The name “Gulf Keystone Petroleum” (GKP) has come to have major significance in the Kurdistan Region, particularly in regards to its world-class commercial field at the Shaikan exploration block. Today, the discovery at Shaikan represents one of the world’s largest, on-shore oil and gas developments. Moreover, according to gross mean oil in place reserve estimates, the four blocks in which GKP have interest hold at least 19 billion barrels of oil. As GKP Country Manager Umur Eminkahyagil notes, “Gulf Keystone is a major in the Kurdistan Region of Iraq in terms of our level of activity, foot print, and commitments to the KRG. Our drilling record is a testament to that commitment.
The company was already active in multiple areas in North Africa when it first elected to pursue opportunities in the burgeoning market of the Kurdistan Region. Consequently, GKP began working in the Region with interest in four exploration blocks in 2007. GKP entered as the operator of both the Shaikan and Sheikh Adi blocks, with 75% and 80% interests, respectively. In addition, it entered as a non-operator in the Ber Bahr exploration block (40% interest), which is currently operated by Anglo-Turkish firm Genel Energy, and Akri-Bijeel block (16% interest), which is currently operated by the Hungarian company MOL. Work at the Shaikan block advanced rapidly, with GKP registering its first discovery at the Shaikan-1 exploration well in the 3rd quarter of 2009. With the completion of the Shaikan-5 and Shaikan-6 exploration wells in the summer of 2012, the company completed its well appraisal program. In August of the same year, GKP declared the Shaikan field a “world class commercial discovery”. Indeed, as highlighted by Eminkahyagil, “During the extended well testing stage, which was part of the Shaikan appraisal program, we produced 1 million barrels of oil. That number does not even reach 1/10,000th of the field’s gross oil-in-place volumes.
Development at Shaikan
In the summer of 2011, while the appraisal campaign was still underway, GKP began the initial phases of creating its Field Development Plan (FDP). Following the declaration of commerciality, it stepped up its efforts to finalize the FDP, which was submitted to the MNR in January 2013. According to Eminkahyagil, “This is because the MNR is not just a regulatory body, but also our partner in the development. Based on the MNR’s recommendations and some of our own findings, we made some changes to the plan and then submitted an addendum.” In late June 2013, the MNR approved the FDP. Commenting at the time of the approval, GKP CEO Todd Kozel noted, “This is an historic moment in the evolution of the Company. Gulf Keystone is now fully permitted to commence production from the Shaikan field and this represents a key milestone in the Company’s growth. We have been a pioneer in the Region from the outset and this milestone reconfirms our pioneering spirit and our desire to lead the upstream oil industry in Kurdistan.
GKP has targeted an increase in production to 150,000 bpd in the next three years and 250,000 bpd by 2018.
The FDP called for the escalation of production with a targeted goal of 40,000 bpd by the end of 2013. To allow for this development, the company commissioned its first purpose built Production Facility (Shaikan PF-1), which has a capacity of 20,000 barrels of oil per day (bpd). A second production facility, Shaikan PF-2, which is scheduled to be completed in the fourth quarter of 2013, will rapidly increase that capacity to 40,000 bpd. Following successful completion of the two facilities, GKP has targeted an increase in production to 150,000 bpd in the next three years and 250,000 bpd by 2018. New production facilities are expected to facilitate the completion of such goals. In addition, these growth numbers are expected to go a long way towards helping the MNR achieve its overall oil export targets of 1 million bpd by the end of 2015, and 2 million bpd by 2019.
Taking into account the latest resource estimates for GKP’s Shaikan discovery, Genel Energy’s Ber Bahr block, the Bijell discovery in MOL’s Akri-Bijeel block, and the preliminary resource evaluation for GKP’s Sheikh Adi block, the company today has a share of gross mean oil-in-place resources of at least 19 billion barrels. Eminkahyagil makes it plainly clear that GKP has big things on the horizon: “Even though Shaikan rightly occupies the newsreels these days, our Sheikh Adi block is only a few years behind of Shaikan.” Indeed, the Sheikh Adi-2 exploration well that was spudded in May 2012 successfully achieved total stabilized aggregate flow rates of 4,235 bpd. Following approval of the company’s appraisal work program for Sheikh Adi, GKP began conducting 2D seismic surveys and will drill an appraisal well (SA-3) for delineation purposes in the fourth quarter of 2013. Company officials confirmed that further appraisal of Sheikh Adi will naturally take into account future synergies with Shaikan in terms of production facilities, infrastructure, and logistics. As summarized by Umur Eminkahyagil, “All in all, with work progressing in our Sheikh Adi, Ber Bahr, Akri Bijell blocks, and the major developments at Shaikan, we look forward to joining the ranks of key producers in the Kurdistan Region.”