Dana Gas, Crescent Petroleum update progress of major gas project in Kurdistan

Source: Dana Gas

Dana Gas PJSC, the Middle East’s first regional private-sector natural gas company, and its partner and joint operator Crescent Petroleum, the Middle East’s oldest private oil and gas company, gave a technical update on the progress of their joint operations on the second anniversary of commencement of production from their
major gas project in the Kurdistan Region of Iraq, which has now reached an overall production and processing capacity of 200 million cubic feet per day, and is fully supplying the fuel needs of the domestic power stations in the Region.

The project partners, who were joined last year by OMV of Austria and MOL of Hungary in the Pearl consortium, have so far invested over US$850 million under contracts signed with the Kurdistan Regional Government (KRG) in April 2007, making it the largest energy investment today by any company in Kurdistan and the whole of Iraq.

Current gas production ranges from 160 million to 180 million cubic feet per day to meet the prevailing demand of the two gas-fired power stations at Erbil and Chemchemal, with a combined capacity output of 1,250 Megawatts, thereby providing almost continuous electricity to the communities of the Kurdistan Region. In total, over 72 billion cubic feet of gas and 3.3 million barrels of liquids have been produced since the start of production in October 2008, providing billions of dollars of savings in fuel costs for electricity for the Kurdistan Regional Government and the people of Iraq.

During the project implementation, the companies installed a 180km gas pipeline across challenging mountainous terrain that sometimes required the clearing of minefields, and achieved first gas production in a record time of only 16 months for a project of this scale. This included carrying out upstream activities on seismic surveys and production wells, drilling successfully to tertiary reservoir formations at depths of 2,300 meters, and importing and installing the brand new gas processing facilities. Production capacity from the project is currently expected to rise to 300 million cubic feet of gas per day by 2012, as well as 14,000 barrels per day of condensate and 1,000 tonnes per day of liquid petroleum gas (LPG), from new LPG plant currently under commissioning in preparation for start-up later this month.

Marking the second anniversary of gas production in Kurdistan, Mr. Ahmed Al- Arbeed, CEO of Dana Gas, said: “We are very proud of this historical milestone, especially as it has been achieved with the cooperation and support of the KRG, as well as our partners, contractors and local staff. We hope to build on this achievement to grow our projects and enable further progress and prosperity for the local community.”

“The investment by the companies is the largest energy investment in Iraq today, and has already delivered tangible benefits for the people of the Kurdistan Region and all of Iraq in terms of enabling electricity supply and fuel cost savings”, added Mr. Majid Jafar, Executive Director of Crescent Petroleum and Member of the Board of Dana Gas. “This shows what can be achieved by the private sector, even under difficult circumstances, when the right policies and investment framework are adopted.”

During the project’s construction phase, work opportunities were provided for over 2,000 Iraqi workers from all ethnic groups and sects, supported by expatriate workers from over 20 nationalities in the region and worldwide. In total over 63,000 tonnes of equipment were imported in over 3,300 truck-loads, with pipe material supplied from China and Thailand, and the state-of-the-art gas processing plant imported from the USA.

The companies are currently implementing a nationalization program, with currently 65% of operational staff as locals, with targets to reach 80% local staff by 2011 and 90% by 2012. In addition to their investment and work on the project, the companies have also partnered with local charitable foundations to invest in community projects and development, including providing school supplies, drinking water treatment, fuel for generators, mobile medical units, and youth sports facilities, as part of a corporate social responsibility program.

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