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Oman: A Door About To Open In The Energy World

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Posted: 02/28/2012
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As the largest Arab oil and gas producer that is not a member of OPEC, Oman is in a prime position to capitalise on its reserves.

Exploration is continuing, with Irish incorporated Circle Oil being granted an extension in its exploration period on one of its onshore blocks, while work continues on a previously unexplored region of offshore southern Oman.

Oil production increased by 2.3 per cent year-on-year from 2010-2011, and Nasser bin Khamis al-Jashmi, undersecretary of the Omani Oil and Gas Ministry has projected that all of the nation’s fields should be producing to similarly high levels in 2012.

Natural gas output increased by an even larger amount over the same period, up 4.4 per cent to 95 million cubic metres (3.35 billion cubic feet) – and the ministry is hoping to see this figure increase further to 99 million cubic metres (3.49 billion cubic feet) in 2012.

With oil prices continuing to ride high, further development is of primary importance. Four agreements are to be signed with international companies to boost output, and drilling rights were awarded last year for the blocks it wishes to development.

Super majors in the Sultanate

Among the companies developing in the country is BP, which is looking to exploit tight gas fields in north-central Oman.

Commenting upon the announcement of the four agreements, Al-Jashmi said: "BP is continuing its activities to appraise the field and drill more wells. According to the plan, we will make the final investment decision in 2013."

Accessing new reserves is really only half of the story though. With reserves in the region depleting and the threat of unrest spilling over from neighbouring Yemen and Iran and disrupting supply, Oman must ensure it gets all it can out of its mature fields while they are economically viable.

The plan for enhanced recovery

In 2010, the Sultanate announced an initiative to boost crude output to around 900,000 barrels a day using enhanced oil recovery (EOR) techniques.

Former managing director of Petroleum Development Oman (PDO), John Malcolm, said at the time: "We are focused on cost and efficiency."

The same year, PDO announced the commissioning of its first full-scale enhanced oil recovery project, based at the Marmul heavy-oil field in the South Omani province of Dhofar.

The field was first discovered in 1956 by Cities Service P.C. and was acquired by PDO in 1969 for appraisal drilling. The field was developed full-scale in 1978 and first oil was attained in October 1980.

In February 2010, PDO announced the commissioning of The Marmul Polymer Project at the field’s main Al Khlata reservoir. Polymer flooding techniques were employed to boost both production and recovery of the field’s very heavy crude oil. PDO have predicted that EOR activity will lead to a 10 per cent increase in the oil recovery of the reservoir, or some 8,000 barrels per day.

With the initiation of the project, former managing director Malcolm said: "This is an ambitious and novel project that involved building a water treatment plant with a capacity of 80,000 cubic metres per day and a polymer preparation and injection facilities station which will have a capacity of 17,500 cubic metres per day.

"It is an excellent example of the increasing application of new technology to increase production at PDO’s mature oilfields."

Marmul presents a viscosity of around 90 centipoises, while water under reservoir conditions is only about half a centipoise – so, in effect, it flows about 200 times more easily than the oil through the reservoir rock, PDO claims.

Current success and future EOR projects

In 2011, production in Oman hit 884,900 barrels a day, perhaps as a testament to the greater use of enhanced oil recovery techniques.

Raoul Restucci, the current managing director of PDO, is also positive about the use of these techniques in the future. He predicted that in the next two years advanced production techniques in use at a number of the fields with heavy crude will begin to reap the benefits.

Oman is also placed in a strong position with the current issues surrounding the export of oil from Iran. Ports on the Gulf of Oman will allow for oil to be exported from the rich United Arab Emirates, while bypassing Iran's influence.

Oman & India: Rekindling The Indus Valley connection

Linked to the Indian subcontinent through the Bronze Age Indus Valley Civilisation, Oman and India are set to be tied together once more, this time trading culture for a major global infrastructure project.

The Oman-India gas transmission pipeline will extend approximately 1,100km across the Arabian Sea at depths of up to 3,500m.

At an estimated cost of $4 billion, the joint venture is expected to transport 31.1 billion cubic meters (1.1 trillion cubic feet) of natural gas per day, arriving in Oman from the gas rich nations of Turkmenistan, Iran and Qatar.

When this pipeline is completed, Oman will become one of the most influential natural gas hubs in the world, well and truly opening up a concomitant world of opportunity for the Arabian Sultanate.

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