Khazzan field in central Oman requires horizontal drilling and hydraulic fracturing to release trapped gas from depths of up to 5km
BP has started production from a $16bn gas project in Oman that involves the biggest use of US-style fracking technology so far seen in the Middle East.
The Khazzan field in central Oman is characterised by “tight” rock, which requires horizontal drilling and hydraulic fracturing to release trapped gas from depths of up to 5km below the surface.
BP said it had employed techniques developed in the US to open the field, showing how the American-led “unconventional” oil and gas revolution is slowly spreading to hard-to-reach resources in other parts of the world.
“The rock is old, deep and very hard and the gas moves through it only grudgingly,” said one person familiar with the Oman project, which is expected to meet about a third of the sultanate’s domestic gas demand.
Fracking has so far not been widely used in the Middle East because the region has plentiful remaining supplies of conventional oil and gas, but new drilling and seismic technology pioneered in the US made Khazzan commercially viable.
Announcing the start of production from the first phase of the project on Monday ahead of schedule and under budget, Bob Dudley, BP chief executive, said Khazzan “has the potential to produce gas for Oman for decades to come”.
Khazzan is the largest of six new oil and gasfields brought on stream by BP so far in 2016 as part of accelerating efforts to replenish its production base after years of retrenchment since the 2010 Deepwater Horizon oil spill.
With most of the $62bn cost of clean-up and compensation behind it from the Gulf of Mexico disaster, BP has begun to refocus on growth with a spate of acquisitions, project start-ups and new investments.
The group aims to deliver 800,000 barrels a day of new production by 2020 — equivalent to a third of its current output of about 2.4m barrels a day.
Much of this will come in the form of gas, reflecting efforts by BP to reduce dependence on oil as the world gradually shifts towards cleaner forms of energy.
Of the 16 new BP projects due on stream between this year and 2021, 12 involve gas rather than oil.
Other large oil and gas groups are making a similar shift in anticipation that demand for gas will keep growing even after oil goes into decline because of its potential to replace coal as a lower carbon source of electricity.
In Oman, gas from Khazzan is earmarked for use as a feedstock to develop the country’s petrochemicals industry as well as in power generation.
BP owns 60 per cent of the 4,000 sq km exploration block containing the Khazzan field, with the other 40 per cent held by the state-owned Oman Oil Company.
Phase one of the project involves 200 wells expected to reach steady production of 1bn cu ft of gas a day — a 30 per cent increase on Oman’s total output last year.
A further 100 wells would be involved in the planned second phase, which is due to receive a final investment decision from BP next year. Total recoverable resources across the two phases are estimated to be 10.5tn cu ft of gas, accounting for 42 per cent of Oman’s total reserves.
Lydia Rainforth, analyst at Barclays, said BP’s success in bringing Khazzan on stream early and within budget was a sign of improving operational and financial performance across the group.