CCED eyes improved recovery in Oman blocksJanuary 9, 2023
Walter Simpson, managing director of CC Energy Development (CCED), talks to The Energy Year about the oil and gas sector’s positive momentum, the latest on the company’s developments in blocks 3 and 4, and its strategy for reducing its carbon footprint. CCED holds the E&P rights for Oman’s Block 3 and Block 4.
How do you view the positive momentum the oil and gas sector is experiencing globally, backed by high oil prices?
Operators and other upstream companies are playing in a market that is highly volatile: there are geopolitical issues such as the war in Ukraine, the global recession driven by rising inflation, energy transition trends and opec/’>OPEC cuts to oil production – all elements that create uncertainty and nervousness, impacting oil demand and thus bumping the price up.
My assessment is that this market volatility is going to continue and that it will become the norm in the future. Just in the last few months, we have seen the oil prices going up and down by USD 10 per barrel, but averaging around USD 90.
Within the Gulf region, 2021 oil price increases turned the fiscal budgets of oil-producing countries positive and OPEC, as shown by the recent agreement to cut oil production by 2 million bopd, will work to keep them that way.
Oil is still going to be the primary energy of the economy, but there is an underlying recognition that the energy transition is moving forward and these countries will need to capitalise on hydrocarbons as much as possible within this window to be able to manage the energy shift in economic terms.
Where do your developments in blocks 3 and 4 stand?
We are focused on improving the efficiency of our operations and our plateau maintenance, keeping assets full as they are at the moment, and at the same time we are looking for new opportunities further from our facilities that would require new infrastructure to be developed.
Currently, we are producing around 33,000 bopd and conducting an extensive exploration campaign, surveying about 5,000 square kilometres of 3D seismic in the south of Block 4 and going forward for another 5,000-6,000 square kilometres in 2023.
At the same time, we are reprocessing about 11,000 square kilometres of quality 3D seismic which we previously acquired in blocks 3 and 4. By the end of 2024 or early 2025, we will have 17,000 square kilometres of high-quality 3D seismic processed to state-of-the-art standards over the entire prospective portions of both blocks.
Besides this, we have contracted an additional rig, and we are running four in total as of 2022. The plan is to dedicate at least a full rig year to exploration and appraisal work on the back of the seismic we have acquired in order to test the full prospectivity of our blocks.
What are the company’s plans to increase the productivity and performance of its existing assets?
A number of our fields are fractured carbonate, with very complex geology, which have reservoir engineering challenges. We’re using both external and internal expertise and have recently acquired new technical in-house capacity to build state-of-the-art reservoir models to see how our fields are working and improve our performance.
There’s a lot of technical work going on in the background, which is aimed at driving improved recovery of our existing reserves to help compensate for the natural decline we get with new reservoirs, as well as finding new reserves and resources that we can produce. It is important to underline that the cheapest oil an operator will ever produce is oil that is already in a reservoir that you are producing and that you can enhance production from. It’s all a matter of how to keep your assets running and working effectively.
What is CCED’s standpoint on empowering more national talents and promoting the In-Country Value (ICV) programme?
Part of our obligation as an international operator working in Oman is to develop national talent. That’s not just something that you say for CSR or to get a good stakeholder relationship.
It’s actually in our own interest as it is more cost effective to have a national who is technically competent doing the work than to bring in an expatriate to do it. We’ve had a lot of success in building up skills for Omanis, offering a graduate recruiting programme and also delivering training via a third-party provider.
Our Omanisation rate stands around 92%, with nearly 700 personnel, with more than 60% working on the field. Nearly 70% of our senior leadership is local – more than double where it was just a few years ago. Of course, we do have an element of expatriate experience, because that is where we utilise highly skilled people to bring that experience in-house to develop, coach and mentor nationals.
What is the company’s strategy for being more environmentally sustainable and reducing its carbon footprint?
We have a three-pronged approach to our environmental stewardship: greenhouse gas [GHG] emissions reduction, water and waste management.
Regarding greenhouse gas emissions reduction, there are two key elements: reducing the quantity of flared gas and removing the gas from the system.
We are looking to reach zero gas flaring by 2027. To achieve this aim, we were initially looking at building a pipeline to export our associated gas, but we did not have sufficient quantities to make that economical. Then, we turned to a gas-to-power project, and we started using our associated gas effectively by generating electricity to power our field production assets, such as wells and pumps. This will allow us to replace most of the diesel that is currently used for those purposes, impacting positively not only our operating efficiency and carbon footprint but also our costs.
On the water management side, we are producing around 65,000 barrels per day and that is probably going to double soon, so it is very important that we deal with that water both efficiently and effectively. Our plan is to stop using ponds, except for emergencies, and all that water will be disposed of either through injection, for pressure maintenance, in our reservoirs, or by disposal in safe reservoirs where we no longer need to be producing hydrocarbons.
Given the nature of our fields, we get high levels of water production and we are looking at ways we can enhance our understanding of the flow regimes. We optimise production through facilities while at the same time determining how we can reduce water production, including a trial of a new polymer technology.
Can you give us an overview of your gas-to-power projects and the main benefits they can represent for the oil and gas sector?
In 2019, we inaugurated our first power generation facility in Shahd F, which we built as a trial and which is still running. Now, we are going to add two new power generation facilities at Ulfa and another at Shahd-B. They will utilise significant quantities of our gas, generating enough power to provide electricity to our fields, facilities and camps via an overhead power line distribution system. By the beginning of 2023 we should be awarding a contract for a two-year project for the construction of these new plants.
These gas-to-power projects represent a win-win situation for everybody: they are good for the environment, they cut diesel consumption and the risks associated with its transportation, and they save money.
What are your expectations regarding the oil and gas sector’s need to consolidate technology and sustainability?
The relationship between technology and sustainability is a paramount one and the Gulf region community is paying increasing attention to that, as shown by the Paris Agreement targeting net-zero emissions by 2050, which Oman has signed, along with the UAE and Saudi Arabia.
At CCED, we are looking to halve our GHG emissions by 2027, but we also want to go beyond that and to do so we are exploring new technologies.
The plus side is that the oil and gas industry has been particularly good at taking on technological challenges. Operators went into super deep water, where nobody thought we’d be able to produce hydrocarbons. We’ve been able to resolve the challenges in high-pressure, high-temperature fields and we have drilled super-long horizontal wells. For these reasons, I am highly confident that the industry will come up with solutions to overcome these barriers and turn towards a more sustainable approach.