Oman makes new oil and gas find

The government-controlled oil and gas producer said the finds include a 'major' oilfield thought to contain about 1 billion barrels of crude, and a 'potentially large' gasfield.

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MINA AL FAHAL // Petroleum Development Oman (PDO) has announced the discovery of three oilfields and a gasfield with the combined potential to boost Oman's reserves by more than 5 per cent. The government-controlled oil and gas producer said the recent finds included a "major" oilfield thought to contain about 1 billion barrels of crude, and a "potentially large" gasfield.

"These four discoveries represent an important success for PDO's exploration efforts during 2009," said John Malcolm, the managing director. "They show that there will be opportunities for further exploration for many years to come." The biggest of the new oil deposits, located in central Oman, contains shallow deposits of heavy crude that promise to be relatively inexpensive to drill for, but technically challenging to extract.

"Even though its oil will be difficult to produce, Al Ghubar South is likely to rank as one of the largest oil discoveries ever made in Oman," said Martin Stauble, the PDO exploration director. Using steam-assisted extraction technologies widely employed in the world's heavy-oil fields, it is generally possible to produce about 30 per cent of the crude from such deposits. That implies Al Ghubar South may contain roughly 300 million barrels of recoverable oil.

PDO's Khulud gas discovery in northern Oman will also pose a production challenge, but is nonetheless important for the sultanate, which currently cannot meet its growing domestic gas demand without imports. The gas was discovered at a depth of 5,000 metres in "very tight reservoirs", PDO said. That means wells will encounter extremely high temperatures and pressures, but the gas will still resist flowing to the surface.

Fortunately, Royal Dutch Shell, one of PDO's long-standing partners, is a world expert at exploiting such reservoirs, Mr Malcolm said yesterday. Oman, a minor oil producer compared to most Gulf states with which it shares the Arabian Peninsula, had proved reserves of 5.5 billion barrels of oil and 850 billion cubic metres of gas, the International Energy Agency estimated in August. The sultanate's oil output is expected to rise by 6 per cent to 860,000 barrels per day (bpd) this year from 812,000 bpd last year, said Nasser al Jashmi, the undersecretary of Oman's oil and gas ministry and a director of PDO.

Oman's gas production last year totalled 85 billion cubic metres, he added, without providing a projection for this year. The sultanate has welcomed foreign investment in its oil and gas sector and would offer 11 new concession areas for bidding this year, Mr al Jashmi said. Although most of Oman's oil deposits are small, PDO has discovered about 180 oilfields in the sultanate, including 126 that are producing crude.

The company planned to boost its total oil and gas output to more than 1.2 million barrels of oil equivalent per day (boepd) by 2014 from 1.05 million boepd last year by maintaining crude production at 540,000 to 560,000 bpd and pumping increasing gas volumes, Mr Malcolm said. PDO was aiming to achieve a sustainable level of oil production, rather than maximising output over a short period, he added. Enhanced oil recovery (EOR) projects to coax more oil from mature fields would be increasingly important in meeting that goal.

Nevertheless, the company had "significantly increased" exploration spending. Among its more advanced EOR developments, PDO is commissioning a project to boost production from an ageing oilfield by injecting polymers and detergent-like chemicals underground to make the crude more slippery and effectively wash it out of the porous reservoir rock. "Chemical EOR is the future," Mr Malcolm said, adding PDO was in talks with major international chemicals producers.