Fracking is coming to Oman as BP will drill wells to push out gas trapped deep under the Omani desert over the next 15 years in a $16 billion project.
The Khazzan tight gas project, which aims to extract around one billion cubic feet (bcf) per day of gas from sandstone at depths of up to 4,500 meters in central Oman, is a showcase for BP’s tight gas extraction technology.
“Today’s signing is an important step in the Sultanate of Oman’s plans to meet growing demand for energy over the coming decades and to contribute to economic development in Oman,” said the country’s oil and gas minister, Mohammed Al Rumhy.
“The Khazzan project is the largest new upstream project in Oman and a pioneering development in the region in unlocking technically challenging tight gas through technology.”
BP will have a 60 percent operating stake in the project, which involves a 15-year program of drilling into sandstone to extract gas using hydraulic fracturing technology, or fracking, developed in the United States.
BP expects to invest around $9.6 billion over the full field development, in accordance with its 60 percent stake in the $16 billion project, a BP spokesman said. State-owned Oman Oil Company Exploration & Production (OOCEP) will have a 40 percent stake. The $16 billion total investment estimate includes around $1.5 billion already spent.
“We are a company who have said that we will use a very disciplined capital framework and for the rest of the decade we will keep BP’s capital investments between $24 and $27 billion a year,” said BP Chief Executive Bob Dudley.
“There are other projects that we have put aside but this is one that is big, it is important and it is a good partnership… It fits with our strategy as a company to develop large reservoirs.”
Construction should begin in 2014, with first gas expected in late 2017 and plateau production of around 1 bcf, or 28.3 million cubic meters, per day expected in 2018.
This would be enough to meet around a third of the country’s current domestic gas needs. But Omani energy demand is rising rapidly and Muscat also hopes to import Iranian gas in a 25-year deal signed in August.
BP expects to develop around 7 trillion cubic feet (tcf) of gas in the Khazzan project, and to pump around 25,000 barrels per day (bpd) of gas condensate, a light oil, helping ensure a good rate of return from the investment.