BP Oman lets drilling contracts for Khazzan tight gas project

BP Oman has let two long-term drilling contracts totaling $730 million for the Khazzan gas project in the southern portion of Block 61.

The first agreement calls for KCA Deutag to construct and operate five newbuild land rigs to be assembled in Nizwa, Oman. The contracts total more than $400 million.

The second agreement calls for Oman’s Abraj Energy Service to supply three drilling rigs for the full field development. The contracts total more than $330 million.

Construction work for Khazzan is under way and production is expected to launch in late 2017.

Oman’s government and BP in December 2013 signed a gas sales agreement and an amended production-sharing agreement for development of the project. The agreements were ratified in February.

BP in February let a $1.2-billion engineering, procurement, and construction contract to UK-based Petrofac for a central processing plant (OGJ Online, Feb. 20, 2014).

The following month, BP let an engineering, procurement, and construction management services contract to Jacobs Engineering Group Inc. for $2 billion of gas gathering and water pipelines, wellhead production facilities, and export pipelines (OGJ Online, Mar. 4, 2014).

The project’s full field development involves a 300-well drilling program over 15 years to deliver plateau production of 1 bcfd of gas, equivalent to a one-third increase in Oman’s total daily domestic gas supply, BP says.

BP describes the Khazzan project as the first phase in the development of one of the Middle East’s largest unconventional tight gas plays, representing potential to serve as a major source of gas supply for Oman for many decades. The company in 2011 reported plans to invest $15 billion over a 10-year period for the full-field development of its Block 61 tight gas fields (OGJ Online, June 20, 2011).

BP operates Block 61 with 60% interest, and Oman Oil Co. for Exploration & Production holds the remaining 40%. BP’s upstream presence in Oman dates back to 2007.

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