VZCZCXRO4888
RR RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #3002/01 2611458
ZNR UUUUU ZZH
R 171458Z SEP 08
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 9465
INFO RUCNRAQ/IRAQ COLLECTIVE

UNCLAS SECTION 01 OF 02 BAGHDAD 003002 
 
AIDAC 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAID PGOV PREL ECON SOCI PINS SNAR ENRG
EPET, IZ 
 
SUBJECT:  USAID/IRAQ HELPS CAPTURE $1 BILLION PER YEAR 
FLARE GAS FOR POWER PLANT FUEL 
 
¶1.  BEGIN SUMMARY:  With elections approaching and 
essential services still lagging, improved service 
delivery of electricity is critical.  Yet every day 
Iraq's southern oil fields burn off gas associated with 
oil production, gas that could drive 3,500 megawatts 
(MW) of generator power worth $9 billion USD per year. 
With USAID's assistance, Iraq is setting the groundwork to 
capture a portion of this wasted gas.  Ultimately, this 
will occur when Iraq commissions a long-delayed new gas 
gathering and treatment plant in Basra.  END SUMMARY. 
 
--------------------------------------------- - 
BACKGROUND ON THE PROBLEM 
--------------------------------------------- - 
¶2. With falling temperatures and anxious Iraqis setting 
their eyes on the upcoming elections, improved electricity 
delivery continues to be a primary political motivator 
in Iraq.  In the southern area of Iraq, an estimated 800 
million standard cubic feet per day (scf/d) of gas 
associated with oil production is flared to the atmosphere 
instead of being captured for economic use.  If available 
for power generation, this gas could drive generators 
that produce up to 3,500 Megawatts (MW) of electric power 
for the Iraqi power grid.  Today, the Iraqi grid provides 
roughly 5,000 Megawatts in total.  This amount is equal 
to half of the national demand.  Gas is a preferred fuel 
for power generation in the many gas turbines Iraq has 
deployed over diesel, crude oil or refinery residual 
heavy fuel oil (HFO) due to its clean burning 
characteristics which greatly reduces maintenance and 
decreases downtime and enables increased gas turbine unit 
outputs.  All U.S. agencies are therefore interested to 
provide assistance to the GOI to capture this flare gas 
in every way possible. 
 
--------------------------------------------- - 
MINISTRY REQUEST FOR HELP 
--------------------------------------------- - 
¶3.   The Ministry of Oil's State Company for Oil Projects 
asked USAID for help at the Zubair Oil Field in Basra, 
classified in the industry as a "giant field" because it 
contains over five billion barrels of producible oil. 
The ministry completed construction of a new gas-gathering 
plant in 2003, however, the international contractor fled before 
starting up the plant due to security issues.  Since then, 
the ministry has not been able to gain access to the new 
plant's control system computers nor has it been able to 
start up the new plant.  As a result, the plant remains idle. 
Meanwhile, 100 million standard cubic feet of associated 
gas continues to be flared into the atmosphere. 
 
--------------------------------------------- - 
INITATIVE 
--------------------------------------------- - 
¶4.  At the request of the Iraqi Ministry, USAID, 
under its Capacity-Building Program (known as 
Tatweer in Iraq, Arabic for "development"), agreed to 
take on removing this initial roadblock to the gathering 
of the flared associated gas in Zubair.  Working with 
ministry engineers, USAID experts tracked down the 
company that designed the control systems.  USAID 
assisted the ministry in obtaining from the design company 
the codes and procedures, which will facilitate the 
commissioning of the plant.  With this information, 
ministry engineers in Basra now have successfully turned 
on all the related digital equipment in the facility 
and the plant can be made ready for commissioning. 
 
--------------------------------------------- - 
A FLY IN THE OINTMENT 
--------------------------------------------- - 
¶5.  The ministry requested further USAID assistance 
to obtain training and startup support from the 
vendor of the control consoles.  This is not an easy 
task, since the training simulators are in Dubai where 
visas are unavailable for Iraqis.  Meanwhile, 
the vendor is unwilling to send representatives to Iraq 
to train staff and provide plant startup support in 
country.  USAID is working with the ministry to overcome 
these further obstacles.  A training simulator will be 
moved to Turkey and on-line remote monitored by vendor 
engineers will be provided for the initial operation 
period.  The ministry is now reviewing a proposal from 
the vendor to provide these training and start-up 
assistance services, and a solution is at hand.  This was 
a practical opportunity for USAID to interact with the 
ministry in problem-solving techniques using this as a 
case study.  While the ministry has now solved this 
immediate problem, it has also gained experience at 
 
BAGHDAD 00003002  002 OF 002 
 
 
detecting problems and finding alternative solutions. 
This experiential learning and doing approach is one 
component of USAID's efforts to make the ministries self- 
diagnosing and self-sustaining. 
 
--------------------------------------------- - 
TANGIBLE RESULTS 
--------------------------------------------- - 
¶6. After years of delay in commissioning the Zubair Gas 
Plant and its attendant loss of a precious resource, 
the GOI requested USAID's help, and is now 
preparing to commission the plant for the production 
of liquefied petroleum gas and fuel gas.  When this 
happens, this will contribute to a proportionate 
reduction in the need for crude oil and imported 
diesel for power generation and increase the 
production of liquefied petroleum gas, an expensive 
product currently being imported.  It will also reduce 
environmental impacts due to the elimination of current 
flare burning as the gas is diverted into use to displace 
heavier fuels.  The captured gas at Zubair is valued at 
$1 billion per year.  While electricity remains a 
challenge in Iraq, this is an important measurable step 
forward for the Electricity Ministry and for the Iraqi 
people.  It also reflects on the entree the U.S. Mission 
has with the ministries and how USG capacity-building 
assistance efforts are poised to produce measurable 
impacts. 
 
 
 
 
CROCKER