It is ironic that despite Muscat’s long-running economic diversification strategy, which aims to wean the country off its dependence on oil revenues, the sultanate’s most valuable ‘non-oil’ export may one day be its technical expertise in oil recovery techniques.
A combination of declining oil production, rising oil prices and increased demand for both oil and gas, stemming from the growth of industry in Oman, have made investment in enhanced oil recovery (EOR) schemes economically viable – for these schemes to be economic, oil prices must stay above $50 a barrel.
To address fears that Omani reserves could run dry in 20 years, in 2006, the government pledged more than $3bn of a $10bn upstream exploration package to EOR schemes.
Today, Petroleum Development Oman (PDO) has 20 such schemes either under way or at the planning stage. With projects in each of the three EOR types – thermal, chemical and miscible gas – PDO is building up a regional reputation for cutting-edge recovery.
If all goes to plan, the Harweel miscible gas project will deliver 100,000 barrels a day and EOR production will represent a fifth of PDO’s total output by 2010.
By demonstrating the potential rewards of EOR schemes, Oman will attract the attention of fellow GCC states including Bahrain, where oil production is also declining, and Kuwait, where oil in the state’s northern field is proving difficult to extract.
While some of the methods being used in Oman’s EOR schemes are so new that the outcome is still uncertain, oil experts acknowledge that boosting recovery from known fields will be one of the greatest sources of future energy production.
Armed with this knowledge, Oman’s Oil & Gas Ministry can safely assume that its multi-billion-dollar EOR investment is solid.