OREANDA-NEWS. BP and Oman Oil today signed a heads of agreement with the Government of the Sultanate of Oman committing to amend the Oman Block 61 exploration and production sharing agreement (EPSA), extending the licence area of the block and enabling a further development of the major Khazzan tight gas field. BP is the operator of Block 61 with a 60% interest and Oman Oil holds the other 40%.

Under the amended EPSA, the extension will add a further over 1000km2 to the south and west of the original 2,700km2 Block 61. The extension will allow a second phase of development, accessing additional resources in the area that have been identified by drilling activity within the original block. Development of this additional resource is subject to final approval of the Government of Oman and of BP; both expected in 2017.

The agreement was signed today in Muscat by His Excellency Dr. Mohammed Al Rumhy, Minister of Oil and Gas of the Sultanate of Oman, Bob Dudley, BP Group Chief Executive, and John Malcolm, Executive Managing Director of Oman Oil E&P.

Dr. Mohammed Al Rumhy stated: "I am delighted to see BP taking additional acreage that will result in realizing more gas reserves and more production of gas that our country needs to support our energy planning and requirements."

Bob Dudley commented: "Khazzan is a major resource with the potential to produce gas for Oman for decades. This expansion of its development will build on the success we are already seeing in our work on the first phase, working closely with our Omani partners and applying BP’s leading technology and extensive tight gas experience. It clearly demonstrates our commitment to continue to invest in a superior project that will deliver long-term value to both BP and Oman."

The Khazzan reservoirs in Block 61 represent one of the Middle East’s largest unconventional tight gas accumulations, with the potential to be a major new source of gas supply for Oman over many decades. Production from Khazzan will make a significant contribution to ensuring continuing stable and long-term domestic supplies of gas for Oman. Combined plateau production from Phases 1 and 2 is expected to total approximately 1.5 billion cubic feet of gas a day (bcf/d), equivalent to around 40% of Oman’s current total domestic gas production.

The Phase 1 project, sanctioned in December 2013, remains on schedule to deliver first gas in late 2017. Subject to completion of the agreements and final sanction, the new Khazzan Phase 2 project will come on stream from 2020.

The two phases are expected to produce 1.5 bcf/d through development of 10.5 trillion cubic feet of recoverable gas resources. This will involve construction of a three-train central processing facility with associated gathering and export systems and drilling around 325 wells over a 15 year period. Improved reservoir performance, drilling efficiencies and other improvements have reduced the well count by around 100 wells from the original Phase 1 plan.