HAVING reversed years of decline in national oil production, Oman is pinning its hopes on enhanced oil recovery (EOR) to spur further recovery.

The rebound is being led by new players that snapped up acreage from dominant upstream player Petroleum Development Oman (PDO).
But there are limits to the upside potential, in terms of both acreage that PDO will relinquish for other companies and the extent of EOR’s prospects in Oman.
Oman’s crude oil and condensate output peaked at 960,000 barrels per day (bpd) in 2001 and steadily slid to a low of 710,000 bpd in 2007, undermined by a combination of aging oil fields, challenging geology and reservoir management. Levels clawed back to 757,000 bpd last year, with the ministry predicting a bounce to 805,000 bpd this year, thanks to a combination of EOR projects and extra condensate flows.
Of the total, crude alone peaked at just below 900,000 bpd and bottomed out at 651,000 bpd in 2007, before climbing back to 669,000 bpd in 2008.
Although Muscat has long opened exploration opportunities to newcomers, it raised the stakes in recent years by offering EOR and small-field contracts carved out of PDO’s Block 6.
One such project – Occidental’s steamflood development at the Mukhaizna heavy oil field – has been crucial to the rebound. Oxy raised production from 10,000 bpd in 2006 to 50,000 bpd at the end of 2008.
It is due to bring a further 30,000 bpd on stream this year as it heads toward a target of 150,000 bpd for 2012. Others are developing small groups of marginal fields, including local Petrogas, which was awarded the Rima cluster, and Indonesia’s Medco Energi, with the Karim cluster.
Zaid Khamis Al-Siyabi, director-general of oil and gas exploration and production at the oil ministry, says that Oman’s future lies in heavy oil, although developments require hefty investments and can be affected by price fluctuations. Medco is still studying its project, while Petrogas is some way from a final decision on whether to deploy tertiary EOR techniques at Rima.
Even if these companies make a final decision to go ahead with EOR plans, there is a limit to what such techniques can achieve at small fields. Petrogas’ Rima involves a group of unconnected single-well discoveries, with a goal of raising output from 2,000 bpd to 7,000 bpd, while Medco has a more ambitious target of 30,000 bpd. Oman is unlikely to roll out another oil field with as much growth potential as Mukhaizna, another ministry source tells Energy Compass.
The production boost from Oxy’s project will exceed that of all other EOR schemes currently on PDO’s books, he says.
PDO – which is owned by the state, Royal Dutch Shell, Total and independent Partex – failed to replace natural declines at maturing fields with newer developments, and saw its share of total Omani crude and condensate output fall from around 95 per cent in 2001 to 84 per cent last year.
Under pressure from Muscat to improve its reservoir management, the Shell-guided company in 2002 announced an expansionary five-year plan to arrest field declines through EOR. Its three major schemes involve a miscible gas injection project at Harweel in southern Oman, a steam injection scheme in Qarn Alam, and a smaller polymer injection project in Marmul.
Qarn Alam and Harweel will each contribute 40,000 bpd, and Marmul 10,000 bpd.
These schemes are now more than 70 per cent complete, Al-Siyabi said. Marmul is set to add production this year, and the other two in 2010 – compared with original targets of 2007.
After missing its production targets in past years, PDO is now reluctant to spell out goals for growth.
Outside PDO’s vast acreage, Oxy produces more than 60,000 bpd from Block 9, separate from the Mukhaizna project, while local Petrogas pumps around 20,000 bpd from Block 5. UAE-based Rak Petroleum and South Korea’s LG International in February started oil production from the offshore Block 8 at an initial 3,000 bpd, and sources say levels could reach 10,000 bpd.
For exploration, Oman is limited to offering acreage relinquished by other companies after lack of success, and has struggled to attract much interest. It recently signed exploration agreements for Block 64 with Houston-based Harvest Natural Resources and Block 63 with Malaysian state Petronas. Five blocks are currently out to tender, with a deadline of May 2.
Three of these were recently let go by Chinese Sinopec and US Hunt Oil. Omani officials note that in the past, smaller companies have made some discoveries on acreage relinquished by larger firms.
Oman is also pinning hopes on making small finds in new areas says Al-Siyabi.
Smaller players that have taken over fields relinquished by PDO are now considering following suit; they will go ahead if the schemes look commercially viable, Al-Siyabi says.
These smaller firms include Indonesia’s Medco Energi, which is trying to increase output from the Karim cluster of oil fields from around 12,000 barrels per day to 30,000 bpd. Another is Oman’s Petrogas, which is attempting to boost production from its Rima cluster from 2,000 bpd to 7,000 bpd.
PDO is working on three EOR projects considered key to stemming Oman’s production decline, but all have been delayed. They are a miscible gas injection project in Harweel in southern Oman, a steam injection scheme in Qarn Alam in central Oman, and a smaller polymer injection project in Marmul. Qarn Alam and Harweel will each contribute an extra 40,000 bpd of oil, while Marmul is expected to bring an additional 10,000 bpd.
All three projects were originally due on line by 2008, but have been delayed by technical problems. Al-Siyabi says Marmul is now expected to be commissioned by the end of June; Harweel and Qarn Alam will be commissioned in 2010, but it may take up to six months for them to reach their full capacity, he added.
Oxy is meanwhile implementing a steamflood EOR project at the Mukhaizna heavy oil field. The US firm saw production increase to 50,000 bpd at the end of 2008 from an average of 10,000 bpd in 2006. The target for the end of this year is 80,000 bpd, Al-Siyabi says, and 150,000 bpd for 2012.
The country is also counting on small finds to stabilise production. The oil ministry in January offered one offshore and four onshore blocks to international bidders and has sweetened terms to lure more interest. “We have done some modifications – for example in cost recovery, profit split and commercial issues,” Al-Siyabi says. He adds that foreign firms have shown interest in the blocks. More blocks will go on offer when PDO relinquishes further acreage, he says.