Chevron eyes Saudi oil project expansion in 2017

ABU DHABI Tue Jun 2, 2009 7:14am EDT

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ABU DHABI (Reuters) - U.S. oil major Chevron (CVX.N) could deploy a technique to boost oilfield output across the neutral zone between Kuwait and Saudi Arabia in 2017, a top Chevron executive said on Tuesday.

If successful, the technique could be rolled out worldwide and add billions of barrels to global reserves, said Guy Hollingsworth, Chevron's president for exploration and production in Europe, Eurasia and the Middle East.

"We could go to full-field in 2017," Hollingsworth told reporters on the sidelines of an energy conference in Abu Dhabi.

Chevron is testing the impact of steam flooding in the oilfields in the neutral zone to help boost output of heavy oil. Steam raises the temperature below ground and loosens up crude that is otherwise difficult to pump.

The U.S. firm would begin the second stage of the testing program in July, Hollingsworth said.

This stage, pumping steam underground through 16 injection wells to produce crude from 25 wells, would run for three years and give a better idea of how much recovery could be improved through the process, he said.

The first stage, already completed, used just one injection well and one producing well. It was unclear from that how much recovery could be improved, he said.

Saudi Arabia and Kuwait share the estimated 550,000 barrels per day (bpd) output from the Neutral Zone. Kuwait Gulf Oil Company, operator on the Kuwait side, detailed plans last month to invest $11 billion with Saudi Arabia to boost output to 900,000 bpd over the next 20 years in the zone.

Saudi Arabia renewed Chevron's concession in the neutral zone last year. It is the only concession that survived the nationalization of the Saudi oil industry in the 1970s.

Chevron's net production after royalties is 110,000 barrels per day, mostly heavier grades that trade at a discount to benchmark West Texas Intermediate oil.

The zone is a region between Saudi Arabia and Kuwait that dates back to 1920s treaties to establish regional borders.

(Editing by James Jukwey)

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