9/26/2005

Oil and Water

Clean water, crucial for Iraq's Oil industry, is hard to come by -- law

Only weeks after the U.S.-led invasion in March 2003, the U.S. hired KBR under a no-bid contract to repair the Qarmat Ali water treatment plant, a complex of twisting pipes and rusting metal that sits in the middle of drab, flat desert a few miles north of Basra in southern Iraq.

Both the United States and Iraq considered the water treatment plant a high priority. Oil rises from the ground in southern Iraq because of natural pressure in the sands. As the oil surges out, the pressure declines, making extraction more difficult.

To counter the problem, the Iraqis inject water into the earth to maintain the pressure in the oil field. That water, however, must be first cleaned at Qarmat Ali so that particles or bacteria don't plug up the holes in the soil that allow the oil to rise.

By August 2004, KBR had completed most repairs at the plant, which had badly deteriorated during 12 years of sanctions and because of the looting that followed the U.S.-led invasion. KBR rebuilt motors, refurbished pumps and installed electrical generators and chlorination and anti-corrosion systems.

But when KBR opened the taps to send the treated water to Iraq's legendary Rumaila oil field, the deteriorated pipes were unable to handle the increased pressure. The pipeline burst repeatedly, delaying work for weeks on end, KBR and U.S. Army Corps of Engineers officials said. In the five months ending December 2004, KBR managed to send water through the pipes for only 29 days. Even today, the plant delivers only about a third of its capacity.

To make matters worse, farmers tapped into the pipeline, using it to irrigate their fields. KBR found one local who was watering his entire tomato crop courtesy of the Qarmat Ali pipeline.

Despite the problems, the U.S. never assigned KBR the task of repairing the aging lines. Todor, the U.S. oil advisor, said that by the time the problem became apparent, most of the money available in the south had already been committed to other projects.

The Iraqis, meanwhile, have not invested in repairs, using most of their oil revenue for fuel subsidies and salaries.

"The Iraqis have not had the money to do the work," Todor said.

On a recent tour of the sprawling, decades-old complex, its decrepit state was obvious. The walls were cracked; motors, valves and pipes were rusted. Dirt and mud covered the floors.

Only two of the five pumps that KBR fixed were operating. An Iraqi engineer said a machine to add cleaning chemicals to the water was unusable. Another system to protect the interior of the pipelines from rust was not being used for fear that the anti-corrosion additive would damage the oil fields.

Neither the U.S. nor KBR have provided additional maintenance or operating funds to the plant since turning it over to the Iraqis. For their part, the Iraqis said KBR had installed substandard equipment and had not provided sufficient training.

"It's useless. We have material from KBR, but we don't have documents on how to use it," said the Iraqi engineer, who requested anonymity because of security concerns.

KBR said it had done all that was asked of it.

"KBR is not responsible to support with the ongoing maintenance and repair of these facilities unless tasked to do so" by the U.S. government, said Stephanie Price, another KBR spokeswoman, in response to questions sent by e-mail. "To date, most of the follow-on problems at [Qarmat Ali] have stemmed from the overall age of the equipment and the availability of spare parts."

A big part of the problem, some U.S. officials said, was the Army Corps of Engineers, which oversaw initial repairs under the Restore Iraqi Oil project. The Corps, which had little experience in the oil industry before the war, was forced to rely on advice from KBR and other experts in making rebuilding decisions.

Bunnatine Greenhouse, who was the top contracting official in the Corps, sharply criticized its involvement at a congressional hearing in June. "The Corps had absolutely no competencies related to oil production," said Greenhouse, who also criticized the no-bid contracts awarded to KBR. She was demoted in August. The end result of the U.S. investment here is that Qarmat Ali still does not produce enough water to be used for injection into the oil fields, nor can the water reliably be delivered to the injection stations, which also remain in need of repair.

That means that every day, Iraq forgoes about 200,000 barrels of oil — or about $11 million in revenue at current Iraqi crude prices, according to Iraqi and U.S. officials.

Missteps Hamper Iraqi Oil Recovery - Yahoo! News

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