BP Has New $16B Gas Project
Oman has seen its gas exports fall drastically due to growing domestic demand, but it hopes that a new deal agreed with BP (NYSE:BP) will see production output rise enough to help maintain its desired rate of economic growth. The $16 billion natural gas project will see BP drill around 300 wells over the next 15 years throughout a region of the Omani desert that contains huge reserves in a sandstone formation about 4.5 kilometers below the surface. The Khazzan tight gas project, as it is called, will extract a predicted one billion cubic feet of gas a day.
Mohammed Al Rumhy, the Omani Oil and Gas Minister, announced: “Today’s signing is an important step in the Sultanate of Oman’s plans to meet growing demand for energy over the coming decades and to contribute to economic development in Oman. The Khazzan project is the largest new upstream project in Oman and a pioneering development in the region in unlocking technically challenging tight gas through technology. The country needs the gas to develop its economy. Our needs for gas increase day by day.”
BP will use its expertise in hydraulic fracturing to develop tight gas trapped in sandstone. It plans to invest about $9.6 billion to develop the project, of which it owns a 60 percent stake. The other 40 percent is controlled by the state-owned Oman Oil Company Exploration & Production.