Kuwait Looks to Non-Associated Gas
As a member of the Organization of the Petroleum Exporting Countries (OPEC), Kuwait was the world's 10th largest petroleum and other liquids producer in 2013. Despite being the second smallest in land area among the OPEC member countries, Kuwait exports the fifth-largest volume of crude oil and condensates following Saudi Arabia, the United Arab Emirates, Iraq, and Nigeria.
Kuwait's economy is heavily dependent on petroleum export revenues, which account for nearly 60 percent its gross domestic product and about 94 percent of export revenues, according to OPEC and IMF data. The Energy Information Administration (EIA) estimates these revenues were $92 billion in 2013. Kuwait attempts to remain one of the world's top oil producers as the country targets crude oil and condensate production of 4 million barrels per day (bbl/d) by 2020. However, Kuwait has struggled to boost oil and natural gas production for more than a decade because of upstream project delays and insufficient foreign investment.
To diversify its oil-heavy economy, Kuwait has increased efforts to explore and develop its non-associated natural gas fields, which currently make up a small portion of its natural gas production. Greater natural gas production would increase the country’s feedstock for its struggling electricity sector, which frequently cannot meet demand in peak times. Kuwait has increased the share of natural gas in its primary energy consumption from 34 percent in 2009 to 42 percent in 2012, while the remaining share, consisting solely of petroleum and other liquids, has declined. Kuwait also requires increasing supplies of natural gas for water desalination, petrochemicals and for the increased use for enhanced oil recovery (EOR) techniques to boost oil production.
The Jurassic non-associated gas field was discovered in 2006, with an estimated 35 Tcf of reserves. This project has been described as the most difficult in the world, based on the geologic composition, the technical complexities it presents, and the fact that most of the gas quality is tight and ultra-sour. A first phase envisioned 170 MMcf/d of natural gas by 2008. However, it reached a production plateau of 140 MMcf/d, according to IHS Energy. The second phase, which is under construction and scheduled to come online by 2014, has a projected capacity of 500 MMcf/d. A third phase is expected to bring production capacity up to 1 Bcf/d, but political and technical difficulties have occurred. Shell is developing the Jurassic project with Kuwait Oil Company (KOC), although the government has held up future phases of the project as the parliament investigates the contract terms.
The other prospect for non-associated natural gas production is the Dorra gas field offshore PNZ. This field is shared by Kuwait, Saudi Arabia, and Iran. Kuwait and Saudi Arabia originally planned to begin production at Dorra by 2017, providing an additional 500 MMcf/d for each country, while Iran planned to develop its own side of the field. However, Kuwait and Saudi Arabia decided to delay project development in 2013 because there was disagreement over the allocation of resources and about where to bring the natural gas ashore. Also, political tensions between the Gulf States and Iran, which also lays claim to the field, are likely to preclude any near-term settlement of mutual development between the three countries.
The country has announced a production target of 3 Bcf/d by 2030, double the current production level.