Oil giant BP confirmed that it has signed an agreement with the Omani government and state-owned Oman Oil to develop the second phase of the Khazzan gas field.
Under the amended exploration and production sharing agreement, the licence area of Block 61 will be extended.
The extension will add over 1000 square km to the south and west of the original 2,700 sqkm Block 61.
The second phase of development will access additional resources in the area that have been identified by drilling activity within the original block, a statement said.
Currently, BP is the operator of Block 61 with a 60 percent interest while Oman Oil holds the other 40 percent.
The phase one project, sanctioned in December 2013, remains on schedule to deliver first gas in late 2017, BP said.
Subject to completion of the agreements and final sanction from the Omani government and BP – both expected in 2017 – the new Khazzan phase two project will come on stream from 2020.
The estimated cost for developing phase one and the phase two extension is around $16 billion.
Oman’s oil and gas minister Dr. Mohammed Al Rumhy stated: “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.”
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.
Combined plateau production from phases one and two is expected to total approximately 1.5 billion cubic feet of gas a day, equivalent to around 40 percent of Oman’s current total domestic gas production.
BP Group chief executive Bob Dudley added: “Khazzan is a major resource with the potential to produce gas for Oman for decades. This expansion of its development will build on the success we are already seeing in our work on the first phase.”
BP first signed an agreement with Oman’s government in January 2007 for the appraisal and development of Block 61.
The company carried out one of its largest-ever onshore seismic surveys covering the area and began appraisal well drilling activities in 2008.
By the end of 2015, 27 wells had been drilled and completed.
Its two-train central processing facility is more than 60 percent complete and around 11,000 people are currently working in the field.
Phase one will produce one billion cubic feet of gas a day through development of seven trillion cubic feet of recoverable gas resources.
The two phases together will develop 10.5 trillion cubic feet of recoverable gas resources. This will involve construction of a three-train central processing facility and drilling around 325 wells over a 15-year period.
By Aarti Nagraj
