BP To Spend $15 Billion For Gas Trapped Under 5KM Of Rock In Oman

oman gas tank

Photo: commons.wikimedia.org

Oman, the Gulf’s least developed state, is set for a major gas development project that will increase the country’s gas production by 40%.The Khazzan and Makarem Gas Fields hold an estimated 30 trillion cubic feet of gas, the biggest field in Oman.  According to Bloomberg News, British Petroleum plans to invest $15 billion over at least a decade to develop the field, and hopes to produce 1-1.2 billion cubic feet of gas per day from the fields.

Oman has been mostly left out of the bonanza of demand for natural gas in Asia that followed from the uncertainty over nuclear power.  Unlike Qatar’s, Oman’s natural gas is tight gas, natural gas that is held in rock pores that could be as much as 20,000 times smaller than a human hair. Furhter complicating matters, the tight gas is buried under 5,000 meters of nearly impermeable rock. This makes the extraction of the gas extremely capital-intensive, inefficient and risky.  Extraction often involves the highly controversial hydraulic fracturing method, which could contaminate groundwater and air.

The Oman Observer reports that although BP has yet to formally sign an agreement with the Omani government, but the company has already sunk $600 million into test wells in the fields.

Omani’s make about 25,000 per year on average, compared to nearly twice as much in the neighbouring United Arab Emirates and not even close to gas-rich Qatar.  The government of Oman realises that if they don’t don’t address their economy’s dependence on dwindling oil reserves, they will suffer.  Their goal is to balance their country’s portfolio and relegate the oil sector to 9% of GDP by 2020.  The natural gas wil surely play a greater role in Oman’s economy in the future.

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