Oman is the largest oil producer in the Middle East who is not a member of the Organization of Petroleum Exporting Countries (OPEC). Oman is a mature oil producer but ran across some troubles with oil extraction in recent years. However, with the application of modern oil extraction techniques, the country was able to avoid a decline in production.
Oman’s crude oil production
Oman saw its crude oil production peaking in the year 2000 when the crude oil production touched 970,000 barrels per day (bblpd). The production started declining after that time and dropped to 710,000 bblpd by 2007. This was a matter of serious concern, with oil being a major contributor to the economy. The country implemented improved enhanced oil recovery (EOR) techniques to turn this situation around and the country’s production increased to 919,000 bblpd in 2012.
Figure 1: Oman crude oil production 1980-2012
“After declining for several years in the early 2000s, EOR techniques have been a key driver of Oman’s rebounding oil production since 2007. At the center of Oman’s EOR activities is Block 6, operated by Petroleum Development Oman (PDO), a joint venture majority-owned by the government of Oman that accounts for 70% of the country’s oil production. Within Block 6, there are a number of projects currently using a range of EOR techniques (see below). PDO expects 16% of its oil production to come from EOR projects by 2016, up from just 3% in 2012. EOR techniques are critical to Oman’s future production plans, and, as such, developments in those technologies are important to Oman’s future production. For example, in late 2012 Royal Dutch Shell plc (ADR) (NYSE:RDS.A) (NYSE:RDS.B) invested more than $25 million in a solar-powered EOR process, although it was not operating as of early October 2013,” says the U.S. Energy Information Administration (EIA).
The EOR techniques applied by the country include:
- Polymer injection: When reservoirs contain heavier grades of crude, the viscosity of the oil restricts its flow to the well. With such a heavy grade of crude, water injection might not prove effective, as the disparity in viscosity causes the water to pass the oil instead of pushing it to the well. At Oman’s Marmul project, with its heavy oil, injecting polymer fluid is more effective than other EOR techniques such as steam injection. In 2012, Marmul produced approximately 75,000 bbl/d.
- Miscible gas injection: Miscible gas injection involves pumping gas, often toxic, that dissolves in the oil, facilitating higher flow rates. Operators at Oman’s Harweel oil field cluster use this technique in their operations. As a result, Harweel produced an additional 23,000 bbl/d in 2012, and production could continue to increase by another 30,000 bbl/d in the near term.
- Steam injection: Thermal EOR entails the injection of steam in various ways and durations to facilitate the flow of heavier oil to the well. In Oman, operators use thermal EOR methods at Mukhaizna, Marmul, Amal-East, Amal-West, and Qarn Alam fields, among others. Thermal EOR could increase production at both Amal-East and Amal-West to 23,000 bbl/d by 2018. Furthermore, the steam injection at Qarn Alam should increase production by 40,000 bbl/d by 2015 through a novel process in which the steam drains oil to lower producer wells. (U.S. Energy Information Administration)
The Petroleum Development Oman (PDO) is 60 percent owned by Oman’s federal government but the remaining stake is distributed among international oil companies including Shell (34 percent), Total (4 percent) and Partex (2 percent). The PDO also has a strong presence in the natural gas sector and accounts for almost all of Oman’s natural gas supply. Other major players besides the PDO with interests in Oman’s oil and gas assets include Royal Dutch Shell plc (ADR) (NYSE:RDS.A) (NYSE:RDS.B), Total SA (ADR) (NYSE:TOT), Partex, BP plc (NYSE:BP) (LON:BP), CNPC, KoGas, and Repsol SA (ADR) (OTCMKTS:REPYY) (MCE:REP).
Oman has proven crude oil reserves of 5.5 billion barrels of oil and 30 trillion cubic feet of natural gas. Oman’s oil reserves rank 7th in the Middle East and 21st in the world.