Bahrain remains on pace to bring offshore shale reserves online by 2023, although a final investment decision and outside investor interest is still a work in progress, Zawya states.
Bahrain did not move beyond the test drilling phase, oil and gas minister Sheikh Mohammed bin Khalifa al-Khalifa said October 19. He added the project remained in the test drilling phase, and results were too preliminary to determine a potential maximum production rate at this time.
“Initially, when we started in 2018, we said five years, so we should be ready by then,” he said during a webinar hosted by the Arab Gulf States Institute in Washington.
“What we need to prove first is the geological and technical viability. Once we get there, hopefully, we will have investors.”
(Shale oil is an unconventional oil produced from oil shale rock fragments by pyrolysis, hydrogenation, or thermal dissolution. These processes convert the organic matter within the rock (kerogen) into synthetic oil and gas. The resulting oil can be used immediately as a fuel or upgraded to meet refinery feedstock specifications by adding hydrogen and removing impurities such as sulfur and nitrogen. The refined products can be used for the same purposes as those derived from crude oil.
The term “shale oil” is also used for crude oil produced from shales of other very low permeability formations. However, to reduce the risk of confusion of shale oil produced from oil shale with crude oil in oil-bearing shales, the term “tight oil” is preferred for the latter. The International Energy Agency recommends using the term “light tight oil,” and World Energy Resources 2013 report by the World Energy Council uses the term “tight oil” for crude oil in oil-bearing shales.)
In 2018, Bahrain first revealed the extensive Khaleej Al Bahrain reservoir off the west coast, which could contain approximately 80 billion barrels of tight oil – the kingdom’s most significant oil discovery since the 1930s.
The oil and gas ministry has said it targets producing up to 200,000 barrels per day (bpd), though the resources are likely to be technically challenging to develop.
According to the S&P Global Platts ‘ survey of OPEC+ production, this would double Bahrain’s current crude output, which averaged 180,000 bpd last month, according to the S&P Global Platts’ survey of OPEC+ production.
In 2019, Bahrain also signed a memorandum of understanding with Chevron to assess unconventional offshore oil and gas potential in the Gulf of Bahrain.
The coronavirus pandemic has significantly impaired the appetite for investment in challenging reservoirs and faces further headwinds with the growing push from regulators and shareholders towards environmental sustainability.
Shaikh Mohammed added that upstream development was still necessary while renewable energy companies continued to scale up to meet growing global demand.
“With high oil prices, the chances of the resource extraction going full-scale are better,” he said. “The resources should be attractive to investors, as its production will be consumed locally by the Bapco refinery, with no need to build additional infrastructure for exports or processing.”
Bapco’s 267,000 bpd refinery, which currently imports most of its stock from Saudi Arabia, is in the middle of a $6 billion (BD2.26 billion) modernization program that will see its capacity expand to 380,000 bpd.
According to Shaikh Mohammed, production from the new fields is set to displace Saudi imports, allowing Bahrain to reduce its import bill.
The island nation in the Persian Gulf made waves in 2018 when it first revealed the extensive Khalij al-Bahrain reservoir off its west coast, which it said could contain some 80 billion barrels of tight oil – its most significant oil discovery since the 1930s.
But since then, not much progress has been made to develop the resources, with a final investment decision still pending, and outside investor interest has been slow to materialize.
Khalifa said test results are still too preliminary to determine a potential maximum production rate.
The ministry has said it is targeting producing up to 200,000 b/d, though the resources are likely technically challenging to develop. If achieved, that would roughly double Bahrain’s current crude output, which averaged 180,000 b/d in September, according to S&P Global Platts’ survey of OPEC+ production.
The country has sought a strategic investor – either an international oil company or a services company, particularly with expertise in US shale – for further exploration and development of the field, having previously contracted with Halliburton to drill two appraisal wells.
Bahrain also, in 2019, signed a memorandum of understanding with Chevron to conduct an assessment of unconventional offshore oil and gas potential in the Gulf of Bahrain.
Reducing crude imports
The coronavirus pandemic has significantly impaired industry investment appetite for challenging reservoirs. It faces further headwinds with the growing push from regulators and shareholders of western IOCs to green their energy portfolios.
But Khalifa said the current squeeze in oil and gas prices shows that upstream development is still necessary, with renewables yet to scale up to meet growing global energy demand. He remained confident that the project would eventually gain the outside investment Bahrain seeks.
The 267,000 b/d refinery, which imports the bulk of its feedstock from neighboring Saudi Arabia, is in the middle of a $6 billion modernization program that will see its capacity expand to 380,000 b/d.
Production from the new fields will displace the Saudi imports, allowing Bahrain to reduce its import bill, Khalifa said.
On October 24, Bahrain’s Cabinet announced the intention to bring carbon emissions to net-zero by 2060 to help tackle climate change and protect the environment. Check out more here!