PDO Signs Contracts for Qarm Alam Steam Project

Petroleum Development Oman (PDO) earlier this week signed two major engineering, procurement and construction (EPC) contracts for its Qarm Alam steam-injection project.

A contract for "on plot" facilities (those erected at the field site) was signed with Dodsal and a contract for "off plot" facilities (the oil and water flowlines and associated hardware outside of the field site) was signed with Galfar Engineering & Contracting. PDO Managing Director John Malcolm signed the contracts on his company's behalf. Signing for the contractors were R.A. Kilachand, Chairman of Dodsal, and Salim bin Said al Uraimi, Chairman of Galfar.

The Qarn Alam steam-injection project is the world's first full-field steam-injection project based on thermally assisted gas/oil gravity drainage (TAGOGD) in a fractured carbonate field. The project scope includes drilling some 150 wells and installing facilities to treat water and generate around 18,000 tonnes per day of steam. Additional facilities will be built to process the incremental oil and gas produced at the field as well as disposing of excess produced water in deep reservoirs. Close to 220 kilometers of pipelines and flowlines will be installed to connect these facilities with the wells for water supply, oil production, steam injection and water disposal.

The Qarn Alam field, which was discovered in 1972 and started producing oil in 1975, contains a moderately viscous crude in rock that is rather impervious to its flow. What little oil does flow out of the rock formation does so under the influence of gravity, through a network of cracks that criss-cross the formation. The EOR recovery process being applied – TAGOGD – is based on injecting steam into the formation's fractures to heat the low-permeability oil-bearing rock. As the rock is heated, gas is liberated and the viscosity of the oil is reduced, flowing much more easily into the fractures under the action of gravity. The fractures thus serve as conduits for both the injected steam and the produced oil. Unlike a conventional steam-injection project, in which the steam serves to drive oil to producing wells, the steam at Qarn Alam is used as merely a heating agent to enhance the existing gravity drainage mechanism. This feature of the project allows the number of wells, and hence development costs, to be kept to a minimum.

Most of the steam will be generated by waste heat recovery from the existing Qarn Alam Power Station, thereby significantly reducing the project's carbon dioxide emissions and saving on gas consumption. This is part of PDO's strategy to preserve the environment while benefiting from the waste heat. The start-up date of all facilities will be around 2010.

"The contracts signed today represent the successful conclusion of an innovative contracting strategy in difficult market conditions," commented Saif bin Hamed al Hinai, Oil Director for PDO's northern assets.

They will also distinguish PDO from its peer oil companies around the world. EOR methods fall into three categories: thermal, chemical and miscible gas. "PDO is one of the few companies in the world that can claim to be carrying out at least one major field-development project based on each of the three EOR types," said Malcolm. "We now have a thermal project at Qarn Alam, a chemical project at Marmul and a miscible-gas project at Harweel."

Petroleum Development Oman (PDO) is the major exploration and production company in the Sultanate of Oman. It accounts for more than 80% of the country's crude-oil production and nearly all of its natural-gas supply. The Company is owned by the Government of Oman (which has a 60% interest), the Shell Group (which has a 34% interest), Total (which has a 4% interest) and Partex (which has a 2% interest). Gas fields are operated by PDO exclusively on behalf of the Omani Government.