Oman Sees First Deepwater Well

I n the wake of a long hiatus from discoveries that nearly made Oman obsolete in the industry, potential is brewing again. This time, it is offshore where Eni recently began drilling the country’s first deepwater well.

The company remains tight-lipped on the project, in which it holds a 55-percent stake, along with Qatar Petroleum and Oman Oil Company Exploration and Production.

In a Nov. 2019 publication of the Oman Business News, Eni CEO Claudio Descalzi announced, “The first drilling that we are doing in the region will be in Oman in February. It will be the first (deepwater) offshore drilling in Block 52 in Oman, so it’s quite important.”

“Oman is a very moderate oil and gas exporter/producer compared to our neighbors,” said past AAPG Middle East President Salim Al-Mahrouqi, a geologist formerly with Petroleum Development Oman. “In 2018, oil and gas made up to 36 percent of Oman’s GDP, and up to 78 percent of government revenue. Hence, any discovery is very important for the Oman economy. However, there is concentrated effort from the government to diversify the economy by focusing on other sectors such as mining, tourism, fisheries, logistics and manufacturing.”

Block 52 is a vast area of approximately 90,000 square kilometers off the southern and southeastern seaboard of Oman, with water depths up to 3,000 meters.

The exploration well was planned just seven months after the completion of seismic data acquisition and is likely to show gas-condensate, Descalzi said.

“In the last two years, we have signed more than 16 (oil and gas) agreements in the Middle East,” said Salvatore Giammetti, managing director of Eni Oman, in a February publication of Oman Business News. “But Block 52 has been the first. As a matter of fact, Oman was the first country in the region with which we have signed an agreement.”

Please log in to read the full article

I n the wake of a long hiatus from discoveries that nearly made Oman obsolete in the industry, potential is brewing again. This time, it is offshore where Eni recently began drilling the country’s first deepwater well.

The company remains tight-lipped on the project, in which it holds a 55-percent stake, along with Qatar Petroleum and Oman Oil Company Exploration and Production.

In a Nov. 2019 publication of the Oman Business News, Eni CEO Claudio Descalzi announced, “The first drilling that we are doing in the region will be in Oman in February. It will be the first (deepwater) offshore drilling in Block 52 in Oman, so it’s quite important.”

“Oman is a very moderate oil and gas exporter/producer compared to our neighbors,” said past AAPG Middle East President Salim Al-Mahrouqi, a geologist formerly with Petroleum Development Oman. “In 2018, oil and gas made up to 36 percent of Oman’s GDP, and up to 78 percent of government revenue. Hence, any discovery is very important for the Oman economy. However, there is concentrated effort from the government to diversify the economy by focusing on other sectors such as mining, tourism, fisheries, logistics and manufacturing.”

Block 52 is a vast area of approximately 90,000 square kilometers off the southern and southeastern seaboard of Oman, with water depths up to 3,000 meters.

The exploration well was planned just seven months after the completion of seismic data acquisition and is likely to show gas-condensate, Descalzi said.

“In the last two years, we have signed more than 16 (oil and gas) agreements in the Middle East,” said Salvatore Giammetti, managing director of Eni Oman, in a February publication of Oman Business News. “But Block 52 has been the first. As a matter of fact, Oman was the first country in the region with which we have signed an agreement.”

“Gas is on the rise in Oman, and this transition is very timely,” stated a November 2019 report from the Petroleum Economist, alluding to the country’s oil output, which, after a decline, has stabilized to roughly 1 million barrels per day in the last five years.

While Block 52 is relatively unexplored, it is believed to hold hydrocarbon potential based on evidence of the presence of petroleum systems in the area.

Just north of Block 52, an offshore light oil discovery was made last year in nearby Block 50, just off Masirah Island, by Masirah Oil Limited – with a production test of 3,500 barrels per day.

“This gives more confidence on the prospectivity of the eastern part of Oman offshore,” Al-Mahrouqi said.

It is reported that Oman currently produces roughly 3 billion cubic feet of gas and is encouraging exploration and other projects to monetize its resources.

Eni has been operating in the country since 2017 and last year entered into two additional contracts to explore two onshore blocks. The company currently has assets throughout the Middle East, including the United Arab Emirates, Bahrain, Lebanon and Iraq.

“We have a program (to drill) about 10 wells in the next couple of years, so it’s going to be very intense exploration activities,” Descalzi said.

Filling in the Gaps

The potential of offshore Oman has been studied for a while, as evidenced in a 2012 abstract titled, “Offshore Southern Oman: New Insights into the Petroleum Potential of the Northeastern Margin of the Gulf of Aden,” by Stuart Harker, an AAPG member and petroleum geology consultant based in Edinburgh.

“Southern Oman has had a long history of successful petroleum exploration onshore,” Harker said. “The petroleum potential of offshore Oman, from south west of Masirah Island to the Yemen border has up until recently been condemned for lack of mature source rocks. But there is evidence of a working petroleum system in this huge offshore area that is greater in size than the oil and gas fields occupying the Central North Sean Basin of North West Europe.”

Three nearshore wells, drilled in 1979, 1982 and 1991, all had either oil or gas shows, and there was evidence of a working petroleum system from active offshore seeps, Stuart explained. All wells were drilled on basement highs and did not reveal the “full story of the basin potential,” he said.

While these wells did have some petroleum shows, the sections penetrated encountered significant erosional unconformities and missing sections before reaching crystalline basement. However, extensive 2-D seismic data conducted in the early 21st century prompted a reappraisal of the prospectivity of southern offshore Oman, Harker said.

He added, “Analysis of that seismic reveals four separate sub-basins that have significant structures worthy of investigation, plus studies show several oil seeps that occur at the same locations on successive satellite surveys.”

Al-Mahrouqi suspects that offshore hydrocarbon systems will not differ much from onshore, as the geology of both is similar.

“Onshore, there are at least three hydrocarbon systems yielding at least 10 reservoir seal pairs,” he said. “I think it would be very interesting to see if additional hydrocarbon systems can be identified offshore.”

Diversifying for the Future

In addition to exploring Block 52, Eni also entered agreements last year to explore two onshore areas in Block 77 and Block 47, the latter in partnership with BP.

Block 77 covers an area of more than 2,700 square kilometers in central Oman, and, according to Oman Energy Minister Mohammed al-Rumhy, the block contains reserves of up to 4 billion cubic feet with the potential for 10 billion cubic feet in place. Block 77 lies less than 20 miles from Khazzan gas field, which produces 1 billion cubic feet per day – one-third of Oman’s total gas production.

Block 47 covers approximately 8,500 square kilometers onshore in the Omani A’Dakhiliyah Governate.

Furthermore, in a partnership, Shell and Total signed upstream gas agreements in Feb. 2019 to develop reserves in the Greater Barik region in the northwest. Initial production is estimated at 500 million cubic feet per day.

Aside from providing feed gas for Shell’s planned 45,000 barrels a day gas-to-liquids facility at Duqm port, Total plans to develop an LNG bunkering project at Sohar port, with a capacity of 1 million tons per year, reported the Petroleum Economist.

“Before, upstream companies would find gas and the government would buy it from them, with the government taking the full risk,” stated Oman Liquefied Natural Gas CEO Harib al-Kitani. “Today, the government lets the companies discover the gas and develop it all the way to production and export. It is a totally integrated project from one end to the other. It helps the government in terms of risk-taking and financial commitments.”

He added, “The government is spending a lot of money on bringing in new technology. These days you cannot survive without being efficient and without cost optimization.”

Furthermore, gas can be used for power or as feedstock for Oman‘s manufacturing industry, Al-Mahrouqi said. “Hydrocarbons, especially gas, are critically important for diversifying the Oman economy.”