Geology Might Reshape Economic Landscape: Afghan Study Boosts
Resource View
Pat Blake
AAPG Explorer
06/30/2006
A March announcement that the U.S. Geological
Survey had identified undiscovered oil reserves 18 times the
amount originally thought in a certain location and three times
the amount of natural gas there likely caused many a Pavlovian
response.
Whetted appetites may have dried a bit with the
realization of the potentially lucrative site’s location:
northern Afghanistan.
While such a knee-jerk reaction may be inaccurate,
this battle of perception is central to the Afghan struggle
for reconstruction. The newly formed government is banking on
the work of USGS geologists as a pivotal leg in its strategy
to reshape its image, attract investors and thereby resuscitate
its economy.
Geology takes center stage in the northern reaches
of the Islamic Republic of Afghanistan where risk, reward and
the creation of a new marketplace all hang in the balance.
Getting Started
In the fall of 2001 -- after the United States entered Afghanistan
and the sting of 9/11 was still new -- the U.S. State Department
approached the USGS, asking for ideas to revitalize the Afghan
economy. The response would yield one of the most concentrated
efforts of USGS expertise.
“We proposed the oil and gas assessment
of the north -- knowing that there was potential there -- a
water project, a coal assessment and a hazards project, including
landslides and earthquakes,” recalls Craig Wandrey, USGS
project chief. “Because of the last 20-plus years of war,
the Afghans don’t have a lot of developed industry of
any kind. They have no real energy infrastructure. They have
a lot of mining operations that have been going on for hundreds
of years, but they are on a very small scale.
“The idea of doing this assessment was to
help the Afghans define their resource base,” he said,
“and determine what they had that we could help them develop
into industries.”
Teaming with Afghan’s Ministry of Mines
and Industry, the crew recruited Afghanis who were adept in
oil and gas assessment, including geologists, geophysicists,
geochemists and petroleum engineers. Although skilled with a
solid foundation in the geosciences, the mostly Russian-schooled
scientists had suffered a long break in training during more
than two decades of war.
The assessment process itself would go a long
way in advancing the Afghan knowledge of contemporary geological
practices.
First Findings
This new look at undiscovered oil reserves began with a base
of seismic data and detailed geologic information gathered by
the Afghanis during Russian occupation. The Afghan-USGS team
took the exploration two steps further by surveying the sub-basin
of the Amu Darya Basin and the Afghan-Tajik Basin, areas that
had never before been assessed.
Samples of oil and core from northern neighbor
Tajikistan broaden the geological scope.
The geologic elements amassed, according to the
USGS assessment report, include “source-rock presence,
maturation, petroleum generation and migration; distribution
and quality of reservoir rocks; and character of traps and time
of formation with respect to petroleum migration.”
A greatly improved ability to analyze source rock
gave the team a more accurate picture of the petroleum system
than what was imagined a generation ago.
“Though the Russians and Afghans recognized
source rocks, there was very little work done with the source
rocks in the ‘70s and ‘80s in that part of the world,”
Wandrey explained. “We collected a lot of oil and gas
samples and source rock samples and were able to analyze them
here at our labs using the latest techniques. That gave us a
better handle on what the rocks were, particularly in the Afghan-Tajik
Basin.”
Using data collected over a two-year period, the
assessment team identified four petroleum systems:
Accumulations of undiscovered natural gas were
pinpointed in Upper Jurassic carbonate and reef reservoirs.
Potential crude oil in Cretaceous to Paleogene carbonate reservoir
rocks was estimated in the Afghan-Tajik Basin.
Undiscovered petroleum in the region was estimated at 1.6 billion
barrels; approximately 15.6 trillion cubic feet of natural gas;
and 562 million barrels of natural gas liquids.
These levels may pale in comparison to Saudi Arabia’s
quarter of a trillion barrels of oil reserves and the Russian
swells of proven natural gas. But for Afghanistan, which trucks
in diesel from Pakistan to fuel generators that deliver part-time
electricity to only 6 percent of the population, the find is
nothing short of a boon.
To Secure an Economy
A large donor community is aiding the Afghan government in taking
giant steps forward in reconstruction.
In the petroleum sector, the Asian Development
Bank is rehabilitating a few existing wells with the intent
of drilling and increasing the current production levels. The
potential identified by the Afghan/USGS team may come online
within two to five years for oil and twice as long for the natural
gas.
“The oil play is relatively shallow and
undeveloped in Afghanistan, (and) slightly developed in Tajikistan,”
Wandrey said. “It is economically easier to develop that
shallow oil resource because it requires less of an infrastructure.
It still requires seismic and drilling to prove out the plays,
but it is something that can develop in the nearer term, perhaps
than gas.
“For deeper resources and the gas, it might
extend out to 10 years,” he added. “They need new
pipelines. They need a new gas plant. Presently the gas primarily
supplies a 28-megawatt power plant near Mazar-i-Sharif, and
a fertilizer plant. There domestic supply is somewhat limited.
But there is certainly an opportunity to provide power for other
industry in much larger power plants.”
Although the brunt of fighting is confined to
the southern part of the country, security remains a prime concern
in the north as well. The country is still in the process of
removing landmines at the same time it is striving to better
its police force and its army.
“Many questions still arise regarding potential
setbacks in the political development of Afghanistan, and business
risk assessments still have to include major security issues,”
according to the Afghanistan Investment Support Agency Web site.
“However, little doubt remains today that
regional integration can be fully developed over the next 10
to 15 years,” it continues. “In fact, the dramatically
rising international demand for natural resources and its expected
benefits for the region’s economies are its main drivers.”
The need for improved security and lack of infrastructure
has not held back the economy, which is growing by more than
100 percent per year.
“The first year I went there, the streets
were pretty deserted,” recalled Wandrey, who has made
the trip to Afghanistan five times since 2002. “Our Afghan
friends talked about how important security was for the people
who had basically gone back to their villages.
“The security that was provided by the United
States and other international security forces went a tremendous
distance toward reinvigorating the economy,” he said.
“Now when we go to Mazar, the streets are packed. There
are shops everyplace. Business is booming for them and things
are certainly improving.”
The transformation in the people of Afghanistan
is a reminder that this is not only a project of economy but
one for humanity as well.
“You see signs of change everywhere. Children
are laughing and playing on the streets; men are playing sports.
None of this was allowed under the Taliban,” Suleman Fatimie,
vice-president of the Afghanistan Investment Support Agency,
recently reported to fDi Magazine. “The fact that we have
this working, functioning office, the fact that we’re
talking about economic development rather than war -- that is
enormous progress.”
Putting It Together
The economic promise for an Afghan future lies in hydrocarbon
development, exports and investment from the foreign and private
sectors, according to a development plan unveiled in London
last year.
The environment for hydrocarbon exploration was
greatly enhanced in December when a “hydrocarbons law”
was approved by the Afghan cabinet. The World Bank helped draft
the regulation that gives the Afghan government full ownership
of oil and gas wells, but allows foreign investment in exploration
through shared-production agreements. A similar “Minerals
Law” was approved in July 2005.
The World Bank furthered the Afghan cause by commissioning
a study by Gustavson & Associates to update the reserve
estimates in the country’s major discovered fields in
the north.
“There is a lot of potential in the deeper
Jurassic reservoirs. These are carbonate reservoirs, and some
of them are quite significant,” says Ed Moritz, executive
vice president of Gustavson & Associates.
“The biggest hurdle is trying to find a
market for the gas primarily,” he said. “We’re
talking about a fairly impoverished country, and you’re
going to have to have significant investments to bring this
gas onstream.
“The key question is, ‘What are you
going to do with the gas in terms of use? Are you going to generate
it for electricity, are you just going to use it for local energy
consumption or for certain industrial purposes?’
“If you can come up with some good solutions
for the use of the gas,” he said, “then I think
everything else will fall into place.”
Putting all the pieces in place is the mission
of the Afghanistan Investment Support Agency and its “one
stop shop for investors.” The process to register a business
to operate in Afghanistan is streamlined and straightforward
via the online agency (www.aisa.org.af).
“We are inviting the private sector to join
the government to explore and extract resources, both for domestic
use as well as for international sale,” says Ashraf Haidari,
first secretary for the Afghanistan Embassy in Washington, D.C.
“We have a mineral’s law, an improved legal environment
and a one-stop shop for investors. The environment is right
and the government is very receptive.
“Without the private sector, we would
be unable to exploit those resources. We neither have the human
resources nor the technical capacity. All we know is that we
have those resources and we need the private sector -- especially
the energy sector -- to come and help us exploit it.”
