The oil fields of south Iran produce billions of cubic feet of natural gas every day. This gas is integrally combined with crude oil in the oll field reservoir and as each barrel of oil is brought to the surface some 700 cubic feet of largely unwanted gas comes with it.
Before the oil is moved by pipeline to the refinery or tanker terminal this so-called "associated" gas, under very high pressure, must first be removed. Virtually all of the associated gas was for many years flared off near the wellheads, because of the problems and expenses of transporting it to distant markets or utilizing it in Iran. Only a tiny fraction was used, mainly for power generation in the oufields themselves.
In addition to the associated gas in the oilfields, which exists not only in solution in the oil- bearing strata but also as a gas-cap on top of the reservoir, Iran has a number of independent gas fields. As of January, 1975, Iran's estimated proven gas reserves were 374.4 trillion cu.ft., and maximum probable reserves were 570.4 trillion cu. ft. This compared with the ex-Soviet Union's estimated proven reserves of 547 trillion Cu. ft.
Russia's reserves are consiidered the largest in the world, and the United States figure, the largest after Iran, is 291 trillion cu.ft. As a large proportion of Iran's probable reserves have subsequently been proven by the confirmation of a major field of at least 180 trillion cu.ft. capacity, it was possible that Iran's proven reserves are now equal to or greater than those of Russia.
The Shah of Iran always deplored the flaring of Iranian gas, and under his leadership considerable progress was made in utilizing associated gas. To centralize responsibility for full utilization, the National Iranian Gas Company (NIGC) was established in 1966 as a subsidiary of the National Iranian Oil Company (NIOC).
The four principal strategies of the NIOC-NIGC gas utilization programme
(a) to re-inject vast quantities of gas, both associated and non-associated, into the Khuzestan oil fields to conserve gas and improve reservoir pressures, and hence oil recovery,
(b) to increase the domestic consumption of natural gas, replacing oil as the chief source of energy,
(c) to make Iran a major producer of petrochemicals,
(d) to increase exports of natural gas, both in gaseous and liquid states.
Much was done to reduce flaring, which in 1970 accounted for about 60 per cent of total gas production of 3 billion cubic feet per day. In 1974 effective utilization was increased to 41 per cent of 4.9 billion - c.f.d. of gas production, and in 1975 utilization rose t6 46 per cent of 4.5 billion c.f.d. production. Within a few years it was hoped that nearly all the associated gas produced will be utilized.
Re-injection, which is critical to the secondary recovery programme for the prolific Khuzestan oilfields, is being given top priority, and these fields have first access to gas supplies. The objective of secondary recovery was to maintain reservoir pressures and ensure that a greater proportion of the oil in place was actually recovered. It was expected that in the Khuzestan fields gas injection would raise recovery to 40 per cent of oil in place, as opposed to the 20 to 30 per cent obtainable without gas injection. This programme had the effect of substantially raising effective oil reserves.
When fully operational, gas injection will require about 13 billion cu.ft. of gas per day, as compared with 1975 production of 4.5 billion c.f.d. In view of existing domestic and export commitments ad the time, gas produced in association with crude oil would not be sufficient, so the balance must come from the gas caps of selected oilfields and from non-association gas fields. Re-injection began in 1975, in the Haft Kel oilfield, and was gradually being introduced in all major fields in south Iran. It is worth noting that the very large volume of gas used in re-injection is not lost, but will eventually be largely recovered after fulfilling its secondary recovery function.
Iran converting in the seventies a number of industries and cities to gas consumption, and discouraging the wasteful consumption of oil. Th first use of natural gas as a fuel outside the oilfields was in Abadan Refineries in the 1950's. In 1962 a pipeline was built from the Gachsaran oilfield to Shiraz to supply associated gas to a fertilizer plant, a sugar factory, a cement plant, the Sliiraz power station and a number of smaller consumers, including a pilot project to supply domestic consumers.
In 1970 the Iranian Gas Trunkline (IGAT) was built for the dual purpose of exporting gas to the Soviet Union and supplying Tehran, Esfahan, Qazvin and other cities en route. IGAT runs 1,100 kilometres from south Iran to Astara on the north-west frontier with the ex-Soviet Union. Exports began late in 1970 under a barter deal whereby the Soviets provided Iran with a steel mill and other items in exchange for natural gas. In 1974, following the world-wide rise in oil and gas prices, the export price of IGAT gas was raised from $0.30 to $0.57 per I ,00C cu.ft., and in 1975 exports to the Soviet Union amounted to 338 billior cu. ft.
Large though it was, the IGAT scheme would have only accounted for a fraction of Iran's gas exports, as a result of new discoveries at the time of substantial reserves of non-associated gas. Since 1973 one new field after another had been dis- covered along the shores of the Persiarn Gulf, and at the latest count at least 14 gas-bearing structures have been identified.
Three major projects were prepared for the export of natural gas. The first of these was the Kalingas project, based on a 1972 agreement between NIGC and a group of U.S., Japanese and European companies to produce and export to Japan and the U.S. West Coast between 290 and 440 billion cu.ft. of liquefied natural gas per year from the Kangan reserves. Total investment for the land-based facilities were estimated at about $1 billion and twice as much must be added to include shipping investment. The Kahngas project is expected to go on stream in the early 1980's. Even larger ws the Pars project which involved the export of 730-1,100 billion cuft. of gas per year to the United States and West Europe. The first stage of the project alone involved an investment of $6 billion, and delivery of gas was also expected to begin in the early 1980's.
In 1975 a multi-national agreement was signed for the export of Iranian natural gas to Europe. Under a switch arrangement with the Soviet Union, Iran would deliver 470 billion cu.ft of gas to Astara for the account of the Eu ropean buyers. This gas would have been consumed in the U.S.S.R., which in exchange would have supplied an equivalent quantity to West Germany, Austria and France from its own reserves. The project involved 1,500 kilometres of new pipeline in Iran, 3,000 kilometres in the Soviet Union and 1,000 kilometres in Czechoslovakia, which could also join in the project by taking an additional 56 billion cu.ft. of gas per year. Gas was expected to start flowing in early 1981. Apart from supplying very large quantities of natural gas to Europe, this project would also have strengthened economic ties between all the countries involved.
The gas for this project was also supplied from the prolific Kangan field, which was believed to be possibly the biggest in the world. In addition to the export aspect, the project also envisaged the annual utilization of a further 354 billion cu.ft. of Kangan gas for internal consumption, which could bring the total annual capacity of the system to 880 billion cu.ft.
In summary, it can be said that Iran's huge gas reserves were enabling the country to undertake a number of major projects at home and also become a major exporter. Projects operating or under construction would have raised Iran's own consumption of gas to 630 billion cu.ft. in 1979, which would have accounted for 34 per cent of total energy consumption. Despite the enormous distances separating it from the consuming markets of Europe, the Far East and the United States, Iran would have become the world's largest exporter of gas, supplying 15-20 per cent of the total amount of gas imported to those three major markets.