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$1 bn Abu Tubul Energy Pact

Source: Oman Observer 10/9/2011, Location: Middle East

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Oman Oil Company Exploration and Production (OOCEP), the upstream subsidiary of the wholly government owned Oman Oil Company, is set to sign a pair of agreements this week that will further underscore its emerging importance as a key player in the country’s mainstay hydrocarbon sector.

The pacts, scheduled to be inked on Tuesday, October 11, will commit OOCEP to the further development of two hydrocarbon blocks, including the hugely promising Abu Tubul gas field in Block 60 in central Oman. Top officials of the Ministry of Oil and Gas will initial the agreements on behalf of the Omani Government.

The first agreement covers Block 42 in the Sharqiyah region. Covering an area of about 25,600 sq kilometres, the concession encompasses the northeast coastal range of the Oman Mountains and the basin immediately to the south (under Ramlat Sharqiyah). Hydrocarbon indications have already been proven by previous exploration wells. OOCEP plans to acquire new data to appraise known structures in the block.

The more significant of the two pacts is a Gas Sales Agreement covering initial output from the Abu Tubul field in Block 60. In March this year, OOCEP said it planned to invest around $1.1 billion in the development of the gas-rich Abu Tubul discovery. The amount represents the first phase investment in an ambitious project to unlock Block 60’s potentially prodigious reserves of tight gas and condensates. OOCEP has set its sights on a Q1 2013 time frame to bring the field into commercial production.

Output is targeted at a peak production rate of 90 million standard cubic feet per day (mmscf/d) — volumes that will go a long way in meeting the nation’s escalating demand for natural gas as fuel for electricity generation and water desalination, as well as feedstock for petrochemical schemes.

Block 60 is proposed to be developed in two distinct phases. Phase 1, targeting the southern part of the block with its prized Abu Butabul field, will first be taken in hand for development. Around $1 billion will be invested in harnessing the unconventional gas reserves of the field over a two-year period. In the second phase, OOCEP plans to drill at least two exploration wells in the northern half of the 1,485 sq kilometre concession.

The Abu Tubul field, first discovered in 1998, has ample volumes of gas in place, but the challenge lies in evacuating the gas, trapped in tight pores in the rock, to the surface. Horizontal drilling and technology hold the key to enhancing recovery from the reservoir.

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