Momentum and optimisationJune 5, 2019
Mahmoud Khalil Dabbous, chairman and CEO of IPR Energy Group, talks to TOGY about advances in E&P in Egypt, the importance of exploiting brownfields and deploying tailored EOR, and why the energy hub strategy is a smart approach. E&P and services company IPR focuses on reservoir simulation technology, EOR and production optimisation.
How do you view the recently achieved milestones in Egypt’s oil and gas industry?
As part of a company that has been active in this sector for 38 years, I say with confidence that the petroleum sector has made significant leaps in the last five years in terms of achieving record production, expanding gas exploration and production activities to new horizons.
Upstream exploration expanded in territories off- and onshore. There were very significant discoveries leading to jumps in Egypt’s production of natural gas, to the extent now of satisfying the country’s needs, as well as having excess for potential exports. This is a remarkable achievement – both offshore in deep and shallow water and onshore – finding gas in horizons that have traditionally been gas-producing horizons, as well as in new geological horizons, such as the West Nile Delta project.
We are actively engaged in gas exploration and production now as part of this ongoing momentum. In terms of oil exploration and production, we are seeing more discoveries in geological formations that have not been explored or exploited in the past. Egypt is managing to replace the quantities that are consumed annually with new reserves.
Production techniques are being improved in various operations covering different territories on- and offshore. We are proud that IPR Energy Group is an active part of this process. We have a textbook example of extending the lives of mature and ageing fields: We managed to extend the life of the historic Alamein field in the Alamein concession by more than 25 years when it was almost at the end of its primary life, using production and reservoir management techniques that we have mastered elsewhere and brought to Egypt.
We are now exploring in Upper Egypt. IPR has two exploration concessions there, extending from Kom Ombo to Aswan. We are just about to embark on some exploratory drilling in that territory. Should we find oil or gas, that will open up new territory for new exploration and production. Upper Egypt needs development, and the government is giving a lot of attention to improving the economic conditions there.
What is the new direction taken by the country to extend brownfield lifespans?
This is an integral part of the modernisation of the petroleum sector and something that the country needs to pay attention to. There are significant reserves of unproduced oil due to modest recovery factors that need to be improved with the introduction of new techniques. There is potential for increasing the country’s reserves by planning for and implementing this technology for the enhancement of production and reservoir exploitation.
What is your assessment of the government’s aim of positioning Egypt as the East Mediterranean energy hub?
The government really is doing a great job in that regard, with a vision that reflects a smart strategy. This is a new vision by those in charge of the petroleum industry in Egypt. It is a very smart strategy, under which Egypt will receive supplies from producing countries and become the centre for redistribution of these supplies to the consuming territories in Europe and other markets within reach.
A very good example of this strategy at work is the recent arrangement with Cyprus. Cyprus has discovered gas and they have to do something with it in order to provide it to the market in Europe. Egypt already has LNG plants with large capacity. This was a perfect setting for the commercialisation of Cyprus’ gas resources. Gas is transported to the Zohr field and from Zohr to the shore via pipelines, where it will then be liquefied and shipped off in LNG tankers.
This is done using the excess gas not needed for domestic consumption. The gas can also be sent via pipeline to Jordan – we have the Trans-Sinai pipeline. It is the same case with the SUMED pipeline. Oil from the Gulf producing countries is unloaded at Sokhna, it goes through this pipeline across the country to the SUMED facilities and from there it is exported to Europe.
There are some thoughts about similar arrangements with Libyan crude oil, when the dust settles in that country, thanks to Libya’s proximity to the Western Desert of Egypt. There is a future potential strategic port for crude oil receiving and exporting called El-Hamra terminal, which our company managed for many years. It needs development and expansion.
We also see a lot of downstream projects in terms of petrochemical plants, pipeline network projects and the supply of gas for domestic use. Gas distributing companies are starting to expand their activities. There is a huge effort underway that is really revitalising the economy of the country and providing job opportunities to a very large number of young people in different disciplines.
What new technologies and processes are you introducing in order to enhance the effectiveness and efficiency of E&P?
We are considering several possible enhanced recovery applications. These involve different processes specifically tailored to each field. This is the art of very specialised know-how: how to tailor the right EOR process to a specific field.
There are certain fields that are candidates for non-conventional water flooding. That involves the injection of micellar solutions, which sweep the oil, or using polymer flooding to improve the mobility ratio when you have viscous oils.
Another very important area for production improvement is improving the volumetric sweep efficiency – in other words, contacting the oil that has been bypassed because of reservoir rock heterogeneity. There are areas that have good permeability, but a lot of the oil is still parked, unmovable. You have to make it move by forcing fluids to contact this oil. This is called reservoir volumetric sweep efficiency.
We have patents for these processes under an improved recovery technical service -in IPR Energy Group- called Profile Control Modification. This is designed to sweep more of the reservoir. Then we go to heavy oils and we think in terms of thermal energy. This involves steam injection for heavy oil, or, instead of injecting the steam, creating it in situ in the reservoir itself. The reservoir has water, and it also has oil. We burn some of the oil in the reservoir, which evaporates the water in the reservoir and creates an in-situ heating and steaming mechanism.
This all requires planning and a great deal of education for the practicing engineers and operators. That is going to be the challenge. That is the message I hope I can convey to the sector, through my years of practice and experience with major oil companies in the USA, and having implemented this in other countries as a technology service under the organisations that I was active with, including the World Bank and the US Department of Energy, where I was the managing director for several of their projects in the northern United States.
As an active E&P company, what are your current production figures?
Our gross production is about 25,000 bopd. This does not include the boe of gas. Once we start producing gas from South Disouq, we are going to have around another 10,000-15,000 boepd. So we could reach 40,000 boepd with South Disouq’s production.
With growth in production and an average of more than 180% in your annual reserves replacement ratio, are you now looking at organic growth or acquisitions?
We are looking at both organic growth and acquisitions. Most of that replacement ratio is through organic growth, from our own assets with new exploration and production techniques, and with the addition of new reserves from South Disouq. This has also been from doing something unconventional offshore in the Gulf of Suez, where we did the first offshore hydraulic frack new technic in the North July field. We brought a well on line that is producing 700 bopd. We are also drilling horizontal wells in the mature Alamein field and discovering some new formations in mature fields and new territories.
We also have plans for non-organic growth by adding reserves through various transactions, acquisitions and so on. We are not advertising our plans in that regard, but we are actively engaged in these processes. We have bid on some of the recent rounds, and have some other transactions in the works.
What is your forecast for the Egyptian hydrocarbons industry for the coming two to three years?
My outlook is optimistic, with the industry being encouraging, very dynamic and very active, especially in the next two years. It is no secret that this is a gold rush era. Many companies are now coming to Egypt looking for opportunities. They want to take over or acquire companies, start new exploration, acquire new concessions. There are very serious moves underway to take over companies that have production and assets and build on that.
At IPR we continue to push forward. We have big plans which we are driving very fast. We are always busy keeping the business running and making sure operations are being run properly. We are very much encouraged by the great momentum we see in the sector.
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