Oman: gas gushes
Natural gas production from the giant Khazzan field has begun, as Oman seeks new energy investors in a stable corner of the Gulf
The Khazzan project, in the view of BP's Oman country manager, Yousuf al-Ojaili, is a big deal. He says it is "one of the biggest gas developments in the Middle East". When phases 1 and 2 are complete, the Khazzan project is expected to produce 1.5bn cubic feet a day, equivalent to 40% of Oman's gas supply.
It's all happened fast. In December 2013, BP (operator with a 60% stake) and Oman Oil Company Exploration and Development (40%) signed an exploration production-sharing agreement (EPSA) for the Khazzan venture in Block 61 in central Oman. The EPSA was amended in 2016, increasing the size of the licence to allow the second phase of development.
The project wasn't all plain sailing. According to BP, the Khazzan tight gas reserves lie at depths of up to 5km (3 miles) "in narrow bands of extremely hard, dense rock". Ojaili described the drilling operations as large and complex, with "significant technical sub-surface challenges". Overcoming them required, among other things, "extracting quantities from the reservoir through individual wells, understanding where the good spots were, and where to drill horizontal wells, vertical wells—and the split between horizontal and vertical".
In the first phase of production, 200 wells are feeding into a two-train processing facility, with output expected to plateau at 1bn cu ft/day before reaching 1.5bn cu ft/day in Phase 2. During the course of the whole project some 300 wells will be drilled to gain access to the estimated 10.5 trillion cu ft of gas reserves. Production from Khazzan is being delivered to tie-in points in the national network, which is operated on behalf of the government by Petroleum Development Oman (60% state share) and Oman Gas Company. Whether the gas goes to the domestic market or is liquefied for export is a government decision.
While Khazzan will boost Oman's energy sector, the country needs all the oil and gas it can find. Its oil production only just tops 1mn barrels a day and its liquefied natural gas production is below capacity because of strong domestic demand. To this end, the Ministry of Oil & Gas on 20 September called for bids (closing date 31 December) to develop four blocks (43B, 47, 51 and 65), with a further six to be tendered "over the next few years". The ministry has published a list of advantages to be enjoyed by IOCs investing in Oman, which includes one promising a high quality of life "in a safe and modern country". With increased tension and instability elsewhere in the Gulf over the Qatar crisis, the Omanis are clearly hoping that their country's reputation as a quiet and stable country that steers away from controversy will become a major selling point.