Oman oil and gas minister praises fracking at Downtown conference




Even as his home region captures headlines for the ongoing conflict in Syria and Iraq, a long-serving energy minister in the Middle East said Tuesday that he wants U.S. businesses to know that his country has a “competitive advantage” of peace and stability.

“We don’t advertise ourselves,” said Mohammed bin Hamad Al Rumhy, oil and gas minister in Oman, where he has served since 1997. “But we are serious in friendship, we are serious in peace, and we are serious in tolerance and understanding others … and that includes the United States.”

Oman also has a wealth of hard-to-get oil and gas that was recently unlocked by hydraulic fracturing.

Mr. Al Rumhy addressed a group of business professionals gathered Downtown on Tuesday for a conference hosted by the American Middle East Institute, a Pittsburgh nonprofit focusing on building economic and cultural ties to places like Oman. Though he had traveled to the U.S. many times, he said, this was his first visit to Pittsburgh, where the shale boom brings to mind his own country’s nascent energy renaissance.

“The oil and gas opportunities are immense, and we’re determined now to take every opportunity that comes along,” Mr. Al Rumhy said, answering questions onstage from David Spigelmyer, president of the Robinson-based Marcellus Shale Coalition.

Oman — about 2½ times the size of Pennsylvania and occupying a southeastern slice of the oil-rich Arabian Peninsula — is the largest Middle Eastern producer of oil and gas that is not a member of the Organization of Producing Exporting Countries, or OPEC, according to the U.S. Energy Information Administration.

Oman’s oil and gas sector accounted for 86 percent of government revenues in 2012, and its proven oil reserves of 5.5 billion barrels — modest by Middle Eastern standards — rank 22nd in the world.

The industry through the years, however, has declined and rebounded, largely due to challenging geology.

From 2000 to 2007, oil field production in the sultanate dropped 27 percent to 710,000 barrels per day, as small, scattered deposits of thick, sticky crude became harder to tap. Enhanced oil recovery techniques, such as steam injection, have since helped bring production back to 2000 levels, according to the EIA.

Similarly, fracking technology has loosened “tight” natural gas reserves and brought in a number of investors who have historically shied away from development, Mr. Al Rumhy said.

“Our geology is very complex, but [energy companies] have recognized that the shale opportunity is huge,” he said.

Energy giant British Petroleum, in partnership with the Oman government, is starting work on about 300 horizontal fracking wells in the notoriously difficult Khazzan Gas Field, aiming to boost gas production by 1 billion cubic feet per day — about one-third of the sultanate’s current total daily domestic gas supply.

“Fracturing makes wells cost effective,” Chokri Ben Amor, general manager of oilfield services company Schlumberger Oman, was quoted as saying in a recent report from the market research firm Oxford Business Group. “All of the gas comes from fracking, and some of the oil — it grew rapidly.”

Mr. Al Rumhy reported positive growth not only in the oil fields but also in the manufacturing sector and service industries, such as hotels and restaurants.

The country also has recognized potential for the plastics industry — though “a bit late,” he added — announcing last year it would invest $5 billion in expanding a refining facility and building a new cracker plant in the coastal town of Sohan.

That will increase petrochemicals production seven-fold to about 1.4 million metric tons per year, according to the Oxford Business Group.

“You know, the chain is so long,” Mr. Al Rumhy said. “Once you have ethane and you crack it into ethylene, you can do so much, so that’s where we’re aiming.”

The minister reflected on some obstacles as well, such as introducing a water-intensive industry in an arid landscape. Companies also have encountered environmental resistance, driven by what he called the “media perception of environmental damage.”

“They think we will induce an earthquake,” he said.

Mr. Spigelmyer conceded, “There are probably a number of folks in the audience that say we didn’t get it perfect here” and offered to be a resource for Oman.

Mr. Al Rumhy said the sultanate would be closely watching developments in the Marcellus Shale.

“Believe it or not, we’re really following you, how you do things here,” he said.

Daniel Moore: dmoore@post-gazette.com or 412-263-2743.

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