 1,000-2,500 m at most. Although the recovery factors are high and it’s much easier to manage reservoirs there, it is also much easier to exploit the oil and this means that the rate of depletion is much faster than is desirable.
We have some reservoirs where the normal recovery factor is less than 5% and even 3%. From one point of view this is bad, but from another point of view it means that there are lots of possibilities and chances for our engineers to gain the valuable experience of using new technologies while working on these fields.
Currently, gas injections are taking place at several fields in order to increase the rate of production and other new technologies are being considered for such purposes.
What is the scope of OEOC’s research and development?
We have a new R&D; department recently established. Although it is new, we are trying hard to grow and expand. We are negotiating with some universities in order to find partners and build a bridge between our company and relevant industries. We have a lot of seismic recording systems which are not useable for industry any more but can be used by universities in order to instruct and educate geologists and geophysicists.
Our R&D; department not only establishes basic and applied research relationship with scientific and specialised technical and industrial institutions, but also relies heavily on individual innovative staff and specialists working in different parts of the company for coming up with new ideas in terms of improving efficiency of equipment, production of tools, and optimisation of operations procedures, etc.
These efforts have already resulted in significant improvements in terms of cost cutting and speeding up progress of operations. With such trends, we are confident that OEOC will have a brighter future and will continue to offer its services not only in Iran but to the international oil and gas market.