Oman - Part 1 - The Prospects & Geology.
PDO has been injecting $1.5bn per annum to boost its crude oil output. The government's target for crude oil and condensate production for 2015 is 1m b/d, mostly from an increase in PDO's condensate output. The other oil and condensate producers in Oman have a combined output of about 265,500 b/d. This compares with non-PDO output of 54,400 b/d of oil and gas liquids in early 2004. The non-PDO ventures also produce natural gas being supplied to the domestic market (see Part 2 in omt6OmanFieldsFeb6-12 & gmt6OmanFieldsFeb6-12).
Oman's objective in the late 1990s to raise oil and condensate production to 1m b/d by 2004 was shelved in view of the fall in PDO's output. Now enhanced oil recovery (EOR) projects are the main-stay, with PDO having tested various new technologies. Oman's crude oil output had risen to 900,000 b/d in late 1996, compared with about 600,000 b/d in 1990 and 400,000 b/d in the late 1970s.
A shift to natural gas for domestic use has limited local oil demand growth (see down5OmanEnBasJan30-12) and helped maintain a fairly good level of exports, including LNG (see Part 3, omt7OmanExportsFeb13-12).
The state-owned Oman Oil Co. (OOC) has increased its investments overseas (see down7OmanOverseasFeb13-12).
The chief executive in Oman is Sultan Qaboos bin Sa'id, who is PM and holds several other positions. His informal advisers include CEOs of major IOCs and he personally supervises key oil and gas E&P deals, having to approve exploration and production sharing agreements (EPSAs - see who's who in Part 4, omt8OmanWhoFeb20-12).
The Sultanate of Oman has a land area of about 309,500 sq km. It is bordered in the north by the UAE, in the north-west by Saudi Arabia, and in the south-west by the Republic of Yemen. Its southern coast runs from the Arabian Sea to the Gulf of Oman and the Musandam Peninsula forms its eastern coast along the Strait of Hormuz.
French and Italian geologists in early 1995 discovered plant fossils about 280m years old in the Houshi Haqf region in central Oman. Hareb al-Hashemi, an expert at the Omani Ministry of Oil and Gas (MOG), said they found pre-historic tree trunks, branches and leaves - sent to France for analysis. The excavations were part of a three-year study of geological changes which covered parts of Oman, Pakistan, Saudi Arabia and Morocco. In 2000 B.C. copper mining and smelting was a major industry in Oman, proven by excavations in the Sohar region. It is said this is the source of copper, "Magan country", referred to in Sumerian tablets. The frankincense and aromatic gums of Oman's southern province Dhofar, now exploited as base ingredients in a lucrative perfume industry, are the same as those used in ancient Egyptian and European rites (see historical background in gmt5OmanGeoJan30-06).
Oman embraces geological provinces for a variety of minerals. The north-east is occupied by the Oman mountains, a complex of igneous and metamorphic rocks emplaced by south-westerly directed thrusting in late Cretaceous times. The rest of the country over-lies the Arabian Shelf, with complex strata generally dipping north-west from the coast into the Rub' al-Khali (Empty Quarter) Basin.
For petroleum, Oman's geology is different from that of Saudi Arabia and the UAE. Omani fields are small, deep and more complex, with many having low permeability. Over 2,050 producing oil wells in Oman average about 400 b/d, compared to 3,700 b/d from 1,850 wells in Saudi Arabia. The wells in Oman are in very tight reservoirs down to depths of up to 5,000 metres. The gas has condensate so it is high pressure and high temperature. There are very few of these kinds of wells in the world today.
With varied terrain, the interior is dominated by a mountain range called al-Hajr (rock). The largest mountain is Jabal al-Akhdar which rises to more than 2,000 metres. At the north-eastern end, the Musandam Peninsula juts into the Strait of Hormuz and is similar to the barren fjords of Norway, with a difference in temperature. In the south-east, the fertile Batina plain inclines towards Muscat and then on to reach the edge of Rub' al-Khali. From there one travels through mountains to the monsoon-fed plain of Salalah in the south which is near tropical.
The main petroliferous areas of Oman include the following: (a) the Arabian Basin, linked to that of the UAE and Saudi Arabia; (b) the Oman Salt Basin in the centre and south; and (c) a narrow strip of offshore territory facing the coast of the Musandam Peninsula. But it is in onshore areas that prospectivity has encouraged foreign developers.
More than half of Oman's proven oil reserves of about 4.95bn barrels are located in the north of the country, mainly in the fields of Yibal, Natih, Fahud, al-Huwaisah, Lekhwair and Shibkah. These form a single geological structure with proven oil reserves of 2bn barrels. There are large reserves of very heavy oil in southern Oman, along the Marmul-Jalmud trend, with the oil in place said to be 60bn barrels.
Within onshore Oman there are four oil fairways. The most northerly lies close to the borders with Abu Dhabi and Saudi Arabia, in the extension of the Arabian Basin. The three main fields there are Lekhwair, Safah and Daleel. Their oil and gas reservoirs are of the Thamama group similar to that of eastern Abu Dhabi. Field sizes are small, compared to the giant Thamama field of Abu Dhabi. A full-scale water flooding programme increased recoverable oil at Lekhwair to 400m barrels.
South of the Lekhwair-Daleel trend, three productive areas in central and southern Oman are each associated with a sub-division of the main Oman Infra-Cambrian Salt Basin. In the north of these are fields centred on Fahud-Natih-Shibkah (Yibal), with oil and gas mostly in Cretaceous limestone formations (Fms). Field sizes range from 500m to 1bn barrels, but are still small by Middle Eastern standards.
In central Oman, Saih Nihaydah fields are associated with a salt basin. There petroleum is reservoired in Upper Paleozoic and Mesozoic Fms. Field sizes for oil are small. But since late 1989 drilling at Saih Nihayadah and nearby fields has led to the discovery of a deeper gas/condensate pool with very large reserves.
In east-central Oman, Barik and Saih Rawl have fairly large oil and gas reserves in Aptian Shu'aiba Fms which are dolomitic, and in Permo-Carboniferous Fms of the Khlata and Qharif groups. Saih Rawl has a deep gas pool in Cambro-Ordovician sandstones of the Andam group. Total, a partner in PDO, came to this area in mid-1995.
In southern Oman a fourth petroleum province lies along the Marmul-Nimr-Jalmud trend. Fields there are associated with the Southern Oman Salt Basin. The oil is heavy, mostly reservoired in Lower Paleozoic Fms. Marmul oil, found in 1956, was then judged un-economical because it was 22[degrees] API with high sulphur content. Advanced technology made Marmul oil extraction possible. Some fields in the southern trend to have gas. Many Fms are periglacial sandstones sealed by glacial tillites. This is one of the few areas in the world such Fms host petroleum reserves in commercial quantities.
PDO found oil at al-Noor-2 in January 1994 in a rare Athel Fm in the south. The well, 40 km west of Nimr field, produced 625 b/d of 47[degrees] API oil and 25,000 CM/d of gas. A PDO executive said the find was "in a unique rock from which oil and gas have never before been produced in Oman". Athel had been penetrated many times in the course of drilling in the south but had "never proven to be oil- and gas-productive before". The well encountered Fms which "allow very high reservoir pressure to exist". Tests on the rock showed an average microporosity of 22%, almost as good as some of Oman's most prolific fields. The find was hooked up by pipeline to the Birba field, 65 km from al-Noor-2 well. Athel, about 4,500 metres deep, contained over 3bn barrels in place. This complex structure required cutting-edge technology. Shell, the technical leader in PDO, had to overcome such challenges as seismic interpretation, reservoir characterisation and well productivity.
PDO is evaluating shale gas exploration in its concession. If found commercially viable, shale gas will be developed on a full scale. There are also coal-bed methane prospects in Oman to be explored, in addition to tight gas being explored by BP.
Offshore Prospects: Drilling off the north-east Batina coast, on the Arabian Sea, has been disappointing. Results have disproved a model on which the concessionaire there, BHP, based its permit. PDO in late 1991 drilled its first offshore well 63 km north-east of Salalah, Dhofar, in a $10m operation using a specially contracted drill-ship. By 1988 it had begun exploration and seismic tests in three areas off Dhofar.
The offshore Musandam has two gas finds - Bukha and West Bukha - of the same structure as that of Iran's adjacent Henjam gas field. The larger one, Bukha, is a gas/condensate field in the Thamama Fm. The presence of gas/condensate, rather than oil, in Bukha is the result of a greater depth of burial of early Cretaceous/Jurassic source rocks in the Ras al-Khaimah syncline.
Results with over 110 fields producing and un-developed suggest that, since exploration began, operators have delineated all the major oil fairways. Oman does not have giant fields like its GCC neighbours. But exploration has been rewarded by a steady stream of successes which at times out-paced production. Particularly interesting are finds made since 1989, as PDO and other operators have applied advanced technology.
The summit of Jabal Madmar is a classic petroleum-trapping anticline, one reason behind Muscat's decision in 1990 to contract the French Bureau de Recherches Geologique et Miniere which made detailed geological maps of the sultanate. The summit, 400 metres high, is one of the most inaccessible areas of Oman's mountains, first noticed in the 1940s by legendary explorer Wilfred Thesiger. Close to the oasis town of Adam, this is the ancestral home of the Bu-Sa'id tribe, from which Sultan Qaboos is descended.