BP, Oman Agree to Extend Khazzan Gas Project
BP and Oman Oil have signed a heads of agreement with the government of the Sultanate of Oman to add 1,000 km² to the 2,700 km³ licence area of the Block 61 exploration and production sharing agreement, the UK major said February 14.
The deal allows the further development of the major Khazzan tight gas field, at a combined cost of around $16bn. BP is the operator of Block 61 with a 60% interest and Oman Oil holds the other 40%. A final investment decision will take place next year.
The agreement was signed in Muscat by Oman’s oil and gas minister Mohammed Al Rumhy, BP CEO Bob Dudley and John Malcolm, CEO of Oman Oil E&P.
Al Rumhy said: “I am delighted to see BP taking additional acreage that will result in realising more gas reserves and more production of gas that our country needs to support our energy planning and requirements.”
Dudley commented: “Khazzan is a major resource with the potential to produce gas for Oman for decades. This expansion of its development will build on the success we are already seeing in our work on the first phase, working closely with our Omani partners and applying BP’s leading technology and extensive tight gas experience. It clearly demonstrates our commitment to continue to invest in a superior project that will deliver long-term value to both BP and Oman.”
BP said the Khazzan reservoirs in Block 61 represented “one of the Middle East’s largest unconventional tight gas accumulations, with the potential to be a major new source of gas supply for Oman over many decades.”
Combined plateau production from Phases 1 and 2 is expected to total approximately 1.5bn ft³/d, equivalent to around 40% of Oman’s current total domestic gas production.
The Phase 1 project, sanctioned in December 2013, remains on schedule to deliver first gas in late 2017 at 1bn ft³/d. Subject to completion of the agreements and final sanction, the new Khazzan Phase 2 project will come on stream from 2020.
The development of the 10.5 trillion ft³ of recoverable reserves will involve a three-train central processing facility with associated gathering and export systems and around 325 wells over 15 years. Improved reservoir performance, drilling efficiencies and other improvements have reduced the well count by around 100 wells from the original Phase 1 plan, BP said.
William Powell