It is interesting to examine the growth of the gas industry in Oman the past 15 years.
Last year, Oman, which Oil & Gas Journal listed as having had only 7 tcf of proved gas reserves in 1990, began exporting LNG.
OGJ figures now show Oman with 29.3 tcf of gas reserves and 475 MMcfd of gas production. Most of the production is associated gas.
Oman has begun to tap its gas resources only in the last 3 years and even more recently opened acreage to outside companies that will explore for and develop nonassociated gas.
Like many other countries, Oman is trying to reduce its gas flaring. No figure was available for 2000, but flaring averaged 64 MMcfd in 1998 and 1999. Petroleum Development Oman LLC, 60% owned by the government, has attached meters to practically all of its flare stacks because it wants to know the volumes with accuracy.
Recent developments
Big things have happened in Oman, especially in the past 2 years, not all of them positive.
PDO's concession agreement dates to 1981, but it covered only the development and production of oil and associated gas. Natural gas development was not included until 1984.
PDO reached the original 10-year target of finding 3 tcf of nonassociated gas in only 3 years with the discovery of Saih Nihayda, Saih Rawl, and Barik fields in the Ghaba salt basin.
Oil prices crashed in 1986, sending Oman and other oil-producing countries on multiyear programs to cut production costs and improve efficiencies. PDO began applying horizontal drilling, 3D seismic surveys, and gas and water injection projects.
The low prices left little revenue for start-up projects, and the government didn't approve the budget for the LNG project until Nov. 3, 1996.
More tough times due to low prices in 1998-99 gave way to a string of successes in 1999-2000.
Exploration, appraisal, and development drilling added 440 million bbl of crude and condensate reserves in 1999. Horizontal waterflood development of Marmul Haima-West field alone added 233 million bbl, one of the largest reserves bookings in PDO history. The company also added 60 million bbl with the discovery of Ghafeer field in the southern Oman carbonate stringer play.
Last year, PDO started oil production from Burhaan field in early June, Mukhaizna field on June 30, and Al Noor field in August.
On the gas side, Oman started up the Saih Rawl gas processing plant in late 1999 and began shipping gas through a 225-mile, 48-in. pipeline to the liquefaction plant at Qalhat on the Gulf of Oman, 125 miles southeast of Muscat. From there, Oman LNG LLC began exporting LNG to South Korea in April 2000 and signed contracts for 11 shipments to the US.
Still, it was a disappointment for Oman when India called off the proposed subsea gas pipeline from Oman to India last August in favor of importing gas from Iran. The decision was due partly to uncertainty over the size of Oman's gas reserves.
Construction is to start this April at a gas-fired desalination plant in Oman, with gas supplied by the Oman Ministry of Gas under a 15-year contract.
Exploration prospects
Outside companies are beginning to explore for oil and gas in Oman.
Phillips Petroleum Co. holds Blocks 38 and 36, covering a combined 8.8 million acres in southern Oman. It spudded the first well on Block 36 in third quarter 2000.
Gulfstream Resources Canada Ltd., Calgary, last June signed an accord covering the first gas development in Oman by a concession holder that is based on an exploration and production-sharing agreement.
Gulfstream is to spend $37 million to develop Hafar, Al Sahwa, and Nadir gas fields. Contract volume is 84 MMcfd. After processing, Gulfstream will deliver the dry gas to the government gas system. The company secured a rig for well testing and development drilling.
A group led by Novus Australia Energy Co., Sydney, is working 3,200 sq km Block 17 onshore and offshore in northern Oman, where it said it has identified a number of highly prospective structures.
Today, Omanis hold many senior positions and make up 82% of PDO ranks compared with 25% in 1970.
Oman might be one of the Middle East's smaller oil and gas producing countries, but it is likely to become a lot bigger.
OGJ's Middle East Update, with articles on Iran and Yemen, starts on p. 74.
