PDO discovers more oil Petroleum Development Oman (PDO) – a Government-owned company in which Shell holds a 34 per cent shareholding – has discovered significant new volumes of oil at the Budour Northeast oil field, which was itself discovered only last year.

In addition, the company may also have found a significant volume of oil in a rock formation at the Rabab-Southeast field.

Both fields are located in the south of the country, near the Birba field.

The new discovery at the Budour Northeast field was revealed by Buduor NE-2, a well drilled in 2007 to follow up the field’s original discovery well, Budour NE-1. It consists of a reservoir lying below the one tapped by the Budour NE-1. When tested, Budour NE-2 produced as much as 5,800 barrels of oil per day. Both Budour NE wells – as well as a third drilled in the same area – have been hooked up to PDO’s pipeline infrastructure, thereby contributing to the company’s production.

The oil at Rabab-Southeast was discovered whilst drilling an exploration well. The well is being tested and the results of the well test still need to be evaluated. “The discovery of these reservoirs goes a long way towards realising PDO’s aspiration of replacing produced volumes in any given year with new reserves,” said PDO’s Managing Director John Malcolm.

PDO’s Exploration Director Martin Stäuble added, “2007 turned out to be an excellent year for PDO in terms of exploration. In fact it was the best year for oil exploration since 1994 and we expect good results from PDO’s exploration activities to continue in 2008. We are obtaining some encouraging preliminary data from our exploration wells in north Oman, but these results still need to be confirmed through well testing.”

FEED Office established at Mina al Fahal

PDO has announced the establishment of a dedicated engineering and design office at its corporate headquarters at Mina al Fahal. The new unit will specialise in front-end engineering and design (FEED) for major field-development projects. Known as the FEED Office, the new unit has been set up with a team of 15 engineers, who will initially be working on the Mabrouk field development project.

To guarantee the company’s long-term oil and gas production capacity, PDO intends to undertake multiple field development projects. Securing the necessary engineering and design services from external contractors in the early stages of these projects at a time of scant market resources has proved difficult. The FEED Office will ensure that projects over the coming years advance without delay.

“Once it is fully up and running, the FEED office will reduce project lead time, improve project definition and provide exciting career opportunities for Omani staff,” said PDO’s Engineering and Operations Director Suleiman al Tobi.

“Our ability to deliver a large number of complex projects on time and on budget will depend largely on the quality of our front-end engineering designs,” commented PDO’s Deputy Managing Director Dr Abdullah Lamki. “In particular, we need to ensure near-final project definition prior to final investment decision if we are to reduce the number of unnecessary delays and cost overruns.”

Rima Small-Fields Service Contract awarded

PDO recently awarded a contract to Petrogas Rima LLC (Petrogas) to develop a cluster of 18 small oil fields in the Rima area of south Oman. Oman Oil Company (OOC) will also participate in the service contract as a partner with Petrogas. The contract was awarded on the basis of a highly competitive open tender in which more than 200 companies from both Oman and abroad participated.

The 15-year service contract is aimed at raising – in a quick and cost-effective way – the production levels of these fields, which contain more than 500 million barrels of oil in the ground and are currently producing about 2,000 barrels of oil per day. The contract will thus allow PDO to dedicate its resources to the development of its larger fields, which currently account for the vast majority of its oil production, and to the execution of its more complex Enhanced Oil Recovery projects.

PDO Managing Director John Malcolm cited the Rima Small-Fields Service Contract as “another good example of how, with the support of the Government and our private shareholders, we have radically transformed our working relationship with contractors”. He then went on to explain how the contract would give the service provider “a high degree of autonomy, coupled with clearly defined financial incentives, so as to improve the delivery of oil from fields that are too small and too remote to merit PDO’s undivided attention.”

As part of the Rima Small-Fields Service Contract, the contractor will submit a work programme covering all aspects of the cluster’s development — from exploratory appraisal and sub-surface studies to well engineering and facilities construction through to operations and maintenance. PDO, which retains full accountability for what happens in its concession area, will review and approve the work programme and budget. No sharing of the equity in the field is involved in the agreement. This means that the contractor will receive only financial rewards based on the production levels obtained from the fields covered by the service agreement and on the costs involved in achieving those production levels.

A similar service contract was awarded in February 2006 to MedcoEnergi, an Indonesian oil and gas company, and the OOC for the development of a cluster of small oil fields in the Karim area of south Oman.

A new maternity ward inaugurated

As part of a Social Investment Programme aligned with the construction project of a 48-inch gas export pipeline, PDO recently inaugurated a new maternity ward at al-Kamel wa al-Wafi Health Centre in al-Sharqiyah region. A ceremony to celebrate the completion of the project was held under the auspices of the Deputy Wali, Sheikh Ahmed bin Salem Al Mahrooqi, in the presence of local dignitaries and PDO officials.

PDO has also funded two more major projects as part of the same programme: in Wilayat Bidya, some local aflaj (irrigation systems) have undergone extensive repairs and maintenance for the benefit of local villagers; and in Wilayat al-Qabel a house improvement programme has been rolled-out for the benefit of the people who live alongside the pipeline.

The 48-inch gas export pipeline was built by PDO through the region to boost Oman’s gas production and exports by providing natural gas to a third LNG (Liquefied Natural Gas) train in Sur.

“PDO’s Social Investment Programme is one of the most comprehensive in Oman,” says PDO External Affairs and Communications Manager Abdul Amir bin Hussein al-Ajmi. “Each major project that PDO carries out has a Social Investment Plan. This is an integral part of our approach to Social Investment and plays an important role in achieving integrated social, economic and environmental benefits from PDO’s major projects.”