Muscat: BP Oman plans to drill 100 wells in the second phase of block 61 tight gas development, a senior official of the company said.
The company will make a final investment decision by early next year for the second phase development, said Eng. Yousef Al Ojaili, president, BP Oman. The total investment for two phases – Khazzan and Ghazeer – of the tight gas field is estimated at $16 billion for the lifetime of the project until 2040.
BP on Friday started natural gas export from its tight Khazzan gas field, which is operated by the company in partnership with the Oman Oil Company Exploration and Production.
The first phase of the Khazzan development is made up of 200 wells feeding into a two-train central processing facility, while the production is expected to plateau at 1 billion cubic feet of gas per day (bcf/d). The project was completed ahead of schedule and below budget.
The first gas processing train at Khazzan field has already started operation, while the second train will start operation towards the end of this year.
Once the second phase of the Khazzan gas field is up and running, production is expected rise to 1.5 bcf/d. Approximately, 300 wells are expected to be drilled over the estimated lifetime of the Khazzan field. The first two phases together will develop an estimated 10.5 trillion cubic feet of recoverable gas resources.
Eng. Salim bin Nasser Al Aufi, undersecretary at the Ministry of Oil and Gas, said that BP’s Khazzan gas field will pump one-third of the Sultanate’s natural gas demand and there will be a surplus in production in the short run. “This project will help us to continue our commitment. For a short period, we will have surplus gas. This will be marketed by way of short-term contracts,” added Eng Al Aufi.
Eng. Al Aufi said that the surplus production will be used for meeting the 25 per cent spare capacity with Oman LNG. However, only 15 per cent of Khazzan production is required for producing liquefied natural gas and the rest is for local consumption. Petroleum Development Oman can slowdown its natural gas production.
The total production of natural gas, according to Eng. Al Aufi, is estimated at 105 million cubic metres and the Khazzan project will supply one-third of the production.
Eng Al Aufi also noted that the import of natural gas from Dolphin Gas will continue as it is supplying to industrial units in Sohar.
Eng. Al Aufi said that the government is not in a position to sell gas at a cheap price now. Although several investors are interested in setting up gas-based industries in Oman, they need gas at a lower rate, which is a hindering factor for proceeding with their plan. The government is not in a position to lower prices of natural gas.
The undersecretary also noted that natural gas supply to Duqm will start in 2019 and the volume is estimated at 7 million cubic meters a day. However, this can be increased to 28 million cubic metres a day.
Referring to tendering of four blocks, he said one of the four blocks has tight gas reserves.
The Khazzan tight gas reserves lie at depths of up to five kilometres in narrow bands of extremely hard, dense rock. These complex and challenging conditions require specialised drilling equipment, the precise drilling of both vertical and horizontal wells, and well stimulation to free the gas.
The production sharing agreement for Block 61, which contains the Khazzan field, was first signed in 2007 and was amended in 2013 and extended in 2016. An appraisal conducted over the 2007-2013 period confirmed the existence of significant tight gas resources that could be developed through the application of BP’s extensive unconventional gas experience and technology. The first phase of development of the field was sanctioned in December, 2013.
BP is the Operator of Block 61 and holds a 60 per cent interest. The Oman Oil Company for Exploration and Production holds a 40 per cent interest.