Iran’s natural gas output to increase significantly in coming years

Oil&Gas Materials 23 July 2014 17:45 (UTC +04:00)

Tehran, Iran, Jul. 23

By Milad Fashtami - Trend:

The U.S. Energy Information Administration (EIA) in its annual report about Iran's energy sector released on July 22 predicted that Iran's natural gas production will be increased in the coming years.

FGE projects that Iran's gross natural gas production will increase to 10.6 trillion cubic feet in 2020, but that growth will depend on the pace of development of the South Pars field.

Although repeated delays in field development and the sanctions have had negative impact on the country's gas sector, Iran's natural gas output has been on the rise in the past few years.

Iran's gross natural gas production totaled almost 8.2 trillion cubic feet in 2012, increasing 3% from the previous year. Of the 8.2 trillion cubic feet produced, most of it was marketed (6.54 trillion cubic feet), and the remainder was reinjected into oil wells to enhance oil recovery (1 trillion cubic feet) and vented and flared (0.62 trillion cubic feet).

Reinjecting natural gas plays a critical role in oil recovery at Iran's fields. As a result, natural gas reinjection is expected to increase in the coming years.

Some estimates indicate that NIOC will require 7 to 8 billion cubic feet per day of natural gas for reinjection into its oil fields in the next decade, according to FGE.

Iran also flares (burns off) a substantial portion of its gross production. According to Cedigaz, Iran flared the second-largest amount of natural gas in the world in 2012, after Russia. Gas is flared because of the lack of infrastructure to capture and transport gas associated with oil production.

In 2012, almost 40% of Iran's gross natural gas production came from the South Pars field.

Dry natural gas production is a subset of marketed production. Marketed production includes dry natural gas, liquid hydrocarbons, and natural gas used in field and processing plant operations. In 2012, 69% of the gross natural gas production was marketed as dry gas. Iran's dry natural gas production has rapidly increased to more than 5.6 trillion cubic feet in 2012, almost double the amount produced 10 years ago.

Iran is the world's third-largest dry natural gas producer, after the United States and Russia, and accounted for nearly 5% of the world's dry natural gas production in 2012. The vast majority of Iran's production is consumed domestically. Domestic consumption has increased alongside production and totaled 5.5 trillion cubic feet in 2012.

Iran is the second-largest proved natural gas reserve holder in the world.

According to Oil & Gas Journal, as of January 2014, Iran's estimated proved natural gas reserves were 1,193 trillion cubic feet, second only to Russia.

Iran holds 17% of the world's proved natural gas reserves and more than one-third of OPEC's reserves. Iran has a high success rate of natural gas exploration, in terms of wildcat drilling, which is estimated at 79% compared to the world average success rate of 30% to 35%, according to FGE.

Iran's largest gas field is South Pars, a non-associated gas field located offshore in the middle of the Persian Gulf. South Pars is a portion of a larger gas structure that straddles the territorial water borders of Iran and Qatar. It is called the North field in Qatar. South Pars reserves account for roughly 40% of Iran's total gas reserves, and the field is also estimated to hold 17 million barrels of condensate in place. Other major gas fields in Iran include: Kish, North Pars, Tabnak, Forouz, and Kangan.

Although finding new natural gas reserves is not a high priority because much of Iran's current reserves are undeveloped, there have been significant gas discoveries in recent years.

In 2011, four sizeable new discoveries were announced: Khayyam (onshore), Forouz B (offshore in Persian Gulf), Madar (offshore in the Persian Gulf), and Sardare Jangal fields (offshore in Caspian Sea).