|
|||||||
|
|
|
|||||
|
|
|||||||
In many ways, Oman is atypical of Middle Eastern oil producers. For one thing, oil was not discovered in commercial quantities until 1962 - decades after most of its neighbors. For another, Oman's oil fields are generally smaller, more widely scattered, less productive, and more costly than in other countries. Finally, Oman is not a member of OPEC or OAPEC, but is a leader in IPEC, the main independent petroleum exporter's organization. Oman sees its role as that of an intermediary between OPEC and IPEC.
Most of the country's proven oil reserves of 4.8 billion barrels are located in the northern and central regions. In the north, the Yibal, Natih, Fahud, al-Huwaisah, Lekhwair, and Shibkah fields combined contain an estimated 1.8 billion barrels of reserves. Most of the crude oil found in this region is light, with gravities in the 32-38o API range. Heavier oil is found in southern Oman, particularly in the Nimr and Amal fields. Oman's main export blend currently is a medium sour crude.
Oman's oil reserves are projected to last another 17 years at current production rates. However, successful exploration programs over the past several years have resulted in annual reserve increases that have offset production depletions. In March 1995, official Omani calculations raised the country's proven oil reserves to 5.2 billion barrels. According to this official estimate, about 500 million barrels of new reserves were discovered in 1994. Some of these "newly" discovered reserves were in fact discovered previously, but were considered uneconomical to develop. However, horizontal drilling and other enhanced oil recovery (EOR) techniques have made production of these reserves more economical in many cases.
Even with the recent discoveries, though, it is unlikely that Oman will be able to sustain its oil industry in the long term. In early 1996, total oil production reached 870,000 barrels per day (b/d) from over 1900 wells, up from about 850,000 b/d in 1995. Output is expected to peak at 880,000 b/d or so by 2000, before declining naturally. In late 1994, the Ministry of Petroleum and Minerals (MPM) announced plans to spend $4 billion in oil exploration and development through 1999. Roughly 18 percent of this amount is targeted for exploration, 44 percent for the development and installation of production facilities, and the remaining 38 percent for operating expenses.
Technology has become increasingly important to Oman's oil sector. Applications have included 3-D seismic surveys, which allow for greater resolution of geological structures than the 2-D surveys that were used to first map Oman. In addition, infill drilling, simplified well designs, production automation, secondary recovery and EOR techniques are being used in around 90 percent of Oman's oil wells. Horizontal drilling plays a key role and will be applied in over 70 percent of all future wells. MPM estimates that horizontal wells result in a 300 percent increase in well productivity with only a 50 percent increase in cost.
Petroleum Development Oman (PDO), the country's second-largest employer after the government, holds over 90 percent of the country's oil reserves and accounts for about 94 percent of production. PDO is a consortium comprised of the Omani government (60%), Shell (34%), Total (4%), and Partex (2%). However, Shell operates most of the country's key fields, including Yibal and Lekhwair. MPM announced in early 1995 that 20 percent of PDO's concession will be auctioned by the end of the year. Oman hopes this will increase upstream competition and bring new technology into the oil sector. Concessions on offer probably will include tracts near the Saudi and Yemeni borders as well as offshore areas in the Gulf of Oman.
Yibal, discovered in 1962, is Oman's largest producing oil field and supplies approximately one-quarter of PDO's total production. An ongoing drilling program at Yibal has resulted in over 75 new wells since 1991, many of which involve enhanced oil recovery technology including horizontal drilling. As a result of these efforts, production at Yibal rose from 140,000 b/d in 1986 to roughly 200,000 b/d in 1995. With the recent completion of four gathering centers, the $200-million Shuaiba Phase 2 project is commencing and will involve drilling 96 more wells.
Oman's second largest oil field, the Rima/Jalmud group, was discovered in 1979 and is located in the southern part of the country. Rima/Jalmud is currently producing about 96,000 b/d from more than 120 wells.
In 1992, a $300-million water injection project was completed at PDO's Lekhwair oil field -- Oman's third largest. Production at the field subsequently increased from 26,000 b/d in 1992 to over 100,000 b/d in 1993. In addition to new production and injection facilities, the Lekhwair project involved drilling over 200 wells and the construction of four gas pipelines. The lines connect Lekhwair to the Yibal gas plant and will be needed as production of associated gas increases.
Occidental, Elf Aquitaine (Elf), Japex Oman, and International Petroleum Bukha (IPBL), a subsidiary of Canada's IPC, account for the balance of Oman's oil production. Occidental currently is producing 30,000-b/d of 42o API crude oil from its Safah field on the Omani-United Arab Emirate border. The Safah field has estimated recoverable reserves of about 120 million barrels. In addition, Oxy has active exploration efforts in the area. Elf is producing 46o API crude oil from its small Sahmah and Ramlat fields. However, the company estimated in mid-1994 that Sahmah's reservoir was 80 percent depleted. Output from Sahma, which came online in 1980, has fallen from 13,000 b/d in 1992 to about 4,000 b/d in late 1995. Japex Oman began production of 7,500 b/d from its small Daleel field in 1990. Currently, the company is producing 10,000 b/d from Daleel after a 10-well expansion program begun in July 1994. Finally, IPBL's Bukha offshore facility was producing over 5,000 b/d of condensate and 1,100 b/d of LPG in early 1995.
Other foreign companies involved in Oman include Total and Amoco. In July 1995, Total obtained a 10,000 square mile concession block formerly held by Germany's Wintershall. The concession, known as Block 4, is located in Siwan in eastern Oman. As part of the concession agreement, Total has agreed to spend at least $66 million through 2004 on exploratory work in Siwan. Meanwhile, Amoco Oman, a subsidiary of Amoco Corporation, has been exploring in Oman since 1978. To date, Amoco has had little success despite extensive exploration efforts. The company is now pursuing other options, including a proposal to sell Omani natural gas to Sharjah in the United Arab Emirates as the first step in a regional gas network tying together the six states of the Gulf Cooperation Council.
Overall, U.S. companies are well-represented in Oman's oil sector. In particular, U.S. expertise is valued in the areas of exploration, pipeline construction, oil field services, and geophysical analysis. U.S. firms are also the leading suppliers of oil well drilling equipment to Oman.
As part of its economic diversification strategy, the government is attempting to transform Oman into a major natural gas exporter. Through an extensive exploration program, Oman has nearly doubled its gas reserves since 1992. Oman currently has proven reserves of 22 trillion cubic feet (tcf). About one-third of this amount is associated gas, most of which is located in the Natih and surrounding fields. Over 10 tcf of Oman's non-associated gas is located in deep geological structures, many of which are beneath active oil fields. Oman estimates that the country could contain up to 33-34 tcf total.
About two-thirds of Oman's gas production is associated gas, and one-third non-associated. PDO produces the majority of Oman's associated gas, as well as non-associated gas from Yibal and Lekhwair. In the late 1970s, MPM built a gas pipeline and processing facilities in order to utilize, rather than flare, associated gas. Today, most Omani natural gas is used either for electricity production, for water desalinization, or for reinjection into oil wells. In 1985, a 580-million cubic foot per day (mmcf/d) gas treatment plant at Yibal was constructed.
Oman's only producing non-associated gas field is the offshore Bukha field, bordering Iranian territorial waters. A consortium of Vancouver-based IPC, Bermuda-based Transworld Oil, and South Africa-based Engen is developing Bukha, which came online in mid-1994. Currently, production is limited to 44 mmcf/d by an underwater export pipeline connecting the field to Ras al-Khaymah in the United Arab Emirates.