Oman’s Oil Production Costs on the Rise

By Abdelghani Henni 15 Sep 2014

The cost of Oman’s oil production is rapidly increasing because of the increased use of enhanced oil recovery (EOR) techniques that currently account for 180,000 BOPD to 200,000 BOPD of the country’s 940,000 BOPD annual oil production.

“In comparison with primary oil extraction, which sometimes costs only USD 4-5 per barrel, EOR techniques come at an expense of USD 10-12 per barrel,” said Salim bin Nasser Al-Aufi, undersecretary of the ministry of oil and gas in Oman.

Petroleum Development Oman (PDO), which commissioned its first EOR project in 2004, announced in 2012 that EOR would grow from 3% of current oil production to 25% of total liquids production by 2020. 

The most common EOR method deployed in Oman is thermal EOR. This process injects steam into the ground so that operators can heat rock formations surrounding the reservoir to reduce the oil’s viscosity and facilitate extraction. 

Producing the steam necessary for EOR burns enormous quantities of natural gas, a scarce and expensive commodity in the region. In places where natural gas is scarce, as in Oman and Kuwait, burning gas for EOR means less gas for power generation, industrial development, and export. 

Oman is increasingly adopting EOR techniques to facilitate heavy oil extraction and boost well productivity by up to 300%. 

Oman’s average oil production peaked in 2000 at 970,000 BOPD but dropped to 710,000 BOPD in 2007 because of declining production at aging fields. The decline has been successfully reversed with increased use of EOR, as well as additional gains from recent field discoveries. According to Oman’s Ministry of Oil and Gas, Oman produced an average of 940,000 BOPD of crude oil in 2013 and wants to maintain production at that level for the next 5 years.

Abdelghani Henni is the Middle East Editor for the Journal of Petroleum Technology.