BP and Oman Oil Company Exploration & Production signed an agreement with the Government of the Sultanate of Oman amending the Oman Block 61 exploration and production sharing agreement (EPSA) to extend the license area, paving the way for further development of the giant Khazzan tight gas field.
Under the amended EPSA, the extension adds more than 1000 square kilometres to the south and west of the original 2,700 square kilometres of Block 61. The extension will allow a second phase of development, accessing additional gas in the area already identified by drilling activity within the original block. Development of this additional resource is subject to final approval of the Government of Oman and of BP - both expected in 2017.
BP is the operator of Block 61 with a 60% interest and Oman Oil Company Exploration & Production holds the other 40%.
The agreement was signed today in Muscat by His Excellency Dr. Mohammed Al Rumhy, Minister of Oil and Gas of the Sultanate of Oman, Bob Dudley, BP Group Chief Executive, and Eng. Isam bin Saud Al Zidjali, CEO of Oman Oil Company on behalf of Oman Oil E&P.
Dr. Mohammed Al Rumhy commented: “BP recently reached over 80% progression on the Khazzan project completion and on track to deliver first gas near the end of 2017, and I am delighted to see BP taking additional acreage that will result in realizing more gas reserves and more production of gas that our country needs to support our energy planning and requirements.”
Bob Dudley commented: “I am very pleased to be in Muscat to sign this important agreement with our partners. BP is proud to expand our cooperation in the Khazzan project which will be the major source of energy for the Omani economy for decades to come. This expansion will build on our work on the first phase, working closely with our Omani partners and demonstrates our commitment to invest in a significant project that will deliver long-term value to both Oman and BP.”
The Khazzan reservoirs in Block 61 represent one of the Middle East’s largest unconventional tight gas accumulations and are expected to be a major new source of gas supply for Oman over many decades. Production from Khazzan will make a significant contribution to ensuring continuing stable and long-term domestic supplies of gas for Oman is expected to represent around 40% of the country’s current total domestic gas production.
Eng. Isam bin Saud Al Zidjali, commented “Today’s signing marks another milestone in our strategic partnership with BP, and complements the existing licensing agreements. This project contributes to Oman’s economy in various ways; to begin with, the gas will provide feedstock for development of downstream/petrochemical industries. Once the project is on stream it will increase the overall supplies of gas and adds additional resources to the country.”
The Phase 1 project, sanctioned in December 2013, is more than 80 percent complete and remains on schedule to deliver first gas in late 2017. Subject to final approval, Khazzan Phase 2 project is expected to come on stream around 2020.
Taken together, the two phases are expected to produce 1.5 bcf/d of gas through development of 10.5 trillion cubic feet of recoverable gas resources. This will involve construction of a three-train central processing facility with associated gathering and export systems and drilling over 300 wells over a 15 year period. Improved reservoir performance, drilling efficiencies and other improvements have reduced the well count by around 100 wells from the original Phase 1 plan.