In a coup for French major Total, and a blow to Denmark-based Maersk Oil, Qatar Petroleum has awarded Total a 30% interest in the concession covering the offshore Al-Shaheen oil field for a period of 25 years beginning 14 July 2017. Qatar and Total will establish a new joint venture company to manage and develop the field called North Oil Co.
Reuters reports that Total plans to invest US$2 billion in the field over the next five years.
Denmark-based Maersk Oil has been the operator of Al-Shaheen since 1992, and together with Qatar Petroleum, unlocked the potential of the field, producing some 300,000 b/d, which amounts to 40% of Qatar's daily production. Maersk Oil has said it will now leave the country once the current license expires in 2017. Maersk will reassign its employees, with some, the company expects, will be offered jobs by Total.
In July 2015, Qatar Petroleum invited a number of international oil companies to compete in a competitive tender for future development of Al-Shaheen.
“[Qatar Petroleum's] objective for the competitive process was to choose a partner that has world class technical capabilities that enable it to continue the development and operation of Al-Shaheen field in partnership with Qatar Petroleum, while at the same time ensuring the highest possible financial return to the State of Qatar," said Saad Sherida Al-Kaabi, president and CEO, Qatar Petroleum today (27 June).
At the time, Maersk submitted a bid to keep the field, but ultimately, Total was chosen to take over as operator.
"During the past 24 years Maersk Oil and [Qatar Petroleum] have together developed the Al-Shaheen oil field into Qatar’s largest offshore producing oil field," said Maersk, following Total's announcement today. "Under the terms offered by Qatar Petroleum, a minority shareholding for Maersk Oil in the new joint venture would have created a marginal impact on the Maersk Group earnings in the years ahead."
Under the new agreement, Qatar Petroleum will hold 70% of North Oil Company, and Total will hold the remaining 30%.
"Total is honored to have been awarded a 30% interest in the Al-Shaheen concession," said Patrick Pouyanné, chairman and CEO, Total. "This is an important recognition of Total’s technical and commercial competence, and the group will deploy its best technical expertise and experienced teams to this field."
Total has been in Qatar for 80 years, and Pouyanné said the award for Al Shaheen is a "significant milestone" for the company and is in agreement with the company's strategy to reinforce its presence in the Middle East.
Al-Shaheen is 80km offshore the northeast coast of Qatar, in the Persian Gulf, and 180km north of Doha. The field, which began production in 1994, consists of 30 platforms and 300 wells.
According to Maersk, the Al-Shaheen field is the third largest offshore carbonate field in the world after Mexico's Cantarell and the UAE's Zakum. In almost every aspect affecting production behavior and ultimate recovery, the field is at, or near to the most challenging end of the scale compared to other major carbonate fields, the company wrote in a 2015 blog post detailing the potential of the field.
Maersk said, in 2015, "Across the field’s vast 2214sq km area, the geology and oil vary extensively. In a short distance, the reservoir rocks change from fractured and almost cavernous in nature, to hard, chalk-like formations where oil is more likely to be trapped. The oil ranges from being very light and flowing easily through the reservoir to being heavy, "sticky" and extremely difficult to extract – and all within reservoir layers from just 3-100ft thick.
"Within these thin, flat reservoir layers natural pressure is very low, which limits the effectiveness of primary recovery: where underground pressure is sufficient to force oil to the surface. To overcome this challenge, Maersk Oil has drilled long horizontal wells that maximize contact with the reservoir; a method of drilling down to and then along the reservoir, as opposed to down and through it. This approach drastically reduced the amount of topside facilities needed, and was crucial in enabling the field’s economic development."
Maersk said that the carbonates at the field are "oil-wet," requiring more energy to extract it. The company applied wells in a line drive formation, allowing for the injection of about 800,000 b/d of water to displace oil into the production wells and up to the surface.
The move to hold a new tender for the concession after two decades operating the field came as a surprise to Maersk, which had been investing in the field's facilities.
In 2005, the company invested $6.5 billion to build 15 new platforms, construct and install over 140,000 tonnes of new facilities, drilling more than 160 wells and lay of 230km of pipeline and 55km of subsea cables.
In 2014, Maersk opened its digital core laboratory in Doha, Qatar, to support research around enhanced oil recovery, particularly in carbonate reservoirs, such as the Al Shaheen field. Maersk said, at the time (January 2014), "The laboratory is part of a 10-year $100 million investment by Maersk Oil in applied research in Qatar, focusing on improved oil recovery, enhanced oil recovery and the marine environment."
At the time the lab was opened, Maersk said: "Maersk Oil took over the Al-Shaheen field in the early 1990s, at a time when others walked away."
The field was discovered in the 1970s but was considered too challenging to develop, so it lay dormant until then. Maersk Oil has helped to recover more than 1 billion bbl from the field.
Learn more about the challenges Maersk and Qatar Petroleum faced in the video below, from 2015:
Images from Maersk Oil.