Power for

the future
Modern oil exploration in Iran started in
1901, with the first commercial oil discovery
coming at Masjid-I-Sulaiman seven years
later. Today, Iran is one of the world's
leading hydrocarbon nations, producing
more than 3,600,000 B/D in 1997 and
exporting just over 70% of that total.
Two-thirds of Iran around one million
square kilometers is covered by
sedimentary strata that could contain oil
and gas. Independent studies indicate that
there are 2030 billion barrels of oil still to
be found in the country. Unlocking the
potential of these reserves will ensure that
Iran maintains its position as a major oil and
gas producer.

he Islamic Republic of Iran holds

around 93 billion barrels of proven
oil reserves, roughly 9% of the worlds
total. In Iran, oil has been collected from
seeps for thousands of years. Iran was
one of the first countries in the world to
produce oil. Today, oil has become the
main and vital source of the countrys
energy and wealth through export.
The vast majority of Irans crude oil is
located in a number of giant, onshore
fields in the Khuzestan region close to
the border with Iraq. More than half of
the countrys 40 producing fields
contain over one billion barrels of oil.
The onshore Ahwaz, Marun, Gachsaran,
Agha Jari, and Bibi Hakimeh fields alone
account for about two-thirds of Irans oil
production. Most of Irans crude oil is
medium gravity and low in sulfur.
Iran is OPECs second-largest oil
producer, with an average 1998 crude oil
output of 3.6 MMB/D. The countrys
current sustainable production capacity
may be as high as 4 MMB/D.
In December 1997, Irans Oil Minister
Zanganeh stated that the country aimed
to boost oil production capacity by
200,000 to 250,000 B/D each year,
possibly surpassing 6 MMB/D by 2010.
Irans production is limited by OPEC
policy. In June 1998, Iran agreed to
reduce its production by 305,000 B/D. As
of April 1999, Irans production quota
was set at 3.359 MMB/D.

The geology of Iran

36 Middle East Reservoir Review

The early days

History and politics explain why the first
Middle East oil was discovered in Iran.
At the beginning of the twentieth
century, Iran was the only sovereign
nation of the Middle East not under the
domination of the Turkish empire. The
country had been the subject of
geological reports that suggested the
possibility of oil entrapment. British
(1855) and French geologists (1892)
independently provided reports that
encouraged William DArcy, a successful
gold speculator, into the oil business.
This decision resulted in the first
commercial Middle East oil production.
Perhaps the presence of oil seeps was
the deciding factor for DArcy, who had
made his fortune by buying and
developing a gold mine that its owners
believed they had exhausted.
In fact, oil seeps played a role in many
of the important oil discoveries of the
Middle East and elsewhere in the world.
In those early years of oil exploration,
seeps were some of the most important
criteria for drilling and initial
investment. Seeps were the essential
clues to oil at depth.
However, the Middle East oil seeps
have a long historical record, being

mentioned by Herodotus in his History,

by Strabo in his Geography and in other
ancient texts.
Oil seeps were important clues, but
drilling operations in Iran were not
without risk and the terrain was
considered too remote by most. The
leaders of European oil exploration and
production, the Rothschild financial
empire and Henri Deterding of Royal
Dutch declined offers to join the earliest
Iranian drilling venture. As a result,
DArcy financed the operation from his
own pocket.
Following the writings of the French
geologist and archaeologist, Jacques de
Morgan, the exploration efforts began in
1903 with the drilling of wells on the Chia
Sarkh anticline close to the IranIraq
border north of Baghdad. It is a very
large, simple, surface anticline with
copious seeps along its crest.
Unfortunately, one of two wells drilled on
this structure came up dry while the
other was a noncommercial producer.
However, abundant shows of oil helped to
maintain interest in this prospect.
With funds running out, DArcy gained
support from the Burmah Oil Company,
whose exploration program was
encouraged by the British Naval Fuel
Committee needing fuel for the British
fleet that was beginning to convert from
coal to oil.
The next drill site selected was at
Maidan-i-Naftan, the Plain of Oil and a
specific site, Masjid-i-Sulaiman, that took
its name from the nearby fire temple.
However, the site was very remote and
drilling would require construction of a
road. This led to two more dry holes
being drilled in more accessible Mamtain
(in the Khuzestan area) in 1906.
DArcys driller, George Bernard
Reynolds (Figure 5.1), chose the first site
on the Masjid-i-Sulaiman anticline. This
was spudded on January 22, 1908. Later, a
geologist with Burmah Oil chose a second
site after explaining the errors in the
drillers choice. A little more than a week
before making an oil discovery, Burmah Oil
sent instructions to Reynolds to shut down
operations. However, Reynolds ignored
these instructions and his determination
won the day when the Masjid-i-Sulaiman
No 1 well came in, gushing oil 50 ft into
the air on May 26, 1908, from a depth of
1180 ft. The first commercial oil producer
in the Middle East, the Masjid-i-Sulaiman
field (Figures 5.2 and 5.3).

Figure 5.1: Driller George Bernard Reynolds, master of the oil springs,
(far left) lunching in Iran. Reynolds ignored instructions to stop drilling and
found oil at Masjid-i-Sulaiman

Figure 5.2: The discovery well at Masjid-i-Sulaiman on the day commercial

quantities of oil were found May 26, 1908. This discovery was the first
step in a process that would transform the Middle East

History

History

The geological history of Irans

sedimentary basins is a complex story.
Two mountain ranges, the Alborz range
in the north and the Zagros range in the
south, divide Iran into three geologically
different regions. Compression along the
northern edge of the Arabian tectonic
plate, caused by its collision with Iran,
created one of the richest fold belts in
the world.
The belt that runs from Turkey,
parallelling the IranIraq border all the
way to the Straits of Hormuz, contains
some of the worlds largest anticlinal oil
reservoirs. For example, the Ahwaz
reservoir is around 70 km long. These
huge, structural fields have given long
periods of dependable oil and gas
production. The Asmari, the Middle Easts
first oil-producing horizon, was drilled in
1908 and remains, more than 90 years
later, the principal oil producer for Iran.

The fracture systems in many of

Irans major reservoirs are complex and
still being defined. Geological and
engineering studies of the Asmari
provided the oil industry with
important knowledge and experience of
fractured carbonates that spread
around the world. Detailed examination
of these structural features has helped
to reveal the fine-scale variations
within each field, and so enhance oil
and gas production.
The primary hydrocarbon provinces
in Iran are distributed over a very large
area south and west of the Zagros
mountains. This tough working
environment has, over the past 60
years, required a sophisticated and
efficient logistics operation supporting
a professionally organized
infrastructure of oilfield services.
Logistics, transportation and the
inaccessibility of some fields make Iran
a challenging working environment
where oilfield engineers have to make
full and effective use of their problemsolving experience.

Middle East Reservoir Review 37

Figure 5.3: Masjid-iSulaiman, where a

1908 gusher
heralded the dawn of
the Middle Easts oil
and gas industry. The
steam boiler in the
background was
used to drive the
original drilling gear

The investment required to make one

of the worlds biggest oil fields a
commercial operation, was huge and
resulted in the incorporation of the
Anglo-Persian Oil Company in 1909.
Four years later a pipeline from Masjidi-Sulaiman field to the coast at Abadan
was completed. This allowed the first oil
to be exported. Almost one year later a
refinery was completed at Abadan.
DArcy (and the Anglo-Persian Oil
Company) had to wait until 1914 for
their first profits 14 years after
exploration began in Iran. He did
receive considerable support from the
British Empire, including a detachment
of Bengal Lancers that went to Masjid-iSulaiman to protect the growing oil
operations considered critical to the
naval oil conversion championed by
Winston Churchill, the First Lord of the
British Admiralty.
A new deal or arrangement was made
with a 25-year supply contract and the
British Government holding a controlling
interest of 51%. The subsidiary DArcy
Explo Company became British
Petroleum. Early success in Iran
prompted further exploration work.

These early exploration drilling

programs had mixed success but when
oil was found the results could be
spectacular (Figure 5.4).

Carbonates come of age

In the early days at Masjid-i-Sulaiman,
most people believed that the oil was
being produced from the Gachsaran
formation rather than the underlying
Asmari formation because most of the
producing wells were shallow. However,
geological studies of cable tool cuttings
and correlation with Asmari outcrops,
about 60 km from the field, proved that
the Asmari carbonate was the prolific
producing formation.
The realization that oil was being
produced from a carbonate formation had
a major impact on exploration around the
world. Until this discovery, the worlds
geologists had focused their search for
hydrocarbons in sandstone units.
Excellent outcrop studies of fractures
were undertaken, but the realization that
the surface fracture systems were
sometimes misleading would not clear
until the introduction of borehole

electrical imagery in the 1980s. However,

the early engineering studies of fracturing
were conducted using state-of-the-art
methods and their results influenced the
worldwide petroleum industry.

Geophysical pioneers
Some of the earliest geophysical surveys
for petroleum exploration were
performed in Iran (Figure 5.5). Torsionbalance gravity measurements,
experimental magnetic surveys and
electromagnetic surveys were all
conducted in the 1920s.
The new technique of seismic
refraction was imported, but the
greatest successes were achieved
through local modifications and
improvements that finally allowed the
true, subsurface, anticlinal structures to
be accurately mapped even when the
surface structure was misleading.
In the early 1930s, a joint
geologicalengineering study
demonstrated that the Asmari in the
Masjid-i-Sulaiman field was a single
hydraulic unit with good communication
through fractures. This field proved to

Oil nationalization
The National Iranian Oil Company
(NIOC) was established in 1951, and by
1954 an exclusive oil exploration
concession had been granted to a
consortium of American and European
oil companies.
In 1955, the Exploration Division was
formed by NIOC. This department had
responsibility for exploration and
exploitation of oil and gas throughout
the country, with the exception of
southwest Iran which lay in the
consortiums concession area.
The consortium was abolished in 1973,
and replaced by the Oil Service
Company of Iran (OSCI) that, under
NIOC guidance and supervision,
conducted exploration and production
activities in southwest Iran.
Following the Islamic Revolution of
1978, exploration and production
activities were regrouped under two
directorates (NIOC North and NIOC South
Fields) and a single affiliate company (the
Iran Offshore Oil Company).
In the mid-1970s, Irans oil exports
(around 5 MMB/D) accounted for around
15% of the world total. By 1981,

Figure 5.4: Early drilling operations in Iran were often dramatic. At Alborez
the flare from this well caused huge mud and lava flows

History

History

38 Middle East Reservoir Review

be the birthplace of modern oilfield

development. New engineering
principles were implemented here,
notably the use of wider well spacings.
Until this time, most oil fields had
been developed with wells spaced just a
few meters apart. In 1928 Hugo Kamb, a
world authority on the petroleum
industry at that time, said that the
Masjid-i-Sulaiman field is probably the
most efficiently developed oil pool in the
world (Figure 5.6).
Careful assessment of early pressure
measurements and their variation with
depth was a pioneering approach to
understanding of the fields behavior and
characteristics. Many modern oilfield
methods have been tested and refined in
Iran and other parts of the Middle East.

Middle East Reservoir Review 39

production had dropped back to

0.7 MMB/D just 2.8% of the world total.
Since 1981, however, there has been a
gradual but sustained improvement in
production figures, which now stand at
more than 3.5 MMB/D.
Oil is a vital element in the modern
Iranian economy, accounting for around
95% of foreign currency earnings.
The 1990s saw a move towards
international cooperation between the
national oil companies, and international
oil and service companies. Of all the oilproducing countries in the Middle East,
the Iranian oil and gas development
policy has been one of the most radical
and forward looking.

affairs. According to press reports, the

plan called for fundamental changes in
management. Since January 1999, the
oil ministry has been filing monthly
reports on the amounts of crude oil,
refined products and gas exports. These
will help to track Irans actual revenues
from these sales.
The NIOC has recently focused on
frontier exploration efforts in the hopes
of adding 12 billion barrels to proven
reserves by the end of 1999. The
companys current plans calls for drilling
a large number of on- and offshore
exploration wells.
Since 1995, NIOC has made several
significant discoveries, including the
Darkhoven field, which is located
offshore Abadan and contains 2.5 billion
barrels of low-sulfur, 39 API crude oil.
NIOC planned to start production from
Darkhoven in 1999, with an initial
production of 30,000 B/D and a second
phase peak of 60,000 B/D. This is a
challenging field with target reservoir
depths greater than 15,000 ft. Near
Ganaveh, NIOC also found two onshore
oil fields holding combined reserves of
100 million barrels.

The buy-back system

The buy-back process began in 1995,
with calls for international investment in
offshore fields. That initiative attracted
just two offers and only one the South
Pars gas field development with Total
was implemented.
In March 1998, the NIOC revealed
plans to extend the scope of projects
available to international companies
through buy-back schemes to incorporate
some of its onshore oil reserves. In July
1998, Iran invited investment bids for
about 40 upstream projects and a single
downstream operation (upgrading the
refinery at Abadan). Around 100 offers
were received.
With the worlds fourth largest oil
reserves (at least 93 billion barrels) and
second largest gas reserves (more than
21 trillion cubic meters) Iran is in a very
strong position. The investment and new
technology that will help NIOC to develop
these vast reserves more efficiently are
now becoming available under the buyback scheme. Gas projects will take
priority, with gas production projected to
reach 300 Bcf/yr over the next five years.
This increased production will be used to
enhance oil recovery in declining onshore
fields, for local industrial consumption,
and for export.
In December 1998, President Khatami
called for the modernization of Irans oil
industry and the discovery of new fields.
In January 1999, Khatami approved a
plan to restructure the industry,
including decentralization and the
separation of policy from executive

Figure 5.6: Masjid-i-Sulaiman, the birthplace of modern,

oilfield-development methods. This field was described in 1928
as the most efficiently developed oil pool in the world

Characterizing Irans
reservoirs
NIOC earth scientists, working in
partnership with GeoQuest have built
up extensive experience in analyzing
the reservoir properties and
characteristics of Iranian oil fields such

Trillion cubic meters

13.9
(10.0%)
24.6
(17.6%)
45.2
(32.4%)

56.0
(40.0%)

Oilfield service in Iran

The first Schlumberger operation in the
Islamic Republic of Iran took place in
1936 with the drilling of well Laleh-1 in
the Masjid-i-Sulaiman area. The
resistivity log shown in Figure 5.7 is the
oldest surviving log from Iran and was
recorded by Marcel and Conrad
Schlumberger in 1938.
World War II halted all logging
operations in Iran. Schlumberger logging
operations resumed in the 1940s and
have continued, without interruption, to
the present day.
In Iran, technology transfer has taken
place through best-practice training and
the deployment of technologically
advanced equipment and techniques.
Many of the innovative and industryleading products and services familiar
to engineers operating in the Gulf of
Mexico or the North Sea, are being
used to locate and bring Iranian oil
fields into production quickly, safely
and cost-effectively.
Oilfield service companies are being
encouraged to forge close partnerships
with the NIOC. These partnerships cover
the installation and operation of data

as Ahwaz, Dorood, Marun and Soroush.

Geologists, petrophysicists,
geophysicists, reservoir engineers and
technical support personnel work
together in integrated asset teams to
deal with a range of major challenges.
A detailed reservoir characterization
of Marun field evaluated fluid contacts,
reservoir fluids, reservoir geology and
petrophysical logs. The project also
examined faulting, fracturing and other
structural features. Detailed geological
and reservoir models for Ahwaz field
helped to improve the accuracy of
predictions about this field.
A full-field simulation of Dorood field,

OECD
Former Soviet
Union
Other

Middle East
Iran (21%)
Iraq (3.1%)
Kuwait (1.5%)
Saudi Arabia (5.3%)
UAE (5.8%)

Figure 5.8: With the worlds second largest

natural gas reserves, Iran is well positioned
to supply the worlds changing energy needs
in the next millennium

Figure 5.7: This resistivity log from exploration

well Laleh-1 was recorded in the 1930s by
Marcel and Conrad Schlumberger and is the
countrys oldest surviving well log

History

History

40 Middle East Reservoir Review

Figure 5.5: Geophysical operations in Iran began early with seismic

refraction techniques being imported in 1920. Working conditions
for the early field crews were extremely tough

processing and interpretation centers for

petrophysical, geological, geophysical
and reservoir applications. Cooperation
has helped to ensure the success of
extensive field studies on giant reservoirs
such as the Ahwaz and Marun fields.

Middle East Reservoir Review 41

The low permeability of some Iranian

reservoirs has made them prime
candidates for stimulation and
fracturing. Integrated teams of specialist
geoscientists and engineers drawn from
service companies work closely with
NIOC technical staff to identify target
wells for production enhancement. This
synergy is also used to design, plan and
steer wells and access undrained
reservoir zones.

Counting on experience
Access to the right support
infrastructure means that the Iranian oil
industry can expect the highest levels of
oilfield performance from service
companies. Recent projects carried out
for NIOC include the drilling of
horizontal wells and assistance with
major geophysical surveys.
Horizontal wells are crucial for the
effective development of many Iranian
oil and gas reservoirs. The pace of
reservoir development in modern Iran
means that Schlumberger has been
asked to support the drilling of
horizontal wells on up to four rigs
simultaneously, and provide state-of-theart well plans, surveys and anti-collision
calculations to ensure their success.
Offshore geophysical surveys are
helping to identify new oil and gas
accumulations and to delineate existing
fields. Geco-Prakla currently provides
training in survey acquisition and
processing techniques for the crew of the
NIOC Pejwak (formerly the Geco Echo).

Gas - a natural development

100
90
80
70
60
50
1980

1985

1990

1995

2000

4000
3500
3000
2500
2000
1500
1000
500
0
1985

1990

1995

1998

Tehran
Gas field

Alborz

Oil field

Sarajeh

Technology in action
New techniques for the development
and management of oil and gas fields
are helping Iranian geoscientists and
engineers to optimize their resource
management strategies. Improved
understanding of reservoir architecture,
petrophysical characteristics and flow
paths allows reservoir managers to
achieve an optimum balance between
production rates and total recovery
rates. The pioneering geophysicists of
the 1920s laid the foundations for
recent developments such as advanced
borehole geophysics and 3D and 4D
seismic surveys.
Modern oilfield technology has
helped Iran to open its oil and gas
fields and establish huge reserves
(Figure 5.9). The challenges
encountered in those fields and the
problems solved by Iranian engineers
have, in turn, helped to shape oilfield
methods and to rewrite the rules of
exploration and development.

Gas pipeline
Oil pipeline
International border
Chia
Surkh
Naft Emmam Hassan
Sarkan
Khaneh
Veyzenhar

Tang Bijar

Kabir Kuh

Halush

Dehluran
Abu Ghuraib

Maleh Kuh
Kabud Qaleh Nar
Lab-E-Safid
Lali
Danan
Chashmeh
Zeldi
Khush
Paydar Ramin
Mushtag
Ahwaz

Par-I-Siah
Masjed Soleyman
Naft-Safid
Haft Kol
Paris

Shurom

Gachsaran

Ab Tevmur
Darquain

Sarvestan
Nowruz

Nargesi
Dorouti
Esfandiar
BB
Foroozan
Marjan

Kuh-I-Mand

FA

Nar

Pars

The

Namaki

Bandubast

Dalan

Sorosh

Iran

Aghar

Bushgan

Abuzar

Kangan
Assaluyeh

Gavarzin
Varavi
Salakh
Lamard

Henjam

W Bukha

Gul

f
BH

Bukha
Saleh

Baih

The oil and gas fields of Iran

History

History

42 Middle East Reservoir Review

Iran contains an estimated 812 Tcf of

natural gas the worlds second largest
reserves after Russia (Figure 5.8). The
bulk of these Iranian gas reserves are
located in nonassociated fields.
However, large onshore oil fields contain
approximately 120 Tcf of associated gas,
dissolved in crude oil or in gas caps.
Irans largest nonassociated gas
accumulation is the South Pars field
an extension of Qatars 241-Tcf North

Figure 5.9: Irans

daily oil production
and reserves
estimates. Modern
technology has
helped to shape
Irans oilfield
development
program and ensured
a steady increase in
oil production

Reserves (billion bbl)

Production enhancement

field. South Pars was first identified in

1988 and originally appraised at
128 Tcf in the early 1990s. However,
NIOC-sponsored studies conducted in
mid-1996 indicate that South Pars
contains an estimated 240 Tcf, of
which a large fraction will be
recoverable, and at least 3 billion
barrels of condensate.
Irans other major nonassociated gas
reserves include the offshore 47-Tcf
North Pars gas field (a separate
structure from South Pars), the onshore
Nar-Kangan fields, the 13-Tcf Aghar and
Dalan fields in Fars province, and the
Sarkhoun and Mand fields.
In 1996, Iran produced about 2.6 Tcf
of natural gas. Of this, 1.3 Tcf was
marketed, 1 Tcf reinjected, and 0.3 Tcf
flared. In 1990, Iran began a gas
utilization program designed to boost
production to 10 Tcf per year by 2010,
reduce flaring, provide gas for EOR
reinjection programs, and allow for
increased gas exports abroad.

Production (1000 bbl per day)

based on extensive history matching

and detailed geological zonation studies,
helped engineers to understand fluid
movements through the reservoir.

Middle East Reservoir Review 43