Engineering mistakes, poor leadership and shifting priorities have delayed or led to the cancellation of several projects critical to restoring Iraq's oil industry, according to interviews with more than two dozen current and former U.S. and Iraqi officials and industry experts.
The troubles have been compounded in some cases by security issues, poor maintenance and disputes between the U.S. and its main contractor, Houston-based KBR, a subsidiary of Halliburton Corp., according to the interviews and documents.
Despite the United States' spending more than $1.3 billion, oil production remains below the estimated prewar level of 2.5 million barrels per day and well below a December 2004 goal of up to 3 million barrels per day.
Most amazingly, the problem isn't even primarily related to security issues, as most of the current oil production takes place in the relatively secure south of the country. Instead, the lack of production comes from the usual mix of individual patronage...
(R)ather than tapping Iraqi state oil company officials, the U.S. program was overseen by American officials with little experience in the oil industry. In an interview, one senior U.S. official managing part of the restoration effort jokingly described his knowledge level as "Oil for Dummies."
...no-bid contracts to Halliburton and friends...
Iraqi officials also said KBR relied too heavily on foreign contractors, conducted lengthy, unnecessary studies and failed to deliver promised equipment. They acknowledged that Iraq needed to spend more on its oil industry but wondered why the U.S. investment had not had more of an effect...
Other Iraqis said that the U.S. and KBR simply failed to deliver. "I think we had the worst quality of U.S. service, staff and companies," said Jaafar Altaie, who was a senior planner at the Oil Ministry.
...and a complete lack of planning:
The Army Corps of Engineers decided it would be quicker to run the pipelines under the riverbed instead of repairing the bridge. The agency ordered KBR to drill under the river despite warnings against such a route, said a Corps contracting official involved in the project. The official asked to remain anonymous, fearing retaliation from commanders.
Trouble began soon after the project started in January 2004. The soil was unstable, and a borehole drilled to hold the pipes collapsed. In an e-mail obtained by The Times, the contracting official described the project as "placing a pipe in a large box of marbles."
And the final result is that, in oil as in other areas, Iraq is now in even worse shape than it was prior to the invasion:
The lack of reliable water injection has led to a debate about whether Iraq's southern oil fields have been permanently damaged. Although nobody is sure, some oil experts fear that America's failure to fix the problems has worsened damage that may have occurred during Saddam Hussein's rule...
United Nations oil experts have told the U.S. government that some oil reservoirs in southern Iraq have been so badly managed that the Iraqis will be able to recover only between 15% to 25% of the oil, well below the industry standard of 35% to 60%, a recent Department of Energy report states.
No wonder Bushco is now calling for conservation while at the same time opening the taps to the Strategic Petroleum Reserve: something has to replace the Iraqi oil that's now less recoverable than it was three years ago. Because this time unlike so many others, another shipment of snake oil from the administration isn't cutting it.
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