BP adds to its gas mix with production starting for the country's Khazzan field
First gas flows from giant Omani field
Gas began flowing on Monday for the first phase of BP’s Khazzan gasfield in Oman.
Phase 1 includes 200 wells feeding into a processing facility, owned by BP and the Oman Oil Company for Exploration and Production. Production is expected to reach 1 billion cubic feet (bcf) of gas per day, the UK oil major said.
“The start of production from Khazzan, BP’s sixth and largest major project start-up so far this year, is an important milestone in our strategic partnership with Oman,” said Bob Dudley, the BP group chief executive. “With further development already planned, this giant field has the potential to produce gas for Oman for decades to come.”
BP announced earlier this year that it would bring on seven new upstream projects, which will add 800,000 barrels of oil equivalent per day of new production by 2020.
For Oman, the biggest regional oil producer that is not a member of Opec and ranked seventh-largest among Middle East producers by the IAE, more natural gas is important for the country’s power generation sector as well as for exports to generate additional revenue. “This will result in realising more gas reserves and more production of gas that our country needs to support our energy planning and requirements,” said Mohammed Al Rumhy, Oman’s oil minister.
Wood Mackenzie said this phase alone, which costs around US$12 billion, would supply a quarter of Oman’s gas by 2019 - a 25 per cent reduction from the original development plan. “As well as satisfying domestic demand, we expect Khazzan to allow incremental LNG exports of 1.5 million tonnes per annum from Oman’s LNG plants,” said Liam Yates, Wood Mackenzie’s Mena upstream research analyst.
Mr Yates said the field will help to replace declining output, particularly from Petroleum Development Oman, which produces over 90 per cent of Oman’s gas. "Successful first gas marks an important step towards sanction of a second development phase. Khazzan's contribution to Omani gas supply will increase to 35 per cent by 2022, assuming Phase 2 is sanctioned," he said.
The second phase will have 300 wells drilled, raising output by 1.5 bcf a day, and BP said the combined phases will develop an estimated 10.5 tcf of recoverable gas reserves.