OMAN’S Mukhaizna heavy oil project is producing about 120,000 bpd and remains economic, even though it has required twice as many wells to extract the oil as originally estimated, a senior Total executive says.
“It is still a profitable project; still a good project,” Arnaud Breuillac, Total’s senior vice president exploration and production Middle East, says. “We’ve managed quite well the capital expenditure. We’re taking a step-by-step approach,” he adds.
“We need to be patient. Maybe 10 years are needed to find the right model,” Breuillac says when asked when the project partners would make a decision on full-field development. Total is a junior partner in Mukhaizna with a 2 per cent working interest.
The development consortium is led by Occidental Petroleum (45 per cent) and also includes state-owned Oman Oil Company (20 per cent), Royal Dutch Shell (17 per cent), Abu Dhabi government-owned Mubadala Development (15 per cent) and Partex (1 per cent).
In the current development phase, which started in 2005, the partners aim to drill more than 2,000 production wells, using steam-flooding to ramp up production to a target of 150,000 bpd, according to the Oman Oil website. The Mukhaizna field in south central Oman has estimated resources of 2 billion to 2.4 billion barrels of sticky crude.
Occidental says on its website that output from the project approached 124,000 bpd at the end of 2011, about 16 times higher than in September 2005, when the US oil major assumed operation of the field.
“Oxy plans to steadily increase production at Mukhaizna through continued expansion of the steam-flood project,” the website states.
The capital cost of the first phase of Mukhaizna was originally estimated at $3.8 billion. The developers proposed to reach the target 150,000 bpd of output in 2011.
Breuillac says heavy oil was an increasingly important part of Total’s global portfolio and the future of the oil industry. He estimates global proven heavy crude reserves at 450 billion barrels, mainly located in Canada, Venezuela, Russia and China.
The Middle East region’s heavy oil potential was significant but under-evaluated, he adds. Total’s Sincor joint venture with Venezuela’s PDVSA and Norway’s Statoil to extract and upgrade ultra-heavy crude from the country’s Orinoco belt had been producing 200,000 bpd of 32-degree API (medium density) synthetic crude oil since 2000, Breuillac says.
The French energy group has a 47 per cent stake in Sincor, which is one of five similar projects in the Petrocedeno area of the Orinoco belt.
“The potential of this area is very, very significant in the future,” Breuillac says.
In Canada, where the company is a partner in two oil sands projects, Total’s 50:50 Surmont joint venture with ConocoPhillips had reached more than 25,000 bpd of output from phase one of the steam-assisted gravity drainage (SAG-D) development, Breuillac says.
The total design capacity of phase one of the project was 27,000 bpd, he adds.
Development of phase two, designed to produce 100,000 bpd, had been launched with startup expected in the first quarter of 2015, Breuillac says.
SAG-D is a technology whereby vertically aligned pairs of parallel horizontal wells are drilled into oil sands deposits below ground. Steam is injected into the reservoir from the upper bore to mobilise the tar-like crude.
