Oil Flows Again From Iraq's Southern Fields

Published April 23, 2003

| Associated Press

Engineers began restoring the lifeblood of Iraq's shattered economy Wednesday, pumping crude oil for the first time since the war. Although the oil is not for export, the quick startup means one of Iraq's largest fields could be back to prewar production levels within weeks.

U.S. Brig. Gen. Robert Crear turned the tap at a storage facility outside the southern city of Basra and watched as slick black crude dribbled from the spigot and oozed between his fingers.

"Now we're in the oil business," Crear said, laughing.

The oil will be used for domestic production only, and the meager flow sprang from just four of hundreds of wells in Iraq's southern oil heartland.

But the rekindled petroleum production is a sign that Iraq is already capitalizing on its biggest natural resource and top economic hope.

Once transformed into refined products such as fuel oil, the petroleum will be distributed throughout the southern part of the country for use in vehicles, power plants and generators, officials from the U.S. Army Corps of Engineers said.

Twelve wellheads in the Rumeila oil fields were believed to have been sabotaged by retreating Iraqis, who blew up some and set fire to others. The fires are out, but workers are still assessing which wellheads can be salvaged.

Money from international oil sales is expected to be the major source of income to help Iraq rebuild after three wars and more than a decade of economic sanctions. Crear said it was unclear when exports might resume.

Any loss of oil from Iraq -- home to the world's second-largest oil reserves -- crimps supplies for importing countries, including the United States, which gets 2 percent of its imported crude from Iraq.

Iraq shut down oil production in mid-March ahead of the war. Before that, the country was pumping around 2.8 million barrels a day, or 3 percent of global supplies. More than half came from the huge Rumeila and other fields near Basra.

Oil fields near the northern town of Kirkuk are still shut down, though there are signs they could start coming back soon. When back up, they can produce about 900,000 of the 2.8 million total barrels.

To reach those production levels again, experts estimate it will cost between $3 billion and $5 billion over two years.

U.S.-led teams of American, British and Iraqi oilhands tapped four wells Tuesday in the Rumeila field. On Wednesday, they pumped the oil 38 miles across the desert from a gas-oil separation plant to storage tanks just outside Basra to await refinement.

Engineers had hoped to pump the oil all the way to the Basra refinery, but unexploded ordnance lying near a section of the pipeline made it unfeasible. Workers hope to clear away the ordnance and get the crude there by Saturday.

It will take three days of treatment to turn it into fuel.

"Our focus in restoring the oil is to give the biggest benefit to the Iraqi people. That means restoring the infrastructure," Crear said.

It could take anywhere from six weeks to almost four months to get the Rumeila oil field back up to producing 1.1 million barrels a day, Crear said. However, analyst Raad Alkadiri of the Petroleum Finance Co., a consulting firm in Washington, called that forecast a "best-case scenario."

To speed the process, the Corps of Engineers and its main oil repair contractor, Kellogg Brown & Root -- a subsidiary of Halliburton Co. -- have already brought back to work 200 oilhands from Iraq's Southern Oil Co. The company employed more than 3,000 workers in the region, and coalition officials will try calling more back on Saturday.

There are more than 1,000 oil wells in the Rumeila field, feeding 34 gas-oil separation plants. But only one separation plant has been restarted. Engineers hope the other plants will come on line over the next few weeks.

"This has been a great news story already, simply because we don't have 700 or 1,000 oil fires as we had anticipated," Crear said. "We don't have oil floating to the Gulf or into the soil, causing an environmental hazard."

Oil facilities in the Kirkuk area fared even better, Crear said, despite reports of looting in the region. He said there was no evidence of major sabotage, and the northern fields could "be restarted on a short-order basis."

In fact, Khalid Khalf, chief engineer of a pumping station near Kirkuk, said his team was preparing to get oil flowing as early as Thursday. It was unclear whether the oil would come from storage tanks or wells.

U.S. Army engineers are in the north as well, and Crear is expected to visit this week.

URL

http://www.foxnews.com/story/2003/04/23/oil-flows-again-from-iraq-southern-fields