Plans in the pipeline

Pakistan’s oil industry is one of the oldest inthe world, cutting its teeth in the PunjabProvince in the last quarter of thenineteenth century, and continuing to growrapidly throughout the last century, bringinghealthy economic progress in its wake.

Since the early 1950s, there have beendiscoveries of huge natural gas resources,and the establishment of an infrastructurefor domestic markets. The country’sdomestic production centers on the PotwarPlateau in Punjab and Lower Sind Province.

Although Pakistan remains a net oilimporter, the government maintains flexiblelicensing agreements in order to remaincompetitive in the world market and developdomestic production capacity.

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P akistan’s petroleum history beganover a century ago when the first well

was drilled in 1866 at Kundal in theMianwali District of Punjab Province.Activities continued during the lastquarter of the nineteenth century withsporadic attempts to drill shallowboreholes, mainly in the Sulaiman foldbelt. The most notable success during thisperiod was at Khattan, in Baluchistan,where 13 wells produced 25,000 barrels ofoil between 1885 and 1892.

After independence in 1947, thePakistan Petroleum (Production) Ruleswere announced in 1949. Oilprospecting was now a subject for thecentral government rather than aprovincial matter, as it had been in pre-independence years. Concessionscould only be granted to companiesincorporated in Pakistan, as a result ofwhich Attock Oil transferred itsactivities to a new local subsidiary,Pakistan Oil Fields Ltd (POL), whileBurmah Oil, the other major activecompany, formed Pakistan Petroleum

Limited (PPL). This was the beginningof the economic progress that wouldtransform the Pakistani economy from awood-burning base to one based onmodern energy sources.

Gas below BaluchistanIn 1952, PPL drilled the discovery well ofthe giant (8.6 Tcf) Sui gas field inBaluchistan, located on a surface anticlineon the southern margin of the Sulaimanfold belt. Production at Sui began in 1955with an initial off-take of 15 MMscf/D. Itwas to remain the nation’s mostproductive gas field until the early 1990s,accounting for 46%of production in 1993.PPL discovered five more gas fields atZin, Uch, Khairpur, Mazarani andKandkhot between 1954 and 1958. Moregas was discovered by Esso, whichdiscovered the giant, 6-Tcf Mari gas fieldin the same central area in 1956. Thus bythe end of the 1950s, substantial gasreserves had been discovered in thecentral part of Pakistan but the lack of aready domestic market inhibited furtherexploration and development. Thismarket has, however, evolvedprogressively, and now Pakistan has oneof the largest gas infrastructures in Asia.

In the 1950s, drilling outside ofcentral Pakistan had been relativelyunsuccessful. In order to keep up thelevel of exploration, the governmentformed its national Oil and GasDevelopment Corporation (OGDC) in1961. OGDC carried out extensiveregional surveys and, up until 1970, had drilled eight structures. Thediscoveries included one oil field atToot, (Figures 11.1 and 11.2), acondensate field at Meyal (Figure 11.3)in the Potwar basin, and small gas fieldsat Sari and Hundi in the Lower Indusregion. Further success came in 1976with the Dhodak 1 well, located on theeastern margin of the Sulaiman foldbelt. With reserves of 581 Bcf of gas,and 16.2 million barrels of condensateDhodak 1 established the presence ofsignificant liquid petroleum outside thePotwar basin.

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Figure 11.1:Drilling at Toot inthe Potwar basin inthe 1960s

Figure 11.2: Schlumberger trucks fording the Indus River at the Toot field

Encouraged by these earlydiscoveries, Attock Oil Company (AOC)drilled the first commercial well, Khaur1, on a surface anticline in the Potwarbasin. Production was from sands in thelower part of the Miocene. A total of 396wells was drilled from 1915 to 1954.Minor production from this fieldcontinues to the present day. Steadyexploration drilling continued in thePotwar basin and led to the discovery ofoil fields at Dhulain, Joya Mair andBalkassar in 1937, 1944 and 1946respectively.

The oil and gas fields of Pakistan

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Foreign companies attractedOGDC’s successes in the first half of the1970s aroused the interests of foreigncompanies. Further attractions includedthe modification of the petroleumregulations in 1976 and the dramaticincrease in crude prices in the mid-1970s, as a result of which severalforeign companies entered Pakistan.

The most far-reaching event during thisperiod turned out to be the signing of aconcession agreement in 1977 by UnionTexas and Cities Services for a blockcovering 18,000 km2 on the Thar slope ofthe Lower Indus basin. There, in 1981,they made a significant oil discovery atKhaskeli, and by the end of 1986 they hadmade a further six oil discoveries atMazari, Dabhi, Turk, Laghari, Liari andHalipota, and six gas discoveries at Sonro,Bukhari, Matli, Jabo, Dabhi South andMakhdumpur. As a result of the UnionTexas success, OGDC acquired theSangar North and South concessions,immediately to the north of the UnionTexas Badin concession.

Union Texas and OGDC continued tomake oil and gas discoveries in theseconcessions throughout the 1980s, andearly 1990s. To date, Union Texas hasalso made 35 discoveries (15 oil fields,and 20 gas fields), whilst OGDC hasmade 35 discoveries (15 oil fields, 19 gascondensate field and 1 gas field).

Concessions were also acquired bynumerous other foreign operatorsincluding Occidental Petroleum that, in1980, was awarded a license coveringthe petroleum rights to the deeperhorizons beneath four currentlyproducing fields at Balkassar, Joya Mair,Khaur and Dhuian in the Potwar basin.Under another agreement signed in1982, the company was awarded afurther license in the Potwar basin,where in 1983 it discovered a major oilfield at Dhurnal. This was developedusing water injection for reservoirpressure support right from the onset ofproduction. However, it has nowproduced 48 of the estimated 51 millionbarrels of oil and is currently producingless than 100 BOPD.

OGDC was very active throughout thecountry during the 1980s and 1990s. Inthe Potwar basin it discovered five oilfields (Dakhni, Chak Naurang, MissaKeswal, Bhal Saydan and Sadkal) and inthe central part of the country itdiscovered five gas fields (Loti, Pirkoh,

Nandpur, Rodho and Kothar) in additionto its previously mentioned success inthe Lower Indus area.

Stepping on the gas

OGDC’s discovery of the Pirkoh (Figures11.4, 11.5 and 11.6) and Loti gas fieldsin 1977 and 1985 respectively, togetherwith the establishment of an extensivegas pipeline infrastructure, stimulatedfurther interest in the Central Indus gasprovince. In 1987, the Tajjal license wasawarded to Lasmo, which drilled theKadanwari 1 discovery well in 1989.This discovery of gas in a new lowerCretaceous sand horizon has excellentreservoir characteristics, although it isat a depth in excess of 3500 m. A newexploration play was established, andappraisal wells drilled in 1990 and 1991have proven reserves at Kadanwari inthe order of 1 Tcf. The significance of

this play has been confirmed by thediscovery by OMV in 1993 at Miano 1and at Sawan 1 in 1998. The discoveryat Aswan is under appraisal.

Also in the Central Indus area, theOWC/Premier/Burmah/PPL joint venturediscovered the 4-Tcf Qadirpur gas fieldin 1990.

Encouragement forexploration in the futureAlthough oil reserves have remainedconstant since 1990 (see Figure 11.7)Pakistan remains an active explorationprovince. Significant discoveriescontinue to be made both in existingproducing areas and on new trends.

Large volumes of gas (> 3 Tcf) havebeen discovered in the Cretaceous Pabsandstone by Lasmo and BHP at Bit(1997) and at Zamzama (1998) in their

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Figure 11.4: The original camp for Well No. 1 at Pirkoh field in 1982

Figure 11.6: ThePirkoh field in 1982

Figure 11.3: Steam generators at the Mayal field

Figure 11.7:Production andreserves for Pakistan(excludingcondensate)

Figure 11.5:A Schlumberger loggingtruck in Pirkoh gas field

Kirthar and Dadu blocks respectively. InSui Deep No. 1 well, drilled on Suistructure by PPL, commercial gas hasalso flowed from Pab sands. Thisdiscovery is under appraisal.

Moreover gas has also been discoveredat Zarghun South 1 well (1998), drilledby Premier Oil in its Bolan block. Theflow of gas from the Jurassic Chiltanlimestone has opened new explorationareas in Baluchistan folded belt.

Most recent awards have seen activityextending into frontier areas such as theMakran Coast, Central Baluchistan andthe Sind and Baluchistan parts of thefold belts. Here large surface anticlinesremain undrilled and have the potentialto host giant reserves.

An ambitious plan was drawn up bythe Ministry of Petroleum and NaturalResources to develop the huge gasreserves in Baluchistan and Sind. Moreincentives will be offered to the exploringcompanies rather than consideringcheaper imports. The reserves areestimated to be more than 30 Tcf –enough to meet country’s growingrequirements for more than 50 years. Ofthese, about 3 Tcf are already in theinitial stages of development.

At the same time, however, Pakistanwill extend full cooperation to proposedpipeline projects from Iran andTurkmenistan for supply of gas, throughPakistan, to India and other gas-deficientareas on commercial lines. The benefitsfrom these projects will include extraincome in foreign exchange as royaltiesfor accommodating the pipelines and thecreation of thousands of jobs during theconstruction phase.

Thus, although Pakistan is one of theoldest exploration provinces in the world,it retains genuine potential for the activeand persistent explorer. The governmentis committed to retaining flexibility inlicense terms and to remainingcompetitive in the world climate.

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the giant Bab oil and gas field. Theproject added two 350 MMscf/D trains totreat and process associated gas fromBab’s lower Cretaceous Thamama Breservoir and nonassociated gas fromthe Thamama C reservoir. A625 MMscf/D train was put in place fornonassociated gas from the Thamama Fand compression facilities that couldinject up to 830 MMscf/D into this layer.

The second phase of the OGD projectincreased condensate capacity by50,000 B/D and added 1 Bcf/D of salesgas by 2000. Sustained economic growthand urbanization will ensure a high andgrowing demand for gas to use in powergeneration and water desalination.

While the established industrialsectors typified by operations at DasIsland continue into the nextmillennium (Figures 16.7 and 16.8)there are new directions for businessand industry in the UAE.

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Figure 16.7: DasIsland separatorsand hydrogen sulfideplant seen from thebase of the flowtanks

Figure 16.8: DasIsland tankerterminal. Frenchtanker Saint Remibeing moored at theterminal. A head lineis being taken onboard a work boat

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The oil and gas fields of the United Arab Emirates

Figure 16.9: Fromfirst oil in the 1960sto fully developedfields in the 1990s,production in theUnited Arab Emirateshas grown rapidly.The economicchanges which haveaccompanied this oilboom have made theUAE a major playerin the Middle East oiland gas sector

In recent years, the UAE hasundertaken several projects to diversifyits economy and to reduce itsdependence on oil and gas revenues.According to one Emirates newspaper,the non-oil sector accounted for 69% ofthe gross domestic product in 1997. The federal government has investedheavily in sectors such as tourism,telecommunications, re-exportcommerce and aviation. As part of itsstrategy to further expand its tourismindustry, UAE plans to build new hotels,restaurants and shopping centers, andto expand airports and duty-free zones.

Beyond the oilThe United Arab Emirates is a relativelynew oil and gas producer with productionstarting in the 1960s (Figure 16.9) andthe country being formally constitutedfrom the seven Emirates in 1970s.

The country has used its oil and gasrevenues to establish itself as one of the leading business centers in theMiddle East.

Unable to rely on vast oil reserves forcontinued growth, Dubai has become acentral Middle East hub for trade andfinance, accounting for about 70% of theEmirates’ non-oil trade. In 1996, Dubaiunveiled its strategic development planfor the twenty-first century, whichfocused on the private sector andemphasized capital-intensive industries.It called for a new infrastructure andthe loosening of trade and bankingrules. For its part, Abu Dhabi planned todevelop an offshore financial andcommodity trade center on SaadiyatIsland. This will include storagefacilities, a port, a freight center, and afinancial and insurance center tofacilitate trading.