MUSCAT -- Oman Oil Company Exploration & Production LLC (OOCEP), the upstream spinoff of the government's wholly-owned energy investment arm Oman Oil Company (OOC), will invest $1.1 billion in the development of the gas-rich Abu Butabul discovery in its newly acquired Block 60 concession in central Oman.
The amount represents the first phase investment in an ambitious project to unlock Block 60's potentially prodigious reserves of tight gas and condensates. OOCEP has set its sights on a Q1 2013 timeframe to bring the field into commercial production. Output is targeted at a peak production rate of 90 million standard cubic feet per day (mmscf/d) - volumes that will go a long way in meeting the nation's escalating demand for natural gas as fuel for electricity generation and water desalination, as well as feedstock for petrochemical schemes.
Yesterday, OOCEP signed an Exploration and Production Sharing Agreement (EPSA) for the formal acquisition of Block 60, five months after the concession was relinquished by its previous operator, the BG Group of the UK. Dr Mohammed bin Hamed al Rumhy, Minister of Oil and Gas, inked the agreement on behalf of the Omani government. Salim bin Zahir al Sibani, Chief Executive Officer of OOCEP, signed the pact on behalf of the company.
Underscoring the importance of the concession deal, especially with regard to Block 60's potential to significantly address the country's burgeoning gas requirements, top officials of the Ministry of Oil and Gas and OOCEP's parent organisation attended the signing.
Present were Ministry Advisers Ali bin Thabit al Batashi and Khalifa bin Mubarak al Hinai, Dr Zaid al Siyabi, Director General of Oil and Gas Exploration and Production, and Dr Saleh bin Ali al Anbouri, Director General - Petroleum Investment, among others. Representing Oman Oil Company were Ahmed al Wahaibi, CEO, and Dr Salman bin Mohammed al Shidi, Block 60 Manager -- OOCEP, amongst other high ranking executives.
Speaking to media soon after the signing, Al Sibani said the concession would be developed in two distinct phases. Phase 1, targeting the southern part of the block with its prize Abu Butabul field, would first be taken in hand for development. Around $1 billion will be invested in harnessing the unconventional gas reserves of the field over a two-year period.
Commenting on the timeline for the Phase 1 implementation of the project, Al Sibani said: "We have a one year timeline from today's concession signing to come up with the Field Development Plan. While we are continuing with the appraisal and drilling done in the past by BG Group, we will come up with a Field Development Plan within one year, which will then be submitted to the Ministry for approved. Once sanctioned, we hope to make a declaration of commerciality. From this declaration of commerciality, we have almost another year for commercial production. So, you can see, we are on a very stringent and challenging timeline."
The Abu Butabul field, first discovered in 1998, has "ample" volumes of gas in place, but the challenge lies in evacuating the gas, trapped in tight pores in the rock, to the surface, the CEO said, adding that horizontal drilling and technology hold the key to enhancing recovery from the reservoir.
In the second phase, OOCEP plans to drill at least two exploration wells in the northern half of the 1,485 sq kilometre concession. Later in comments to the Observer, Dr Salam al Shidi, Block 60's Manager, said the company would invest in the requisite infrastructure necessary to support the production of and channelisation of gas into the government gas grid.
"We will put in place gathering systems, pipeline network, flowlines, wells, gas processing station, compression station, as well as a pipeline that will take the gas all the way to Barik station, some 85 kilometres away. In addition to this elaborate gas infrastructure, there will also be investments in camp facilities and roads leading to the block and within it as well," Dr Al Shidi said.
Development of the Abu Butabul field is planned in three stages, according to the official. In the first stage, OOCEP is targeting an output of 90 mmscf/day, which is proposed to be ramped up by a further 50 mmsf/day in the next stage, with output sustained at this plateau level in the third stage. However, if the outcome of the Stage 1 development of the field falls short of expectations, then the company will decide to maintain output at 90 mmscf/day during all three stages of the field's development, he noted.
Significantly, dozens of production wells will be drilled as part of the field's development, Dr Al Shidi explained. "In the first stage, around 60 wells will be drilled, followed by another 60 wells in Stage 2, and perhaps 45 more wells in Stage 3. At the moment, the base case is for the drilling of vertical wells to cover the area. But the number of wells can be reduced if we're successful in converting these vertical wells into horizontal wells. That's our plan. The horizontalisation of these wells will give us more gas at less cost."
© Oman Daily Observer 2011
