Qatar’s vast North Field gas and Al Shaheen oil resource wealth have made the small Gulf State a regional activity hotspot.
Despite being a minor onshore producer, Qatar is a major offshore oil and gas player. Oil was first discovered in 1938 by Petroleum Development Qatar, now Qatar Petroleum Company (QPC), at the onshore Dukhan field – and production reached 40,000 bpd before the onset of the WW2. Onshore production started in the same year and is believed to have reached peak production at around 368,000 boe/day in 2008 – around 25 times less than Saudi Arabia.
The discovery and development of the Idd-al-Shargi field by Shell in 1960 marked the beginning of a significant period of offshore activity. In 1972 the Idd-al-Shargi, Maydan-Mazham and Bul-Hainne fields were brought into production and, for the first time, offshore production levels exceeded those onshore.
Production and export of gas and LNG from Qatar is driven in the main by the giant offshore North field. It was discovered in 1979, and covers over 6,000km2. With estimated non-associated gas reserves of 14 Tcm, it is one of the world’s largest gas fields, and accounts for 98% of Qatar’s gas production. In 2004 Qatar Petroleum and Qatar Shell GTL Limited signed terms for the Pearl GTL project.
The project involved installing upstream gas production facilities and an onshore GTL plant that would allow production of up to 140,000 bpd of GTL products – as well as significant volumes of associated condensate and LPGs. The continued exploitation of the offshore North field should see Qatari oil and gas production climb rapidly over the coming years and reach 4.7 million boe/d by 2015.
Much of the gas will be liquefied for export in facilities such as Ras Laffan.
Today, Qatar boasts one of MENA’s most rapidly growing offshore markets, which is set to see a substantial increase in expenditure over the next five years and beyond. An estimated US$403 million was spent on focus segments in 2005 and this had more than tripled by 2008. 2009 saw some decline as oil price and service pricing pressure impacted negatively on the rig market. Recovery, however, is expected and strong visibility for rig contracts will enable expenditure growth to reach just under $2 billion by 2014 – average annual growth of 8.7% over the forecast period.
Like many other countries in the region, Qatar has initiated policies aimed at increasing oil production and locating additional oil reserves before existing reserves become too expensive to recover. It is also investing in advanced oil recovery systems to extend the life of existing fields. To accomplish this, in recent years the government has improved the terms of exploration and production contracts and production sharing agreements (PSA). The improved terms are designed to encourage foreign oil companies to improve oil recovery in producing fields and to explore for new oil deposits.
Excluding the North field, Qatar has six offshore producing fields: Bul Hanine, Maydan Mahzam, Id al-Shargi North Dome, al-Shaheen, al-Rayyan, and al-Khali.
Almost all wells drilled off the shore of Qatar are deviated and wellstock growth is healthy, driven strongly by flourishing drilling volumes.
Some of the growth expected over the next five years can be directly attributed to completion of the first phases of the Pearl project. Annual growth in producing wellstock is estimated at 7.3% and this will significantly boost the requirement for offshore workover including fracturing and perforation over the coming years.
Onshore production
Given relatively limited prospects and fluctuating drilling activity, onshore drilling expenditure is relatively volatile in Qatar, although expenditure has seen a general upward trend over the last five years to exceed $46 million per annum. It is likely that fluctuations will continue over the coming years, although expenditure will be above $35 million for the forecast period.
It is not expected that directional drilling or MWD to take a significant proportion of this expenditure as vertical wells dominate Qatari onshore activity. A small base of active development wells leads to only a minor onshore work-over market. It is estimated that expenditure of between $25-30 million a year is likely, of which fracturing & perforation will take the lion’s share.
Fracturing is driven particularly strongly by gas-dominated wells and Qatar will become a very significant region in this respect over the coming years. Within focus segments, work-over expenditure of an estimated $166 million in 2005 will grow to reach $1.3 billion by 2014 – an average of 15.6% annual growth. By this point, Qatar will be MENA’s primary centre for offshore fracturing & perforation expenditure – greater than neighbouring Saudi Arabia by over $200 million per year.
LNG in Qatar
Qatar is the LNG capital of the world, with healthy export markets to India, Japan, Korea, Spain, UK, and the US. In addition, the country has the world’s third largest proven natural gas reserves, estimated at 25.46 Tcm (899.3 Tcf), 13.8% of the world’s total. The low cost of gas gives Qatari projects a major cost advantage over all other LNG sources. Qatar aims to complete all of its current LNG developments by 2011, which would then boost production to 77.10 mmtpa. Beyond 2011, the increase in Qatar’s capacity is expected to flatten because no new trains are planned due to a 2005 moratorium.
