Gulf Keystone initiates expansion program at Shaikan field

Gulf Keystone Petroleum has initiated an investment program at its operated Shaikan field in the Kurdistan region of Iraq and is progressing plans to increase production to 55,000 b/d. Average gross oil production of 31,563 b/d in 2018 is underpinned by strong performance of the Shaikan Jurassic reservoir, and is in line with expectations, the company said.

Jan 17th, 2019

Gulf Keystone Petroleum has initiated an investment program at its operated Shaikan field in the Kurdistan region of Iraq and is progressing plans to increase production to 55,000 b/d.

Average gross oil production of 31,563 b/d in 2018 is underpinned by strong performance of the Shaikan Jurassic reservoir, and is in line with expectations, the company said.

The plant debottlenecking program to expand gross production capacity from PF-1 and PF-2 remains on track for completion towards yearend. The production target moved to early 2020 because of delays in equipment delivery, affecting the start date of the drilling campaign, originally January, now March.

The company let a contract to Independent Oil Tools to use Rig 1 to replace tubing on SH-1 and SH-3 wells and install downhole pumps (ESPs) on three other existing wells. The rig has been mobilized and is currently performing a workover on the SH-1 well to install larger bore tubing to increase productivity.

A contract was let to DQE for use of Rig 40 for its upcoming drilling campaign, due to start in March, with the first four wells (needed for the 55,000 b/d target) expected to be completed in first-quarter 2020.

Since July 2018, all production from PF-2 has been exported via the Atrush export pipeline, which connects to the main Kurdish export pipeline. Additional pumps along with a temporary unloading facility have been installed at PF-2, which allows most of the production from PF-1 to be trucked to PF-2 and exported via pipeline.

Progress has been made, including delivery of all 16-in. pipeline to the field, on the installation by KAR Group of the pipeline also connecting PF-1 to the Atrush export pipeline.

It is expected to be brought into service mid-2019, at which point residual trucking of crude oil will be eliminated.

Gulf Keystone and partner MOL have agreed on a staged investment program to increase gross oil production up to 110,000 b/d by 2024. The revised field development plan was submitted for approval to the Ministry of Natural Resources in October 2018.

Gulf Keystone has continued to receive regular oil payments from the Kurdistan regional government, with cash receipts of $225 million net to the company during 2018. With a cash balance of $294 million as of Jan. 15, the company remains fully funded to complete the expansion to 55,000 b/d. Gross capital expenditure guidance for the project remains unchanged at $200-230 million. With the 2019 investment program, particularly in new wells and workovers, the company anticipates improved production levels this year and expects gross average production guidance to be 32,000–38,000 b/d of oil.

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