DOE/EIA-TR/0606

Distribution Category UC-950

Oil Production Capacity

Expansion Costs For The

 Persian Gulf

January 1996

Energy Information Administration

Office of Oil and Gas

U.S. Department of Energy

Washington, DC 20585

This report was prepared by the Energy Information Administration, the independent statistical and analytical agency

within the Department of Energy. The information contained herein should not be construed as advocating or reflecting

any policy position of the Department of Energy or any other organization.
Energy Information Administration

Oil Production Capacity Expansion Costs for the Persian Gulf iii

Preface

Oil Production Capacity Expansion Costs for the Persian

Gulf provides estimates of development and operating costs

for various size fields in countries surrounding the Persian

Gulf. In addition, a forecast of the required reserve

development and associated costs to meet the expected

demand through the year 2010 is presented. This report takes

a different approach than that normally seen in the literature.

Results are based on geologic plays and their individual

development costs rather than country-level economics.

Petroconsultants Estimator database and software provided

the cost data and field properties on which this analysis is

based.

Organizations requesting specific information on the cost to

develop Persian Gulf oil supplies include: the International

Energy Agency, the U.S. Geological Survey, and the

Department of Energy’s Policy Office. Other customers

include Congress, Federal and State agencies, industry

analysts, financial institutions, the oil and gas industry, and

the general public. Publication of this report is in keeping

with responsibilities given the Energy Information

Administration (EIA) in Public Law 95-91/Section 205(a) and

Section 657(2)(a) for gathering and disseminating foreign

energy supply information.

General information about this publication may be obtained

from Diane Lique, (202)586-6401, Director of the Office of

Oil and Gas, or John Wood, (214)767-2200, Director of the

Dallas Field Office.

This analysis is also available on a computer disk. The disk

contains a Microsoft Excel 5.0 workbook that allows a user to

enter other data for each play and immediately see the results

in summary tables and graphs for any other desired conditions.

Specific information regarding the content or preparation of

this publication may be obtained from the author, Gary Long,

(214)767-0882, fax (214)767-2204 or glong@eia.doe.gov. 
Energy Information Administration

Oil Production Capacity Expansion Costs for the Persian Gulf 1

Oil Production Capacity Expansion Costs For The

Persian Gulf

Summary

Countries surrounding the Persian Gulf supply 27 percent of

world oil demand and 22 percent of U.S. imports. The Energy

Information Administration’s International Energy Outlook

projects that, by the year 2010, these countries will be asked

to supply 39 percent of the world’s thirst for oil. U.S. imports

are expected to grow 48 percent over the same time period.

Persian Gulf oil supplies will increase in importance to both

the global and U.S. oil markets. Persian Gulf countries will

need to invest large sums to increase production capacity to

meet the demand.

Persian Gulf oil development, production, and operating costs

have received the attention of industry analysts in recent

years . Concerns range from the revenue available for the 1,2

local economy, to the investment necessary to meet the

expected growth in oil demand. The total cost of the projected

capacity expansion is a relatively small percentage of the gross

revenue. However, oil export revenues provide the vast

majority of government income in the Persian Gulf countries.

Typically, national oil companies have to compete with

defense spending, social programs, and other government

services for investment funds from their governments. Other

options are for the government/company to borrow the

investment funds or allow foreign companies to acquire equity

positions. The advantages and disadvantages of these funding

options vary among the Persian Gulf countries. Before the

year 2010, the Persian Gulf countries will have to develop

between 38 and 251 billion barrels of oil at a cost of 31 to 371

billion dollars to meet the expected demand for Persian Gulf

oil.

This report attempts to quantify the cost of expanding oil

production capacity using individual geologic plays in the

countries surrounding the Persian Gulf through the year 2010.

The countries included in this report are Iran, Iraq, Kuwait,

Qatar, Saudi Arabia, Abu Dhabi, and Dubai.

Petroconsultants' Estimator database and software were used 3

to define eight geologic plays in formations of Mesozoic and

Tertiary ages, both onshore and offshore. (Data for Saudi

Arabia and Kuwait are not available in this database, but the

surrounding plays are assumed to be representative for these

countries.) Development and operating cost scenarios based

on the three field sizes provided by Estimator for each play

were defined yielding low-, mid-, and high-case values.

Because this analysis is focused on oil, all gas production is

assumed to be flared so that all costs are for oil production

only. (In practice, the flaring of gas has been curtailed and

normally is done only at remote locations.) All costs are in

constant 1994 dollars (no inflation or discounting was used).

Costs for the eight plays and three field sizes were calculated

and averaged for each of the three cases (low, mid, and high

field sizes) to yield low-, mid-, and high-case cost estimates

for the Persian Gulf area. The following summary table

defines the investment cost in two ways: 1) the cost of

increasing production capacity, 2) the cost of developing

reserves. Also shown are the production operating expense

and a peak daily production yield per developed reserves.

Capital Capital

Invest/ Invest/ Producing Daily Prod

Field Increased Developed Operating Yield 

Size Capacity Reserves Expense per Reserves

Case $/bbl/d $/bbl $/bbl bopd/MMbbl

Low 4,866 1.70 1.49 322

Mid 2,784 0.66 0.99 227

High 2,515 0.57 1.03 218

The currently reported remaining oil reserves for the Persian

Gulf countries of Iran, Iraq, Kuwait, Qatar, Saudi Arabia, Abu

Dhabi, and Dubai are about 585 billion barrels (World Oil,

August 1994). Current production is about 19 million barrels

per day (assuming Iraqi production at pre-embargo rates).

This yields an annual reserves-to-production (R/P) ratio of

about 83. A country may more prudently develop its oil

reserves at an R/P ratio near 20. Developing reserves that will

not be produced for many years is economically unwise.

Applying an annual R/P ratio of 20 to the current production

rate yields an estimate of developed reserves of about 140

billion barrels. This leaves about 445 billion barrels of

"Yamani Predicts World Crude Price Likely to Falter Again in 1995,” 1

Oil & Gas Journal (April 17, 1995), pp. 26.

Stauffer, Thomas R., “Trends in Oil Production Costs in the Middle 2

East, Elsewhere,” Oil & Gas Journal (March 21, 1994), pp. 105-107. production industry.

Available from Petroconsultants, Inc. International Energy Services, 3

Houston, Texas, ph. 713-995-1764. Petroconsultants collects, compiles,

and analyzes information for the international oil exploration and
Energy Information Administration

2 Oil Production Capacity Expansion Costs for the Persian Gulf

remaining undeveloped (or non-producing) oil reserves for the and 1,000 million barrels for the three field sizes (Appendix

Persian Gulf area. (In addition, the U.S. Geological Survey B). The respective reservoir depths are 2,500, 6,000, and

estimates undiscovered resources of about 112 billion barrels 12,500 feet. Well productivity is defined by 830, 1,520, and

for these same countries.) 2,790 barrels per day for this same play. Peak field

The Energy Information Administration (EIA) forecasts oil the three cases. Appendix B contains the details for the eight

production capacity from Iran, Iraq, Kuwait, Qatar, Saudi plays used in this study. No data on geologic plays are

Arabia, and the United Arab Emirates to grow to from about available for Saudi Arabia and Kuwait. Information from the

20 million barrels per day currently to 30.0 to 36.6 million eight plays used is assumed to be representative of the

barrels per day in the year 2010 (International Energy

Outlook 1995). Applying the mid-case values from the

summary table above to the projected production capacity

requires additional developed reserves of 54 to 83 billion

barrels at a cost of 34 to 53 billion dollars by the year 2010.

This assumes current capacity can be maintained without

replacing produced reserves from an equal quantity of

undeveloped reserves. The undeveloped reserves determined

above (445 billion barrels) are more than adequate to support

the projected demand. This scenario does not include the

replacement of produced reserves by the development of

undeveloped reserves. Currently, the replacement of produced

reserves is minor, but will grow to significant levels in the

future (exact timing is unknown). (Appendix A contains

tables and graphs that address the replacement of produced

reserves using the same costs as used for adding capacity. If

the replacement of production is included, the comparable

volume of undeveloped reserves to be developed is 194 to 248

billion barrels at a cost of 127 to 161 billion dollars through

2010 (mid-case). The actual costs will likely be somewhere

between those associated with no replacement of produced

reserves and those associated with total replacement of

produced reserves.)

This analysis is available on a computer disk from EIA's

Dallas Field Office, telephone 214/767-2200 or

214/767-2204 fax. The disk contains a Microsoft Excel 5.0

workbook that allows a user to enter other data for each play

and immediately see the results in summary tables and graphs

for any other desired conditions.

Geologic Plays

Selected Persian Gulf geologic plays were used for this

analysis. A play is defined as a group of discovered and/or

undiscovered fields with similar geologic, geographic, and

temporal characteristics. For example, the Mesozoic Era of

the Zagros fold-belt in Iran is one of the plays considered in

this analysis. The particular parameters for each of the eight

plays used here were determined using Petroconsultants’

Estimator database and software.

The Estimator database contains field and production

characteristics for each play. Three field sizes (ultimate

recovery) provided by Estimator for each play are the basis

for the low-, mid-, and high-cases. For example, in the

database, the Zagros Mesozoic play in Iran contains 30, 200,

production is determined as a percentage of the field size for

countries addressed here.

Estimating Development Costs

Development costs include wells, production facilities,

pipelines, construction, and management costs. Exploration

costs are not included in this analysis since only partial

development of the very large reserve base in the region is

necessary to achieve the projected increase in production

capacity. Development of discovered non-producing reserves

will be more than adequate for the time period considered here

(through 2010).

After selecting the field and production characteristics for a

low-, mid-, and high-case in each play, Estimator determines

the development costs. Peak field production, as a percentage

of the field size, yields annual and daily peak field production.

Peak field production determines the size and cost of the

field's production facilities. Well productivity determines the

number of wells and reservoir depth determines the cost of the

wells. Other parameters, such as, the gas-oil ratio, terrain,

remoteness, and a development well success ratio, are also

included in the development cost estimate.

Estimating Operating Expenses

Operating expenses are based partially on the development

cost and partially on the production rate. Five percent of the

estimated development cost is used as an annual fixed

operating expense. A variable operating expense of $0.25 to

$1.00 per barrel of production is also included in the operating

cost estimate. Well workovers were scheduled at a rate of one

every other year per well and are included in the estimated

operating expense as well. All operating expenses are for the

peak production year.
Table 1. Estimated Development, Production, and Operating Costs for the Persian Gulf

Peak Prod

Capital Invest Capital Invest Capital Peak Prod Year Oper Peak Daily

Peak Est per bbl of per bbl of Invest Year Oper Expense Prod per

Field Field Dev Annual Daily per bbl of Expense per bbl of Developed

Size Prod Cost Prod Cap Prod Cap Reserves per Well Prod Reserves

Country and Play MMbbl bopd MM$ $/bbl $/bbl $/bbl $/month $/bbl bopd/MMbbl

Low Case Field Sizes

Iran Zagros Tertiary 30 8,100 24.943 8.55 3,079 0.83 26,113 1.07 270

Iran Zagros Mesozoic 30 7,470 24.464 9.10 3,275 0.82 27,706 1.11 249

Iraq Zagros Tertiary 5 960 9.444 27.29 9,838 1.89 34,924 2.42 192

Iraq Zagros Mesozoic 5 960 9.444 27.29 9,838 1.89 34,924 2.42 192

Iraq Arabian Mesozoic 20 4,650 19.011 11.36 4,088 0.95 35,980 1.29 233

Abu Dhabi Arabian Mesozoic 10 4,000 15.411 10.70 3,853 1.54 39,623 1.32 400

Abu Dhabi Arabian Mesozoic Offshore 10 5,700 61.720 30.08 10,828 6.17 56,509 2.64 570

Offshore 25 11,680 65.103 15.48 5,574 2.60 81,494 1.86 467

Weighted Average (by Field Size) 17 7,101 32.265 13.51 4,866 1.70 42,089 1.49 322

Mid Case Field Sizes

Iran Zagros Tertiary 200 38,750 88.591 6.35 2,286 0.44 39,074 0.84 194

Iran Zagros Mesozoic 200 39,520 95.862 6.74 2,426 0.48 39,127 0.86 198

Iraq Zagros Tertiary 50 9,020 31.986 9.85 3,546 0.64 28,151 1.14 180

Iraq Zagros Mesozoic 50 9,020 31.986 9.85 3,546 0.64 28,151 1.14 180

Iraq Arabian Mesozoic 150 29,580 83.027 7.80 2,807 0.55 48,814 0.94 197

Abu Dhabi Arabian Mesozoic 200 49,830 110.571 6.16 2,219 0.55 36,351 0.80 249

Abu Dhabi Arabian Mesozoic Offshore 50 18,960 93.631 13.72 4,938 1.87 83,911 1.77 379

Offshore 75 26,510 108.115 11.33 4,078 1.44 116,622 1.61 353

Weighted Average (by Field Size) 122 34,764 89.690 7.73 2,784 0.66 47,169 0.99 227

High Case Field Sizes

Iran Zagros Tertiary 1,500 290,080 651.181 6.24 2,245 0.43 63,494 0.82 193

Iran Zagros Mesozoic 1,000 192,510 551.002 7.95 2,862 0.55 73,799 0.88 193

Iraq Zagros Tertiary 300 50,540 124.105 6.82 2,456 0.41 37,329 0.94 168

Iraq Zagros Mesozoic 300 50,540 124.105 6.82 2,456 0.41 37,329 0.94 168

Iraq Arabian Mesozoic 1,000 193,380 394.771 5.67 2,041 0.39 93,626 1.07 193

Abu Dhabi Arabian Mesozoic 1,000 248,640 508.546 5.68 2,045 0.51 63,791 0.95 249

Abu Dhabi Arabian Mesozoic Offshore 200 72,540 259.567 9.94 3,578 1.30 122,634 1.75 363

Offshore 500 166,760 694.332 11.57 4,164 1.39 211,970 1.86 334

Weighted Average (by Field Size) 725 206,528 500.799 6.99 2,515 0.57 82,649 1.03 218

 Source: Petroconsultants Estimator.

Energy Information Administration

Oil Production Capacity Expansion Costs for the Persian Gulf 3
Vari Oper Cost ' 0.7714 ( Field Rate &0.2423

Energy Information Administration

4 Oil Production Capacity Expansion Costs for the Persian Gulf

Considering all fields in all plays, the lowest of the field EIA projects production capacity for the Persian Gulf

production rates was given a $1.00 per barrel cost and the countries of Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the

highest of the field production rates was given a $0.25 per

barrel cost (variable operating expense portion). All other

field production rates between the lowest and the highest were

determined from a straight line connecting these two extremes

on a log-log plot. The following equation defines this straight

line.

The variable operating cost for all low-case fields ranged from

$0.54 to $1.00, all mid-case fields from $0.38 to$0.58, and all

high-case fields from $0.25 to $0.38 per barrel of oil

production.

Cost Ratios

After Estimator was used to determine the field and

production characteristics, development costs, and operating

expenses, several cost ratios were calculated. The

development cost can be shown as: capital investment per

barrel of annual production capacity, capital investment per

barrel of daily production capacity, and capital investment per

barrel of reserves or field size. Peak operating expenses can

be shown as the peak operating expense per well or per barrel

of peak year production (Table 1).

One additional item was calculated. The peak daily

production per developed reserves or field size shows the

daily production potential for each million barrels of newly

developed reserves. The use of this number is explained later

in the section Projected Development and Costs.

Persian Gulf Average Costs

Field sizes were used to determine weighted averages for the

columns in Table 1. The low-case field sizes of the eight

plays were weight-averaged to yield a low-case for the Persian

Gulf. Weighted averages were also determined for the

mid-case and high-case field sizes.

A typical field-size distribution for any given area would show

many more small fields than large fields. The weighted

averages as used here do not account for the number of fields

of any particular size. Weighting the costs by total volume

would be more accurate (field sizes x number of fields).

However, neither the number of fields nor the field-size

distribution is known so this is not possible.

Projected Development and Costs

United Arab Emirates (International Energy Outlook 1995).

Production capacity for these countries is expected to be

between 30.0 and 36.6 million barrels per day in the year

2010. The low-, mid-, and high-case development costs from

Table 1 can be applied to the annual increase in the projected

production capacity to yield a cumulative development cost in

the year 2010 (Tables 2 and 3). Similarly, the peak daily

production per developed reserves is inversely applied to the

annual increase in production capacity to yield cumulative

reserves developed by 2010.

For example, applying the mid-case weighted average costs to

the production projections yields cumulative costs between 34

and 53 billion dollars to develop between 54 and 83 billion

barrels of oil reserves. Low- and high-case weighted averages

are applied in the same manner. As little as 31 billion dollars

could be spent to develop 56 billion barrels of oil (high-case)

or as much as 92 billion dollars to develop 59 billion barrels

(low-case) (Figures 1 and 2).

Tables A1 and A2 show the same analysis but include the

replacement of produced reserves by the development of

undeveloped reserves. (Replacing produced reserves will

maintain current oil production capacity.) If production

replacement is included at the same cost as increasing

capacity, then the mid-case would yield cumulative costs

between 127 and 161 billion dollars to develop between 194

and 248 billion barrels of oil reserves. Looking at the lowand high-cases, as little as 111 billion dollars could be spent

to develop 197 billion barrels of oil (high-case) or as much as

371 billion dollars to develop 223 billion barrels of oil

(low-case) (Figures A1 and A2).

Figure 1 shows the three weighted average cumulative

development costs applied to the low and high projected

production capacity (same data as in Table 3). The result is a

range of development costs for each of the low-, mid-, and

high-case averages for the Persian Gulf. These ranges are

depicted by pairs of lines with the same style (dotted, solid,

and dashed). The cumulative reserves development is

depicted similarly in Figure 2. The same application is used

in Figures A1 and A2 for including the replacement of

production.

Undeveloped Reserves Available

The reported remaining reserves for the Persian Gulf countries

are about 585 billion barrels of oil (Table 4). Current

production is estimated to be a little more than 19 
Table 2. Persian Gulf Oil Production Capacity and Development Cost Forecast (without additional development to replace production)

Based on Low-Case Weighted Average Based on Mid-Case Weighted Average Based on High-Case Weighted Average

IEO/95 Production Capacity Projections Development Costs Development Costs Development Costs

Low High Low Capacity High Capacity Low Capacity High Capacity Low Capacity High Capacity

Low High Capacity Capacity Developed Annual Developed Annual Developed Annual Developed Annual Developed Annual Developed Annual

Capacity Capacity Change Change Reserves Dev Cost Reserves Dev Cost Reserves Dev Cost Reserves Dev Cost Reserves Dev Cost Reserves Dev Cost

Year MMbbl/d MMbbl/d MMbbl/d MMbbl/d MMbbl MM$ MMbbl MM$ MMbbl MM$ MMbbl MM$ MMbbl MM$ MMbbl MM$

1990 18.6 18.6

1991 16.2 16.2 -2.4 -2.4

1992 17.7 17.7 1.5 1.5

1993 18.6 19.2 0.9 1.5 2,908 4,562 4,575 7,178 4,132 2,610 6,502 4,107 4,298 2,358 6,763 3,710

1994 19.6 20.7 0.9 1.5 2,908 4,562 4,575 7,178 4,132 2,610 6,502 4,107 4,298 2,358 6,763 3,710

1995 20.5 22.1 0.9 1.5 2,908 4,562 4,575 7,178 4,132 2,610 6,502 4,107 4,298 2,358 6,763 3,710

1996 21.5 23.6 0.9 1.5 2,908 4,562 4,575 7,178 4,132 2,610 6,502 4,107 4,298 2,358 6,763 3,710

1997 22.4 25.1 0.9 1.5 2,908 4,562 4,575 7,178 4,132 2,610 6,502 4,107 4,298 2,358 6,763 3,710

1998 23.3 26.6 0.9 1.5 2,908 4,562 4,575 7,178 4,132 2,610 6,502 4,107 4,298 2,358 6,763 3,710

1999 24.3 28.0 0.9 1.5 2,908 4,562 4,575 7,178 4,132 2,610 6,502 4,107 4,298 2,358 6,763 3,710

2000 25.2 29.5 0.9 1.5 2,908 4,562 4,575 7,178 4,132 2,610 6,502 4,107 4,298 2,358 6,763 3,710

2001 25.6 30.2 0.4 0.7 1,241 1,946 2,295 3,601 1,763 1,114 3,262 2,060 1,834 1,006 3,393 1,861

2002 26.0 31.0 0.4 0.7 1,241 1,946 2,295 3,601 1,763 1,114 3,262 2,060 1,834 1,006 3,393 1,861

2003 26.4 31.7 0.4 0.7 1,241 1,946 2,295 3,601 1,763 1,114 3,262 2,060 1,834 1,006 3,393 1,861

2004 26.8 32.5 0.4 0.7 1,241 1,946 2,295 3,601 1,763 1,114 3,262 2,060 1,834 1,006 3,393 1,861

2005 27.2 33.2 0.4 0.7 1,241 1,946 2,295 3,601 1,763 1,114 3,262 2,060 1,834 1,006 3,393 1,861

2006 27.8 33.9 0.6 0.7 1,737 2,725 2,109 3,309 2,468 1,559 2,997 1,893 2,568 1,408 3,118 1,710

2007 28.3 34.6 0.6 0.7 1,737 2,725 2,109 3,309 2,468 1,559 2,997 1,893 2,568 1,408 3,118 1,710

2008 28.9 35.2 0.6 0.7 1,737 2,725 2,109 3,309 2,468 1,559 2,997 1,893 2,568 1,408 3,118 1,710

2009 29.4 35.9 0.6 0.7 1,737 2,725 2,109 3,309 2,468 1,559 2,997 1,893 2,568 1,408 3,118 1,710

2010 30.0 36.6 0.6 0.7 1,737 2,725 2,109 3,309 2,468 1,559 2,997 1,893 2,568 1,408 3,118 1,710

Totals 12.3 18.9 38,155 59,853 58,628 91,970 54,218 34,246 83,311 52,621 56,396 30,935 86,657 47,534

Averages 0.7 1.1 2,120 3,325 3,257 5,109 3,012 1,903 4,628 2,923 3,133 1,719 4,814 2,641

 Sources: Production Capacity Projections from EIA International Energy Outlook, 1995 (IEO/95), Reserves and Costs from Petroconsultants Estim ator.
Table 3. Cumulative Persian Gulf Oil Production Capacity and Development Cost Forecast (without additional development to replace production)

Based on Low-Case Weighted Average Based on Mid-Case Weighted Average Based on High-Case Weighted Average

IEO/95 Production Capacity Projections Development Costs Development Costs Development Costs

Low High Low Capacity High Capacity Low Capacity High Capacity Low Capacity High Capacity

Low High Capacity Capacity Developed Annual Developed Annual Developed Annual Developed Annual Developed Annual Developed Annual

Capacity Capacity Change Change Reserves Dev Cost Reserves Dev Cost Reserves Dev Cost Reserves Dev Cost Reserves Dev Cost Reserves Dev Cost

Year MMbbl/d MMbbl/d MMbbl/d MMbbl/d MMbbl MM$ MMbbl MM$ MMbbl MM$ MMbbl MM$ MMbbl MM$ MMbbl MM$

1990 18.6 18.6

1991 16.2 16.2 -2.4 -2.4

1992 17.7 17.7 1.5 1.5

1993 18.6 19.2 0.9 1.5 2,908 4,562 4,575 7,178 4,132 2,610 6,502 4,107 4,298 2,358 6,763 3,710

1994 19.6 20.7 0.9 1.5 5,816 9,124 9,151 14,355 8,265 5,220 13,004 8,213 8,597 4,716 13,526 7,419

1995 20.5 22.1 0.9 1.5 8,724 13,686 13,726 21,533 12,397 7,831 19,505 12,320 12,895 7,073 20,289 11,129

1996 21.5 23.6 0.9 1.5 11,633 18,248 18,302 28,710 16,530 10,441 26,007 16,427 17,194 9,431 27,052 14,839

1997 22.4 25.1 0.9 1.5 14,541 22,810 22,877 35,888 20,662 13,051 32,509 20,533 21,492 11,789 33,814 18,548

1998 23.3 26.6 0.9 1.5 17,449 27,372 27,453 43,065 24,795 15,661 39,011 24,640 25,791 14,147 40,577 22,258

1999 24.3 28.0 0.9 1.5 20,357 31,934 32,028 50,243 28,927 18,271 45,512 28,747 30,089 16,505 47,340 25,967

2000 25.2 29.5 0.9 1.5 23,265 36,496 36,604 57,420 33,060 20,882 52,014 32,854 34,388 18,863 54,103 29,677

2001 25.6 30.2 0.4 0.7 24,506 38,442 38,899 61,021 34,823 21,995 55,276 34,914 36,222 19,869 57,496 31,538

2002 26.0 31.0 0.4 0.7 25,747 40,389 41,195 64,622 36,586 23,109 58,538 36,974 38,056 20,875 60,889 33,399

2003 26.4 31.7 0.4 0.7 26,988 42,335 43,490 68,223 38,349 24,223 61,800 39,035 39,890 21,881 64,282 35,260

2004 26.8 32.5 0.4 0.7 28,228 44,282 45,786 71,824 40,113 25,336 65,062 41,095 41,724 22,887 67,675 37,121

2005 27.2 33.2 0.4 0.7 29,469 46,228 48,081 75,425 41,876 26,450 68,324 43,155 43,558 23,893 71,068 38,983

2006 27.8 33.9 0.6 0.7 31,206 48,953 50,191 78,734 44,344 28,009 71,321 45,048 46,125 25,301 74,186 40,693

2007 28.3 34.6 0.6 0.7 32,943 51,678 52,300 82,043 46,813 29,568 74,318 46,942 48,693 26,709 77,303 42,403

2008 28.9 35.2 0.6 0.7 34,681 54,403 54,409 85,352 49,281 31,127 77,316 48,835 51,260 28,118 80,421 44,113

2009 29.4 35.9 0.6 0.7 36,418 57,128 56,519 88,661 51,750 32,687 80,313 50,728 53,828 29,526 83,539 45,823

2010 30.0 36.6 0.6 0.7 38,155 59,853 58,628 91,970 54,218 34,246 83,311 52,621 56,396 30,935 86,657 47,534

 Sources: Production Capacity Projections from EIA International Energy Outlook, 1995 (IEO/95), Reserves and Costs from Petroconsultants Estim ator, and Table 2.
Energy Information Administration

Oil Production Capacity Expansion Costs for the Persian Gulf 7

million barrels per day (assuming Iraqi production at reserves and the reduction of total reserves due to production.

pre-embargo levels). This gives an annual

reserves-to-production ratio (R/P) of about 83. Not all of the

585 billion barrels of remaining reserves are developed and

ready for production. Developing reserves that may not be

produced for 80 years is economically unwise. Assuming a

more prudent R/P ratio of 20 and working backwards gives an

indication of the reserves currently developed for production.

An R/P ratio of 20 indicates developed reserves of 140 billion

barrels leaving about 445 billion barrels undeveloped. The

following table shows developed and undeveloped reserves

for annual R/P ratios from 10 to 30. The U.S. Geological

Survey has estimated another 112 billion barrels yet to be

discovered for the Persian Gulf countries (World Petroleum

Assessment and Analysis, World Petroleum Congress, May

1994, modal values).

Developed Undeveloped

R/P Reserves Reserves

Ratio Billion barrels Billion barrels

10 70 514

15 105 479

20 140 445

25 174 410

30 208 376

From 1994 through 2010, cumulative production will be

between 134 and 158 billion barrels of oil (assuming

production at 85 percent of projected capacity) (Tables 5 and

7, Figure 3). In the year 2010, remaining reserves will be

between 426 and 450 billion barrels (assuming no

discoveries). The annual R/P ratio in 2010 will be between

37 and 48, about half the current R/P ratio. Undeveloped

reserves in the year 2010 will be between 199 and 264 billion

barrels using an R/P ratio of 20 to determine the developed

reserves. This compares to the current undeveloped reserves

of 445 billion barrels. The developed producing reserves

currently at about 140 billion barrels will increase to between

186 and 227 billion barrels. These changes reflect the transfer

of undeveloped to developed

Conclusions

Table 6 shows a summary comparison of the two mid-case

development possibilities (with and without reserves

replacement). Currently, complete replacement of produced

reserves is not necessary to maintain current capacity, but it

will be necessary in the future. Likewise, some of the reserves

development in an existing field will not cost as much as the

reserves development for new fields because of the existing

equipment and infrastructure. Actual costs probably lie

somewhere between these two scenarios. Through 2010, oil

reserves that would be developed are between 54 and 248

billion barrels (mid-case). The cost to develop these reserves

is between 34 and 161 billion dollars. Total development

costs plus operating expenses will consume 7 to 12 percent of

gross revenues assuming a $17/bbl oil price. Similarly, total

development costs plus incremental operating costs will

consume 11 to 26 percent of the incremental gross revenue.

Potentially, by the year 2010, hundreds of billions of dollars

will have been spent to develop hundreds of billion barrels of

oil. Production capacity will have increased by 53 to 77

percent, remaining reserves will be 23 to 27 percent less,

developed reserves will have increased 33 to 62 percent,

while undeveloped reserves dropped by 41 to 55 percent. 

Other Possible Scenarios

All of the data and calculations for this analysis are contained

in an Excel 5.0 workbook. A computer disk containing these

spreadsheets is available from the Dallas Field Office of EIA

(214)767-2200, (214)767-2204 fax. The spreadsheets are

linked in a way that allows the user to easily enter different

costs, production capacity forecasts, and reserve data to test

other scenarios.
Figure 1. Persian Gulf Projected Cumulative Development Costs Using 

High and Low Production Capacity Projections

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Year

Development Cost, MM$

Low Case Mid Case High Case

Source: Table 3.

Note: Each case is bracketed by a pair of lines.

Figure 2. Persian Gulf Projected Cumulative Reserves Development Using 

High and Low Production Capacity Projections

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Year

Developed Reserves, MMbbls

Low Case Mid Case High Case

Source: Table 3.

Note: Each case is bracketed by a pair of lines.

Energy Information Administration

8 Oil Production Capacity Expansion Costs for the Persian Gulf
Table 4. Persian Gulf Oil Reserves, Oil Production, and Undiscovered Oil Resources, 1993

Undeveloped

Reserves

Remaining Daily for R/P= Producing Undiscovered

Reserves Prod Current 20 Reserves Resources

MMbbls bopd R/P MMbbls MMbbls MMbbls

Iran 59,964 3,600,000 45.6 33,684 26,280 19,000

Iraq 99,628 2,897,000 94.2 78,480 21,148 35,000

Kuwait 94,241 2,033,000 127.0 79,400 14,841 3,000

Qatar 4,192 448,000 25.6 922 3,270 0

Saudi Arabia 262,430 8,133,000 88.4 203,059 59,371 51,000

Abu Dhabi 62,975 1,887,000 91.4 49,200 13,775 4,200

Dubai 1,083 350,000 8.5 0 1,083 - -

Totals 584,513 19,348,000 82.8 444,744 139,769 112,200

 Note: Saudi Arabia and Kuwait each include half of the Neutral Zone. Abu Dhabi Undiscovered

Resources include Dubai. Iraqi production rate prior to Gulf War. R/P indicates annual Reserves-toProduction Ratio.

 Source: Reserves are from World Oil, August 1994. Daily Production is from World Oil and

EIA's International Petroleum Statistics Report (DOE/EIA-0520(95/01)). Undiscovered Resources

are modal values from World Petroleum Assessment and Analysis, U.S. Geological Survey,

14th World Petroleum Congress, May 1994.

Figure 3. Persian Gulf Historical Oil Production and High-Low Production 

Capacity Projections

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Year

MMbbl/d

Production Capacity

Source: Table 7. Energy Information Administration

Oil Production Capacity Expansion Costs for the Persian Gulf 9
Table 6. Summary Results with and without Repalcement of Produced Reserves (Mid-Case Only, 1994-2010)

Without Replacement With Replacement

Of Produced Reserves Of Produced Reserves

Low Capacity High Capacity Low Capacity High Capacity

Average Annual Developed Reserves, MMbbl 3,012 4,628 10,803 13,761

Total Developed Reserves, MMbbl 54,218 83,311 194,461 247,691

Average Annual Development Cost, MM$ 1,903 2,923 7,047 8,953

Total Development Cost, MM$ 34,246 52,621 126,844 161,158

Total Gross Revenue at $17/bbl, MM$ 2,285,822 2,693,327 2,285,822 2,693,327

Total Development + Total Operating Expense, MM$ 167,237 209,322 259,836 317,858

Total Development + Total Operating Expense

as a Percentage of Gross Revenue 7.32% 7.77% 11.37% 11.80%

Total Incremental Gross Revenue at $17/bbl, MM$ 614,742 974,054 614,742 974,054

Total Development + Total Incremental Oper Expense, MM$ 70,012 109,293 162,611 217,829

Total Development + Total Incremental Oper Expense

as a Percentage of Incremental Gross Revenue 11.39% 11.22% 26.45% 22.36%

 Note: All costs and revenues are in nominal dollars.

 Sources: Petroconsultants Estimator, and Energy Information Administration, Office of Oil and Gas.

Table 5. Persian Gulf Situation in 1994 and 2010 in Relation to High-Low Production Capacity Projections

1994 2010 Change Percent Change

Low High Low High Low High Low High

Oil Production Capacity, MMbbl/d 19.6 20.7 30.0 36.6 10.4 16.0 53 77

Daily Oil Production, MMbbl/d 19.3 19.3 25.5 31.1 6.2 11.8 32 61

Cumulative Oil Production, Bbbls 0 0 134 158 134 158 na na

Remaining Reserves, Bbbls 585 585 426 450 -158 -134 -27 -23

R/P Ratio 82.8 82.8 37.5 48.4 -45.2 -34.4 -55 -42

Developed Reserves, Bbbls 140 140 186 227 46 87 33 62

Undeveloped Reserves, Bbbls 445 445 199 264 -246 -181 -55 -41

 Note: Assumes an R/P ratio for developed reserves of 20 with no new discoveries. Cumulative production is from 1994-2010.

Daily Oil Production assumes pre-embargo Iraqi production.

 Source: Energy Information Administration, Office of Oil and Gas.

Energy Information Administration

10 Oil Production Capacity Expansion Costs for the Persian Gulf
Table 7. Annual Historical Production and Production Capacity Projections of the

Persian Gulf, MMbbl/d

Low IEO High IEO

Saudi Production Capacity Capacity

Iran Iraq Kuwait Qatar Arabia U.A.E. Total Projection Projection

1960 1.07 0.97 1.69 0.17 1.31 5.2

1961 1.20 1.01 1.73 0.18 1.48 5.6

1962 1.34 1.01 1.96 0.19 1.64 0.02 6.1

1963 1.49 1.16 2.09 0.19 1.79 0.05 6.8

1964 1.71 1.26 2.30 0.21 1.90 0.18 7.6

1965 1.91 1.31 2.35 0.23 2.21 0.28 8.3

1966 2.13 1.39 2.49 0.29 2.60 0.36 9.3

1967 2.60 1.23 2.50 0.32 2.81 0.38 9.8

1968 2.84 1.50 2.64 0.34 3.04 0.50 10.9

1969 3.38 1.52 2.80 0.36 3.22 0.61 11.9

1970 3.83 1.55 2.99 0.36 3.80 0.78 13.3

1971 4.54 1.69 3.20 0.43 4.77 1.06 15.7

1972 5.02 1.47 3.28 0.48 6.02 1.20 17.5

1973 5.86 2.02 3.02 0.57 7.60 1.53 20.6

1974 6.02 1.97 2.55 0.52 8.48 1.68 21.2

1975 5.35 2.26 2.08 0.44 7.08 1.66 18.9

1976 5.88 2.42 2.15 0.50 8.58 1.94 21.5

1977 5.66 2.35 1.97 0.45 9.25 2.00 21.7

1978 5.24 2.56 2.13 0.49 8.30 1.83 20.6

1979 3.17 3.48 2.50 0.51 9.53 1.83 21.0

1980 1.66 2.51 1.66 0.47 9.90 1.71 17.9

1981 1.38 1.00 1.13 0.41 9.82 1.47 15.2

1982 2.21 1.01 0.82 0.33 6.48 1.25 12.1

1983 2.44 1.01 1.06 0.30 5.09 1.15 11.0

1984 2.17 1.21 1.16 0.39 4.66 1.15 10.7

1985 2.25 1.43 1.02 0.30 3.39 1.19 9.6 17.5

1986 2.04 1.69 1.42 0.31 4.87 1.33 11.7 19.4

1987 2.30 2.08 1.59 0.29 4.27 1.54 12.1 19.5

1988 2.24 2.69 1.49 0.35 5.09 1.57 13.4 19.0

1989 2.81 2.90 1.78 0.38 5.06 1.86 14.8 20.1

1990 3.09 2.04 1.18 0.41 6.41 2.12 15.2 18.6

1991 3.31 0.31 0.19 0.40 8.12 2.39 14.7 16.2

1992 3.43 0.45 1.03 0.40 8.44 2.33 16.1 17.7 17.7

1993 3.65 0.51 1.87 0.41 8.20 2.24 16.9 18.6 19.2

1994 3.60 0.55 2.03 0.41 8.15 2.23 17.0 19.6 20.7

1995 20.5 22.1

1996 21.5 23.6

1997 22.4 25.1

1998 23.3 26.6

1999 24.3 28.0

2000 25.2 29.5

2001 25.6 30.2

2002 26.0 31.0

2003 26.4 31.7

2004 26.8 32.5

2005 27.2 33.2

2006 27.8 33.9

2007 28.3 34.6

2008 28.9 35.2

2009 29.4 35.9

2010 30.0 36.6

 Source: EIA International Energy Outlook, 1995 (IEO), EIA Annual Energy Review, 1993 ,

and EIA International Oil and Gas Exploration and Development, 1991 .

Energy Information Administration

Oil Production Capacity Expansion Costs for the Persian Gulf 11
Appendix A

Replacing Production with

Additional Development
Table A1. Persian Gulf Oil Production Capacity and Development Cost Forecast with Additional Development to Replace Production

Based on Low-Case Weighted Average Based on Mid-Case Weighted Average Based on High-Case Weighted Average

IEO/95 Production Capacity Projections Development Costs Development Costs Development Costs

Low High Low Capacity High Capacity Low Capacity High Capacity Low Capacity High Capacity

Low High Capacity Capacity Developed Annual Developed Annual Developed Annual Developed Annual Developed Annual Developed Annual

Capacity Capacity Change Change Reserves Dev Cost Reserves Dev Cost Reserves Dev Cost Reserves Dev Cost Reserves Dev Cost Reserves Dev Cost

Year MMbbl/d MMbbl/d MMbbl/d MMbbl/d MMbbl MM$ MMbbl MM$ MMbbl MM$ MMbbl MM$ MMbbl MM$ MMbbl MM$

1990 18.6 18.6

1991 16.2 16.2 -2.4 -2.4

1992 17.7 17.7 1.5 1.5

1993 18.6 19.2 0.9 1.5 8,690 14,394 10,525 17,293 9,915 6,428 12,451 8,035 10,081 5,655 12,712 7,102

1994 19.6 20.7 0.9 1.5 8,981 14,888 10,982 18,071 10,206 6,620 12,908 8,337 10,372 5,821 13,170 7,363

1995 20.5 22.1 0.9 1.5 9,272 15,383 11,440 18,849 10,496 6,812 13,366 8,639 10,662 5,987 13,627 7,624

1996 21.5 23.6 0.9 1.5 9,581 15,908 11,917 19,661 10,806 7,016 13,844 8,954 10,972 6,163 14,105 7,897

1997 22.4 25.1 0.9 1.5 9,854 16,372 12,355 20,405 11,078 7,196 14,281 9,243 11,244 6,319 14,542 8,146

1998 23.3 26.6 0.9 1.5 10,145 16,866 12,813 21,183 11,369 7,388 14,739 9,545 11,535 6,485 15,000 8,407

1999 24.3 28.0 0.9 1.5 10,436 17,361 13,270 21,961 11,660 7,580 15,197 9,848 11,826 6,651 15,458 8,668

2000 25.2 29.5 0.9 1.5 10,748 17,892 13,753 22,782 11,972 7,787 15,679 10,166 12,138 6,829 15,940 8,943

2001 25.6 30.2 0.4 0.7 9,183 15,451 11,677 19,553 9,706 6,358 12,644 8,255 9,776 5,535 12,775 7,211

2002 26.0 31.0 0.4 0.7 9,307 15,662 11,907 19,943 9,830 6,440 12,873 8,407 9,901 5,606 13,004 7,342

2003 26.4 31.7 0.4 0.7 9,431 15,873 12,137 20,334 9,954 6,522 13,103 8,558 10,025 5,677 13,234 7,473

2004 26.8 32.5 0.4 0.7 9,578 16,123 12,394 20,771 10,101 6,619 13,360 8,728 10,171 5,761 13,491 7,620

2005 27.2 33.2 0.4 0.7 9,680 16,295 12,596 21,115 10,202 6,686 13,562 8,861 10,273 5,818 13,693 7,735

2006 27.8 33.9 0.6 0.7 10,350 17,369 12,621 21,181 11,081 7,246 13,509 8,834 11,180 6,320 13,629 7,705

2007 28.3 34.6 0.6 0.7 10,523 17,664 12,832 21,540 11,255 7,361 13,720 8,973 11,354 6,419 13,840 7,825

2008 28.9 35.2 0.6 0.7 10,722 18,001 13,073 21,950 11,453 7,491 13,961 9,132 11,552 6,532 14,081 7,962

2009 29.4 35.9 0.6 0.7 10,871 18,255 13,254 22,257 11,602 7,590 14,142 9,251 11,701 6,617 14,262 8,065

2010 30.0 36.6 0.6 0.7 11,045 18,551 13,465 22,616 11,776 7,705 14,353 9,391 11,875 6,716 14,473 8,186

Totals 12.3 18.9 178,397 298,307 223,008 371,465 194,461 126,844 247,691 161,158 196,638 110,912 251,037 141,276

Averages 0.7 1.1 9,911 16,573 12,389 20,637 10,803 7,047 13,761 8,953 10,924 6,162 13,946 7,849

 Note: Production is assumed to be 85 percent of capacity.

 Sources: Production Capacity Projections from EIA International Energy Outlook, 1995 (IEO/95), Reserves and Costs from Petroconsultants Estim ator .
Table A2. Cumulative Persian Gulf Oil Production Capacity and Development Cost Forecast with Additional Development to Replace Production

Based on Low Case- Weighted Average Based on Mid-Case Weighted Average Based on High-Case Weighted Average

IEO/95 Production Capacity Projections Development Costs Development Costs Development Costs

Low High Low Capacity High Capacity Low Capacity High Capacity Low Capacity High Capacity

Low High Capacity Capacity Developed Annual Developed Annual Developed Annual Developed Annual Developed Annual Developed Annual

Capacity Capacity Change Change Reserves Dev Cost Reserves Dev Cost Reserves Dev Cost Reserves Dev Cost Reserves Dev Cost Reserves Dev Cost

Year MMbbl/d MMbbl/d MMbbl/d MMbbl/d MMbbl MM$ MMbbl MM$ MMbbl MM$ MMbbl MM$ MMbbl MM$ MMbbl MM$

1990 18.6 18.6

1991 16.2 16.2 -2.4 -2.4

1992 17.7 17.7 1.5 1.5

1993 18.6 19.2 0.9 1.5 8,690 14,394 10,525 17,293 9,915 6,428 12,451 8,035 10,081 5,655 12,712 7,102

1994 19.6 20.7 0.9 1.5 17,672 29,282 21,507 35,363 20,120 13,048 25,359 16,372 20,452 11,477 25,882 14,465

1995 20.5 22.1 0.9 1.5 26,944 44,664 32,946 54,212 30,617 19,860 38,725 25,011 31,115 17,464 39,509 22,090

1996 21.5 23.6 0.9 1.5 36,525 60,573 44,864 73,873 41,422 26,877 52,569 33,965 42,086 23,627 53,614 29,986

1997 22.4 25.1 0.9 1.5 46,379 76,944 57,219 94,278 52,501 34,073 66,850 43,208 53,331 29,946 68,156 38,132

1998 23.3 26.6 0.9 1.5 56,524 93,811 70,031 115,462 63,870 41,461 81,589 52,754 64,866 36,430 83,156 46,539

1999 24.3 28.0 0.9 1.5 66,959 111,172 83,302 137,423 75,530 49,042 96,786 62,601 76,691 43,081 98,614 55,207

2000 25.2 29.5 0.9 1.5 77,707 129,064 97,055 160,205 87,502 56,828 112,465 72,768 88,830 49,910 114,554 64,151

2001 25.6 30.2 0.4 0.7 86,890 144,514 108,732 179,758 97,207 63,186 125,109 81,023 98,606 55,445 127,329 71,362

2002 26.0 31.0 0.4 0.7 96,198 160,176 120,639 199,701 107,037 69,626 137,982 89,429 108,507 61,051 140,333 78,705

2003 26.4 31.7 0.4 0.7 105,629 176,049 132,776 220,035 116,991 76,148 151,085 97,988 118,531 66,728 153,567 86,178

2004 26.8 32.5 0.4 0.7 115,207 192,172 145,170 240,806 127,092 82,766 164,445 106,716 128,703 72,489 167,059 93,798

2005 27.2 33.2 0.4 0.7 124,887 208,467 157,765 261,921 137,294 89,452 178,008 115,577 138,975 78,307 180,752 101,533

2006 27.8 33.9 0.6 0.7 135,237 225,836 170,386 283,102 148,375 96,698 191,516 124,410 150,156 84,627 194,381 109,237

2007 28.3 34.6 0.6 0.7 145,760 243,500 183,218 304,642 159,629 104,058 205,236 133,383 161,509 91,046 208,221 117,062

2008 28.9 35.2 0.6 0.7 156,482 261,501 196,290 326,591 171,082 111,550 219,197 142,515 173,062 97,578 222,302 125,025

2009 29.4 35.9 0.6 0.7 167,353 279,757 209,544 348,849 182,685 119,140 233,338 151,767 184,763 104,195 236,564 133,090

2010 30.0 36.6 0.6 0.7 178,397 298,307 223,008 371,465 194,461 126,844 247,691 161,158 196,638 110,912 251,037 141,276

 Note: Production is assumed to be 85 percent of capacity.

 Sources: Production Capacity Projections from EIA International Energy Outlook, 1995 (IEO/95), Reserves and Costs from Petroconsultants Estim ator, Table A1.
Figure A1. Persian Gulf Projected Cumulative Development Cost with 

Additional Development to Replace Production Using High and Low 

Production Capacity Projections

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Year

Development Cost, MM$

Low Case Mid Case High Case

Note: Each case is bracketed by a pair of lines.

Source: Table A2.

Figure A2. Persian Gulf Projected Cumulative Reserves Development with 

Additional Development to Replace Production Using High and Low 

Production Capacity Projections

0

50,000

100,000

150,000

200,000

250,000

300,000

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Year

Developed Reserves, MMbbls

Low Case Mid Case High Case

Source: Table A2.

Note: Each case is bracketed by a pair of lines. Energy Information Administration

Oil Production Capacity Expansion Costs for the Persian Gulf 17
Appendix B

Development Costs for 

Persian Gulf Geologic Plays
Table B1. Estimated Development Costs for Zagros Tertiary Play in Iran

Field Low Mid High

Characteristics Case Case Case

Field Size, MMbbl 30 200 1,500

Peak Production, % of Field Size 9 7 7

Production Plateau, yr 3.8 5 5.8

Peak Field Production, bopd 8,100 38,750 290,080

Peak Field Production, MMbbls/yr 2.916 13.950 104.429

Production Decline Rate, % 13 10 8

Well Productivity, bopd 810 1,550 2,590

GOR, scf/bbl 100 500 1000

Reservoir Depth, ft 2,500 6,000 12,500

Oil Pipeline, km 10 25 150

Gas Pipeline, km (flared) (flared) (flared)

Producing Wells 10 25 112

Dry Holes 3 3 6

Total Development Cost, $MM 24.943 88.591 651.181

Peak Operating Expense, $MM/yr 3.134 11.722 85.336

Capital Invest per Well, $MM 1.92 3.16 5.52

Capital Invest per bbl of Annual

Production Capacity, $/bbl 8.55 6.35 6.24

Capital Invest per bbl of Daily

Production Capacity, $/bbl 3,079 2,286 2,245

Capital Invest per bbl of Reserves, $/bbl 0.83 0.44 0.43

Peak Production Year Operating Expense

per Well, $/mo 26,113 39,074 63,494

Peak Production Year Operating Expense

per bbl of Production, $/bbl 1.07 0.84 0.82

Peak Daily Production per

Developed Reserves, bopd/MMbbl 270 194 193

 Source: Petroconsultants Estimator .

Energy Information Administration

Oil Production Capacity Expansion Costs for the Persian Gulf 21
Table B2. Estimated Development Costs for Zagros Mesozoic Play in Iran

Field Low Mid High

Characteristics Case Case Case

Field Size, MMbbl 30 200 1,000

Peak Production, % of Field Size 9 7 7

Production Plateau, yr 3.8 5 5.8

Peak Field Production, bopd 7,470 39,520 192,510

Peak Field Production, MMbbls/yr 2.689 14.227 69.304

Production Decline Rate, % 13 10 8

Well Productivity, bopd 830 1,520 2,790

GOR, scf/bbl 100 500 1,000

Reservoir Depth, ft 2,500 6,000 12,500

Oil Pipeline, km 10 25 150

Gas Pipeline, km (flared) (flared) (flared)

Producing Wells 9 26 69

Dry Holes 3 3 4

Total Development Cost, $MM 24.464 95.862 551.002

Peak Operating Expense, $MM/yr 2.992 12.208 61.106

Capital Invest per Well, $MM 2.04 3.31 7.55

Capital Invest per bbl of Annual

Production Capacity, $/bbl 9.10 6.74 7.95

Capital Invest per bbl of Daily

Production Capacity, $/bbl 3,275 2,426 2,862

Capital Invest per bbl of Reserves, $/bbl 0.82 0.48 0.55

Peak Production Year Operating Expense

per Well, $/mo 27,706 39,127 73,799

Peak Production Year Operating Expense

per bbl of Production, $/bbl 1.11 0.86 0.88

Peak Daily Production per

Developed Reserves, bopd/MMbbl 249 198 193

 Source: Petroconsultants Estimator .

Energy Information Administration

22 Oil Production Capacity Expansion Costs for the Persian Gulf
Table B3. Estimated Development Costs for Zagros Tertiary Play in Iraq

Field Low Mid High

Characteristics Case Case Case

Field Size, MMbbl 5 50 300

Peak Production, % of Field Size 7 6 6

Production Plateau, yr 5 5.8 7

Peak Field Production, bopd 960 9,020 50,540

Peak Field Production, MMbbls/yr 0.346 3.247 18.194

Production Decline Rate, % 10 8 7

Well Productivity, bopd 480 820 1,330

GOR, scf/bbl 100 250 1,000

Reservoir Depth, ft 3,500 4,000 6,500

Oil Pipeline, km 10 50 100

Gas Pipeline, km (flared) (flared) (flared)

Producing Wells 2 11 38

Dry Holes 1 2 2

Total Development Cost, $MM 9.444 31.986 124.105

Peak Operating Expense, $MM/yr 0.838 3.716 17.022

Capital Invest per Well, $MM 3.15 2.46 3.10

Capital Invest per bbl of Annual

Production Capacity, $/bbl 27.29 9.85 6.82

Capital Invest per bbl of Daily

Production Capacity, $/bbl 9,838 3,546 2,456

Capital Invest per bbl of Reserves, $/bbl 1.89 0.64 0.41

Peak Production Year Operating Expense

per Well, $/mo 34,924 28,151 37,329

Peak Production Year Operating Expense

per bbl of Production, $/bbl 2.42 1.14 0.94

Peak Daily Production per

Developed Reserves, bopd/MMbbl 192 180 168

 Source: Petroconsultants Estimator .

Energy Information Administration

Oil Production Capacity Expansion Costs for the Persian Gulf 23
Table B4. Estimated Development Costs for Zagros Mesozoic Play in Iraq

Field Low Mid High

Characteristics Case Case Case

Field Size, MMbbl 5 50 300

Peak Production, % of Field Size 7 6 6

Production Plateau, yr 5 5.8 7

Peak Field Production, bopd 960 9,020 50,540

Peak Field Production, MMbbls/yr 0.346 3.247 18.194

Production Decline Rate, % 10 8 7

Well Productivity, bopd 480 820 1,330

GOR, scf/bbl 100 250 1,000

Reservoir Depth, ft 3,500 4,000 6,500

Oil Pipeline, km 10 50 100

Gas Pipeline, km (flared) (flared) (flared)

Producing Wells 2 11 38

Dry Holes 1 2 2

Total Development Cost, $MM 9.444 31.986 124.105

Peak Operating Expense, $MM/yr 0.838 3.716 17.022

Capital Invest per Well, $MM 3.15 2.46 3.10

Capital Invest per bbl of Annual

Production Capacity, $/bbl 27.29 9.85 6.82

Capital Invest per bbl of Daily

Production Capacity, $/bbl 9,838 3,546 2,456

Capital Invest per bbl of Reserves, $/bbl 1.89 0.64 0.41

Peak Production Year Operating Expense

per Well, $/mo 34,924 28,151 37,329

Peak Production Year Operating Expense

per bbl of Production, $/bbl 2.42 1.14 0.94

Peak Daily Production per

Developed Reserves, bopd/MMbbl 192 180 168

 Source: Petroconsultants Estimator .

Energy Information Administration

24 Oil Production Capacity Expansion Costs for the Persian Gulf
Table B5. Estimated Development Costs for Arabian Mesozoic Play in Iraq

Field Low Mid High

Characteristics Case Case Case

Field Size, MMbbl 20 150 1000

Peak Production, % of Field Size 8 7 7

Production Plateau, yr 4.3 5 7

Peak Field Production, bopd 4,650 29,580 193,380

Peak Field Production, MMbbls/yr 1.674 10.649 69.617

Production Decline Rate, % 12 10 7

Well Productivity, bopd 930 1,740 2,930

GOR, scf/bbl 100 500 2,500

Reservoir Depth, ft 6,500 10,000 11,000

Oil Pipeline, km 5 10 50

Gas Pipeline, km (flared) (flared) (flared)

Producing Wells 5 17 66

Dry Holes 2 2 4

Total Development Cost, $MM 19.011 83.027 394.771

Peak Operating Expense, $MM/yr 2.159 9.958 74.152

Capital Invest per Well, $MM 2.72 4.37 5.64

Capital Invest per bbl of Annual

Production Capacity, $/bbl 11.36 7.80 5.67

Capital Invest per bbl of Daily

Production Capacity, $/bbl 4,088 2,807 2,041

Capital Invest per bbl of Reserves, $/bbl 0.95 0.55 0.39

Peak Production Year Operating Expense

per Well, $/mo 35,980 48,814 93,626

Peak Production Year Operating Expense

per bbl of Production, $/bbl 1.29 0.94 1.07

Peak Daily Production per

Developed Reserves, bopd/MMbbl 233 197 193

 Source: Petroconsultants Estimator .

Energy Information Administration

Oil Production Capacity Expansion Costs for the Persian Gulf 25
Table B6. Estimated Development Costs for Arabian Mesozoic Play in Abu Dhabi

Field Low Mid High

Characteristics Case Case Case

Field Size, MMbbl 10 200 1000

Peak Production, % of Field Size 12 9 9

Production Plateau, yr 2.9 3.8 4.3

Peak Field Production, bopd 4,000 49,830 248,640

Peak Field Production, MMbbls/yr 1.440 17.939 89.510

Production Decline Rate, % 17 13 12

Well Productivity, bopd 1,000 1,510 2,240

GOR, scf/bbl 300 500 2,000

Reservoir Depth, ft 5,000 7,500 10,000

Oil Pipeline, km 10 25 75

Gas Pipeline, km (flared) (flared) (flared)

Producing Wells 4 33 111

Dry Holes 1 4 6

Total Development Cost, $MM 15.411 110.571 508.546

Peak Operating Expense, $MM/yr 1.902 14.395 84.970

Capital Invest per Well, $MM 3.08 2.99 4.35

Capital Invest per bbl of Annual

Production Capacity, $/bbl 10.70 6.16 5.68

Capital Invest per bbl of Daily

Production Capacity, $/bbl 3,853 2,219 2,045

Capital Invest per bbl of Reserves, $/bbl 1.54 0.55 0.51

Peak Production Year Operating Expense

per Well, $/mo 39,623 36,351 63,791

Peak Production Year Operating Expense

per bbl of Production, $/bbl 1.32 0.80 0.95

Peak Daily Production per

Developed Reserves, bopd/MMbbl 400 249 249

 Source: Petroconsultants Estimator .

Energy Information Administration

26 Oil Production Capacity Expansion Costs for the Persian Gulf
Table B7. Estimated Development Costs for Arabian Mesozoic Play Offshore Abu Dhabi

Field Low Mid High

Characteristics Case Case Case

Field Size, MMbbl 10 50 200

Peak Production, % of Field Size 18 13 13

Production Plateau, yr 1.9 2.6 3.5

Peak Field Production, bopd 5,700 18,960 72,540

Peak Field Production, MMbbls/yr 2.052 6.826 26.114

Production Decline Rate, % 25 19 15

Well Productivity, bopd 950 1,580 2,340

GOR, scf/bbl 300 500 2,000

Reservoir Depth, ft 5,000 7,500 10,000

Water Depth, ft 50 100 150

Oil Pipeline, km 10 25 50

Gas Pipeline, km (flared) (flared) (flared)

Producing Wells 8 12 31

Dry Holes 2 2 2

Total Development Cost, $MM 61.720 93.631 259.567

Peak Operating Expense, $MM/yr 5.425 12.083 45.620

Capital Cost per Well, $MM 6.17 6.69 7.87

Capital Cost per bbl of Annual

Production Capacity, $/bbl 30.08 13.72 9.94

Capital Cost per bbl of Daily

Production Capacity, $/bbl 10,828 4,938 3,578

Capital Cost per bbl of Reserves, $/bbl 6.17 1.87 1.30

Peak Production Year Operating Expense

per Well, $/mo 56,509 83,911 122,634

Peak Production Year Operating Expense

per bbl of Production, $/bbl 2.64 1.77 1.75

Peak Daily Production per

Developed Reserves, bopd/MMbbl 570 379 363

 Source: Petroconsultants Estimator .

Energy Information Administration

Oil Production Capacity Expansion Costs for the Persian Gulf 27
Table B8. Estimated Development Costs for Middle East Offshore Fields

Field Low Mid High

Characteristics Case Case Case

Field Size, MMbbl 25 75 500

Peak Production, % of Field Size 15 12 12

Production Plateau, yr 2.3 2.9 4.3

Peak Field Production, bopd 11,680 26,510 166,760

Peak Field Production, MMbbls/yr 4.205 9.544 60.034

Production Decline Rate, % 21 17 12

Well Productivity, bopd 1,460 2,410 3,790

GOR, scf/bbl 100 500 2,500

Reservoir Depth, ft 5,000 9,000 15,000

Water Depth, ft 50 150 150

Oil Pipeline, km 5 25 50

Gas Pipeline, km (flared) (flared) (flared)

Producing Wells 8 11 44

Dry Holes 2 2 3

Total Development Cost, $MM 65.103 108.115 694.332

Peak Operating Expense, $MM/yr 7.823 15.394 111.920

Capital Invest per Well, $MM 6.51 8.32 14.77

Capital Invest per bbl of Annual

Production Capacity, $/bbl 15.48 11.33 11.57

Capital Invest per bbl of Daily

Production Capacity, $/bbl 5,574 4,078 4,164

Capital Invest per bbl of Reserves, $/bbl 2.60 1.44 1.39

Peak Production Year Operating Expense

per Well, $/mo 81,494 116,622 211,970

Peak Production Year Operating Expense

per bbl of Production, $/bbl 1.86 1.61 1.86

Peak Daily Production per

Developed Reserves, bopd/MMbbl 467 353 334

 Source: Petroconsultants Estimator .

Energy Information Administration

28 Oil Production Capacity Expansion Costs for the Persian Gulf
Glossary
Energy Information Administration

Oil Production Capacity Expansion Costs for the Persian Gulf 31

Glossary

Bbbls Billion barrels.

bbl barrels

bbl/d barrels per day

bopd barrels of oil per day

developed reserves volume of recoverable oil with the necessary infrastructure in place

development cost includes the cost of wells, production facilities, pipelines, construction, management costs, and

other infrastructure costs necessary to prepare a field for production. Does not include exploration

costs (geophysical surveys, etc.)

field size ultimate recovery from a field (typically, cumulative production plus remaining reserves)

geologic play group of discovered and/or undiscovered fields with similar geologic, geographic, and temporal

characteristics

gross revenue oil price per barrel times oil production volume

MMbbl million barrels

operating cost cost to produce oil from a field (per well, per barrel, per year, etc.) not including development

and/or exploration costs

peak field production highest annual production volume in the life of a field

Persian Gulf countries Iran, Iraq, Kuwait, Saudi Arabia, Qatar, and the United Arab Emirates (U.A.E.)

production capacity maximum sustainable production rate

R/P ratio remaining reserves divided by the annual production rate

remaining reserves recoverable oil still in place in a field, country, region, etc.

undeveloped reserves volume of recoverable oil requiring development and/or installation of infrastructure for production

(such as wells, production facilities, and pipelines)

undiscovered resources estimated volume of oil contained in fields projected to be discovered in the future

well productivity maximum production rate from a single well