Britain’s BP and partner Oman Oil signed an agreement on Sunday to develop a second phase of the Khazzan natural gas field, taking the estimated investment in the project to $16bn, the company said.
The agreement with the government of Oman will add more than 1,000 sqkm to the original 2,700 sqkm Block 61, which is expected to start delivering gas in late 2017, BP said.
The second phase is expected to come on stream in 2020, and together they are expected to produce 1.5bn cubic feet (bcf) of gas per day, the oil major said in a statement, equivalent to around 40% of Oman’s current total domestic gas production.
BP is the operator of the block, with a 60% interest, while state-owned Oman Oil holds the other 40%.
The agreement was signed by Dr. Mohammed bin Hamad al Rumhy, Oman’s Minister of Oil and Gas, Bob Dudley, BP group chief executive officer, and John Malcolm, executive managing director of Oman Oil E&P.
“I am delighted to see BP taking additional acreage that will result in realising more gas reserves and more production of gas that our country needs to support our energy planning and requirements,” Rumhy stated.
The Khazzan reservoirs in Block 61 represent one of the Middle East’s largest unconventional tight gas accumulations, with the potential to be a major new source of gas supply for Oman over many decades. Production from Khazzan will make a significant contribution to ensuring continuing stable and long-term domestic supplies of gas for Oman.
The Phase 1 project, sanctioned in December 2013, remains on schedule to deliver first gas in late 2017. Subject to completion of the agreements and final sanction, the new Khazzan Phase 2 project will come on stream from 2020.
The two phases are expected to produce 1.5 bcf of gas per day through development of 10.5tn cubic feet of recoverable gas resources. This will involve construction of a three-train central processing facility with associated gathering and export systems and drilling around 325 wells over a 15-year period.
Improved reservoir performance, drilling efficiencies and other improvements have reduced the well count by around 100 wells from the original Phase 1 plan.
