In 2004, the geologist Harry T. Holzman deployed to Iraq as the U.S. Army's Chief Analyst for Iraq Oil & Gas Infrastructure. He worked with the Ministry of Oil and other ministries to assist in the reconstruction of the country's infrastructure. He also gave advice on several of the oil and gas articles in the 2005 Constitution of Iraq. Before his deployment to Iraq, he served in the U.S. Army Reserves, and was the president of the geological information and mapping company Geomaps. He retired in 2008 from the U.S. Army, after 41 years of service, and now works as a geological consultant in San Antonio, Texas. Recently, he wrote an article on Iraq's oil reserves in the Iraq Oil Report, a specialist e-publication on oil and gas affairs, published in Iraq. The report is significant, because it confirms the presence of massive oil reserves in Iraq, and tackles the issues of lost opportunities in developing the available resources, as well as the possibility of achieving progress and growth if a wise and honest government is to rule the country. The report also mentioned, in passing, that one of the major challenges to the development of Iraq's oil production capacity is the absence of proper infrastructure. However, the report failed to elaborate, at the same time, on the political reasons behind the long-term service agreements between the Iraqi government and the international oil companies, and the U.S. goals behind increasing Iraq's production capacity, namely so that Iraq's high production capacity can become on par with that of Saudi Arabia. Nor did the report highlight the goals of the Maliki government behind these agreements, namely, that they were an important economic achievement against a long list of failed policies, shortly before the recent legislative elections. Furthermore, the report did not make any reference to corruption and profligacy in managing oil revenues, and subsequently, the loss of real opportunities to rebuild the country and provide basic services to its citizenry, despite high oil revenues that amount to tens of billions of dollars each year. Below is a quick summary of the main conclusions reached by Holzman's article: “In 2004, the U.S. Army placed me in charge of evaluating the entire Iraqi infrastructure system, from oil and natural gas to electricity. Part of my job was to estimate the country's resource wealth and figure out how to help Iraq rebuild its energy sector. I concluded that Iraq ranks right up at the top of hydrocarbon-rich countries worldwide, and has the potential to overtake any country in production. Out of approximately 87 major fields discovered to date, fewer than 30 are producing. The others never really produced at all, yet some of these are classified as super-giant fields with over 12 billion barrels of proven reserves each. Several Iraqi engineers informed me that they had only ever produced enough oil to meet their OPEC quota of 3.5 million barrels per day. They could do that out of just a few fields.” So what is Iraq's oil production potential? The U.S. Military geologist answers thus: “I began my assignment by looking at the data sets that were already available. Of Iraq's many fields, the first one I worked on was East Baghdad, since I was living just west of there. The field was producing 1,100 barrels per day, and that was it. Yet as I started looking at all the data, I saw that the field was a structure 110 kilometers long and 20 kilometers wide, with 10 pays [geological layers]. There were 16 billion barrels sitting under my feet. The field could produce 1 million barrels per day, but the existing infrastructure could only accommodate 25,000 barrels per day. As I examined data from other fields, I found a similar pattern of under-developed capacity. In the last two years, there have also been several recent major discoveries in Kurdistan, where the geology is a little more complex [than in the remainder of Iraq]. There are over 400 2-D structures in Iraq – based on seismic data accumulated by majors and the Iraqi government in the late 1950s through '70s – that have not been drilled yet.” Holzman's research then reaches the following conclusions: “Iraq held far greater oil and gas reserves than had been previously estimated. For years, Iraq claimed oil reserves of 115 billion barrels and gas reserves of 100 trillion cubic feet. I asked Iraqi engineers and Oil Ministry officials what these figures were based on. They replied that these had been the official reserves for years, but no one knew where the numbers came from. Since then, Iraq has revised its reserve estimate upward, to 143 billion barrels. There is good reason to believe there's even more.” Holzman estimates Iraq's confirmed oil reserves at 230 billion barrels, “Given the data I had at the time, [on the basis of the reserves of] 85 oil fields”. He then added, “I also evaluated the country's natural gas reserves, especially Akkas field in Anbar province, and calculated almost 200-plus trillion cubic feet of reserves. (Most of Iraq's gas production is currently being flared off.) Since then, a couple of new fields have been discovered in the Kurdish region, representing an additional 4 to 7 billion barrels of oil reserves and 9 trillion cubic feet of gas.” Holzman then talks about the hurdles facing the Iraqi oil and industry, including the limited exploration and development of the fields. However, the “major obstacle to production in Iraq is the horrendous condition of the infrastructure. When I arrived in country [in 2004], most [or] everything was broken or stolen, including pumping stations and compressors. Most of the water flood projects had broken down, especially in Kirkuk and the southern part of the country. The workers were re-injecting processed crude and residual oil back into the sands and carbonates because there was no other place for it.” Holzman then concludes his report by stating that Iraq has brought international oil companies to revamp its oil fields. Holzman then affirms that the results of [oil] bids so far have shown that the international oil companies are indeed extremely interested in contributing to the future of the Iraqi oil industry. *. Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
