PDO in 2018

Petroleum Development Oman (PDO) has confirmed a “significant” gas find with estimated recoverable reserves of more than four trillion cubic feet (TcF) and 112 million barrels of condensate in the northern part of its concession area.

The announcement came at the annual Ministry of Oil and Gas Media Briefing in which the company also reported on a string of achievements, including its best-ever safety performance, record investment in local companies and the creation of 14,146 job opportunities for Omanis in 2017.

In total, five wells have recently been drilled in the field and all have encountered gas. One is already producing and another will be hooked up shortly. Work is also progressing on two further appraisal wells, with plans for the expansion of production infrastructure. Additionally, exploration is continuing in nearby prospects.

PDO Managing Director Raoul Restucci said: “This is an exciting find which will provide a boost for economic growth in Oman and help meet rising gas demand from residential, commercial and industrial customers.

“Once again, our Exploration Directorate has performed admirably in challenging conditions to identify, discover and appraise a major hydrocarbon find which will make a substantial contribution to Oman’s sustainable development.

This year, we are celebrating the 40th anniversary of PDO gas production and this is a fitting way to mark that milestone.”

Exploratory drilling has taken place at depths of 5,000 metres. The Barik and Miqrat reservoirs tested at commercial flow rates of up to 1.2 million cubic metres per day after fracturing. The discovery follows PDO’s acquisition of high resolution 3D Wide Azimuth seismic data in the area in 2015. Further prospects are also being drilled.

Mabrouk North East builds on the discovery made in March 2013, when PDO announced another significant find at Mabrouk Deep, some 40km west of Saih Rawl. Restucci added: “We have a very attractive portfolio which keeps us very active, with large seismic programmes and extensive exploration drilling.”

The company operates gas fields and processing plants exclusively on behalf of the Omani government. The average Government daily gas supply during 2017 was 76.64 million m 3 /d, lower than the initially targeted level of 83 million m 3 /d due to the start of BP’s Khazzan field. Throughout,

PDO effectively met the gas demand for all its customers despite increased requirement quantities for Oman LNG. Notwithstanding a number of operational challenges in 2017, PDO also showed good compliance with government targets arising from the OPEC/nonOPEC agreement to limit oil production, while compensating at short notice for any shortfalls in total country supply. Average oil production was 582,196 barrels per day (bpd).

As an example of the step change in efficiency, the Company’s Well

Engineering Directorate carried out more than 21,000 well interventions, compared to 13,000 well entries in

2013 with the same rig and work-over hoist fleet. It also drilled 626 oil and gas production and exploration wells reducing the average well cost by 4% and the rig move cost by 12% compared to 2016 through better collaboration and rig sequence optimisation.

Restucci said: “Contingent on OPEC constraints, we are maintaining momentum to be ready to deliver in excess of 650,000 bpd. The Company is more efficient than ever and we have raised performance across the key parts of our value chain.”

On the safety front, the Company recorded a record performance with

Lost Time Injury Frequency falling 0.20 per million manhours, albeit tragically with one work-related fatality. It also recorded a new road safety milestone of 500 million kilometres driven by staff and contractors without a fatality, and with a 40% fall in Serious Motor Vehicle Incidents. Restucci commented: “Our Journey Management Control Centre, which monitors a fleet of more than

8,500 vehicles, has brought about a step change in safer driving since it was opened in 2016 with a 97% fall in the average number of violations per vehicle.

“Safety remains our overarching priority and we have made good progress through greater frontline supervision, tailored training, stricter consequence management, and enhanced hazard and risk identification in our operations. However, there is still much work to do in securing our Goal Zero aspiration of no harm to people, environment or assets. We must do better to ensure all staff, contractors and sub-contractors alike, return to their loved ones at the end of every work day.” PDO reported that the Rabab Harweel integrated project – the largest projects in its history with a reserve add of more than 500 million barrels of oil equivalent – is well ahead of plan and budget, and good progress is being made at its second mega project at Yibal Khuff, the most complex venture it has ever undertaken. A total of almost $800 million in capital expenditure savings have been secured on both.

The company will continue to place a greater focus on renewables and energy and water management. The giant Miraah solar energy installation at Amal, which it is developing with partner GlassPoint Solar, is in daily operation and meeting its targets for steam output for use in thermal enhanced oil recovery. Construction is progressing on schedule with another eight blocks on track to be completed in early 2019, on top of the four which were commissioned in December 2017.

PDO is also expanding its awardingwinning Nimr Water Treatment Plant which currently treats 115,000 m 3 /d of produced oilfield water using reed beds and, with partner Bauer Nimr, is making progress on a biosaline agriculture trial. Plant growth from a number of crops has been promising with the potential for commercial application, and the possibility of biomass and oil seed production.

Restucci highlighted significant corporate social responsibility advances last year. These included the creation of 14,146 employment, training, redeployment and transfer opportunities for Omanis with PDO contractors and non-oil sectors, such as hospitality, fashion and digital media. PDO also awarded contracts worth more than $5.19 billion to nationally registered firms, the highest sum in its history, and backed a series of new Omani factories and workshops supplying vital parts, equipment and engineering services to the oil and gas industry. The company committed to 35 new social investment projects, totalling more than $5.5 million, which will have tangible impacts on the quality of life of thousands of people living in our concession area and beyond. These include the provision of clean drinking water facilities, safe public spaces, and research and learning opportunities. Further support was provided through miscellaneous grants and donations.

Meanwhile, to boost near-term cashflow, PDO made more than $400 million in further cumulative operational and capital expenditure savings through project re-phasing, closer collaboration with contractors and a further comprehensive review and challenge of costs across the organisation. The Company will continue to drive cost reduction through its Lean business efficiency programme.

Looking forward, Restucci said: “Irrespective of production agreements to stabilise oil prices, 2018 will require us to continue to focus on becoming more efficient, agile and productive in all our key business activities. This will mean identifying savings and cost reductions while delivering growth, excellence and sustainable value creation for Oman and our shareholders. We will also continue our gradual transition to becoming a fully-fledged energy company, with a greater focus on renewables, and securing greater alignment between academia and industry on research and development.

“These are rapidly changing times for our industry with climate change realities, automation, digitilisation and artificial intelligence transforming the way we do things. However, I am confident that these changes also offer us a great opportunity to work more safely, productively and responsibly.”