INTERVIEW: Bahrain eyes conventional prospects as expensive shale oil plans hit pause

Bahrain is exploring prospects for conventional deposits offshore as it weighs the financial viability of developing shale oil found in its territorial waters in 2018, according to the chief executive of Nogaholding, the kingdom's energy development arm.

"There are prospects for conventional deposits, as well as in our four blocks offshore. We have both conventional prospects, oil and gas, as well as on the west coast in particular, the big unconventional," Mark Thomas told S&P Global Commodity Insights in an interview.

"There are a number of them that we that we can see through the current seismic that we have. One of the things that we would like to do is upgrade the quality of the seismic to 3D. We think that will help us further define what these prospects might look like before we go and spend a lot of money on drilling," he added.

Bahrain, where oil was first discovered among the Gulf states in 1932 is one of the Middle East's smallest producers of hydrocarbons.

It pumped 170,000 b/d of crude in May, according to the latest Platts OPEC+ survey by S&P Global, though it has produced as high as 200,000 b/d some months in 2022.

The kingdom is not a member of OPEC but is part of the wider OPEC+ alliance forged in 2017, cooperating on a series of production cuts that are scheduled to end in August.

'Expensive development'

Bahrain's potential to be a significant producer was raised in 2018 when it announced the discovery of 80 billion barrels of shale oil offshore along with 20tcf of gas.

Thomas, however, said additional technical feasibility work had to be done and Bahrain was not moving forward with any exploration activity along the Khaleej al-Bahrain unconventional basin this year.

"The 80 billion barrels figure is estimated resource size, not a recoverable reserve size, but just what would totally be in the ground. So we've continued to do assessment work on the offshore on the Khaleej al-Bahrain field. It's a very challenging geology," he said.

The discovery at the time eclipsed Bahrain's proven reserves, which stood at 3 Tcf. The island's production in 2020 averaged 579 Bcf/d, according to the BP Statistical Review of World Energy 2021.

The Bahrain unconventional find, which marked the country's biggest discovery since oil was found in the 1930s, is similar play to the Permian Basin but with the additional challenge of being located six to 10 meters underwater.

Nogaholding is "continuing to do assessment" on procuring floating rigs to explore for hydrocarbons, Thomas said, adding that "it will be a very expensive development for us."

"We're continuing to talk to international companies to acquire information, technology, knowhow, information and so for 2022 we will just be in study mode, we're not planning on doing any physical drilling or anything like that this year," Thomas said.

He declined to specify companies that Bahrain was in discussions with.

A major constraint holding back development of the new discovery is the Bahrain's planning on the basis of $65-75/b in spite of oil trading above $100/b.

"And under those conditions, it would be very challenging economically for us to develop it," Thomas said.