Oil is the lifeblood of our economy. But as consumption continues to rise and reserves start to dwindle, alternative forms of energy must be found. Team Y investigates why wind turbines, solar panels, and other renewable sources hold the key to securing the Sultanate’s future.
Oil will not last forever.
Efficiency versus renewable energy: that’s the age-old debate. And, despite everything we’ve achieved over the past two decades, we find ourselves working towards the goal of devising an “energy miracle” – a resource that can help us reduce our dependence on carbon-based reserves like oil, natural-gas and coal.
Yet, here in the Sultanate, energy primarily equates to ‘oil and gas’ – both dwindling non-renewable resources that have a lasting impact on the environment, and at the same time, lay the foundation for the nation’s ‘oil-based economy’.
Oman, as it turns out, is one of the few nations in the mix – alongside other GCC countries – that is heavily reliant on non-renewable resources like oil and gas for energy generation. It’s said that a staggering 65 per cent of the nation’s energy comes from crude oil, while the rest is pegged on natural gas.
This, understandably, is a matter of concern. And if the Energy Information Administration (EIA) – a US-government-based energy evaluator – is right, Oman is now left with a touch below 5.115 billion barrels of estimated and proven oil reserves (as of 2017).
While this places us as the seventh largest oil reserve holder in the Middle East and 22nd largest in the world, it must be noted that given our current expenditure, oil will only run the nation’s economy for 15 years (!)
The year 2032 will mark the end (should no more oil fields be discovered) of the Sultanate’s oil reserves. All oil-based activities will come to a halt: those driving past on the Qurum Heights will no longer witness the iconic flame that towers over the skyline, and no longer will the complex matrix-like structures be retained.
All the billions of Riyals spent in expenditure on the infrastructure will then be scrapped.
Meanwhile, Oman can also bid farewell to the ‘oil-based economy’ that drives the Gross Domestic Product (GDP) of the nation. If it indeed runs out of crude oil by the specified timeline, the nation would be forced to dive into newer fields to generate revenue, or focus to tap existing resources to maintain stability in the country.
After all, hydrocarbon revenues made up for almost 39 per cent of the nation’s GDP of US$78.94 (RO30.35) in 2013, as per the Central Bank of Oman (CBO)’s evaluation.
Does all of this sound a bit far-fetched to you?
As per the revelations of a top official from the Petroleum Development Oman (PDO), who preferred to remain anonymous, the answer to that is: “It’s not time to panic, yet”.
He says: “Believe it or not, Oman’s oil reserves won’t simply die down completely after 2032 like what is portrayed in the media.
“What people fail to realise is that the Sultanate is currently faced with the task of exporting hydrocarbon resources – mainly crude oil, among several other products – as well as providing for their own needs, which includes energy requirements.
“That’s putting a lot of pressure on the government and all the agencies involved in everything starting from extraction, refineries, suppliers, and vendors. And what we must keep in mind is that everything is interlinked.
“Therefore, we witnessed the great crash of 2015, which led to companies crumbling and the GCC nations struggling to gain footing.
“Even so, the oil prices have been volatile of late, hovering between the US$63 and US$73 marks.
“But we’re expecting 2019 and 2020 to be a bit better. We’re now slowly capping our deficits, and covering our losses,” he adds, before asserting that Oman can slowly begin exporting more barrels when they remove the trade cap that was placed to help sustain the growth in oil prices.
Currently, Oman’s production values consist of about 970,000 barrels per day (bpd), but as per the official, the consumption, on average, can be 140,000 barrels per day.
This can be to produce products such as petrol, jet-fuel, diesel and other oil products.
However, a sizeable amount of it is also spent on energy generation, namely electricity.
As per the National Centre for Statistics & Information (NCSI), the Sultanate produced 3.7 Terra Watt-hour of electricity in May, 2018, and on average, 2.2 Terra Watt-hour per month since 2008.
While we could not procure an accurate breakdown on the methods used to produce electricity, it’s safe to assume from the aforementioned statistics that on average nearly 1.43 Terra Watt-hour is generated using crude oil, while an additional 0.77 Terra Watt-hour is created by using natural gas.
“Oman simply relies a lot on oil and gas to produce electricity,” the official says, before adding, “We cannot simply come to a halt when the oil runs out. We need an action-plan to put in place so that we can at least cap our demands.
“Let’s face it, the consumption of oil products will only rise in Oman, as we’ve witnessed over the past decade or so. But, the real concern lies in whether we can reduce our reliance on oil and gas – and cutting down on the use of non-renewable resources to produce electricity should be on the top our lists.”
When we ask him why such sustainable projects never took effect in the Sultanate before the oil crisis, he answers, stuttering for words initially: “In an ideal world, an infrastructure for solar power, hydro power, or wind power would already be in place. But, really, the Middle East – especially the GCC – has always had a glut of hydrocarbon resources that there never seemed to be a need to switch towards more sustainable sources immediately.
“Sure, we all knew the change had to be made. We just didn’t expect it to happen so quickly. As a matter of fact, more plans were made to tap into our existing gas reserves; like the Khazzan-Makarem gas field that we discovered in 2000.”
His words are proven right by a report published by multinational professional services firm, Ernst & Young. It reveals that the gas consumption alone in Oman soared by 168 per cent over a 10-year period from 2002 to 2011. What’s more noteworthy is that the study also expected the nation to divert all its natural gas supply to domestic consumption by the year 2024.
“Much of this is to generate electricity – and what must be kept in mind is that oil and natural gas-based electricity generation are incredibly inefficient and harmful to the environment,” he says.
A study conducted by the Joint Research Centre, a subsidiary of the European Commission, reveals that in 2015, a staggering 78,446 kilotons (kt) of Carbon Dioxide was released into the atmosphere in the Sultanate.
In the wake of all these concerns, Oman has begun taking “baby steps” to initiate a radical shift that will soon help the nation reduce its reliance on these non-renewable resources, the primary of which is the use of renewable resources – such as the sun and hydro power – for a variety of industrial activities, which also includes the generation of electricity.
In an interview with Y, Rizwan Ahmed, an engineer working with Solar Intertech, a newly-established solar energy products supplier, says: “Oman is blessed with sunlight all year round. It doesn’t matter which season it is, there’s always enough potential to tap into the power of the sun.
“This solar radiation that we receive is among the highest in the world, and the possibilities of tapping this resource are endless. Simply placing solar panels and storage batteries at your home will enable you to generate free electricity for yourself.
“But, it doesn’t end there: when the infrastructure is in place, you can generate electricity and then send it to the grid through which it will then reach another house that is in need of power.
“While this is by far the most energy-efficient way to operate in Oman, it can also earn you – the consumer – a few Riyals every month,” he explains.
During the initial phase, Rizwan says that his company spent months on the field studying areas that could be included in solar projects.
“Locations such as Marmul, Sohar, and Fahud have higher average daily sunshine, when compared with other locations that are closer to the coast. Harnessing the power from here would provide us with the potential to store high amounts of electricity… if we’re given the right resources to tap the power.
“Moreover, these areas are largely empty lands, so it serves as a perfect base for such activities,” he adds.
A study commissioned by the Public Authority for Electricity and Water (PAEW) in Oman revealed that Photovoltaic (PV) systems – that form the basis of solar equipment – installed on residential buildings in and around the Muscat governorate could help generate a staggering 450 megawatts (MW) of power – which is comparable to a mid-size gas power plant. The figures increase to a whopping 1.4 gigawatts (GW) when extended to residential buildings across all regions in Oman.
That, coupled with the fact that, on average, one square metre of land in Oman can produce 200 watts of electricity per hour from PV power, makes this the perfect solution for the nation’s efforts to reduce its reliance on hydrocarbons.
During our investigation, we also learn that it would cost roughly 770 baisas worth of (solar) equipment to produce one watt of power. However, currently, it only costs residential consumers 12 baisas to use 1kW in one hour, rising to 30 baisas if more than 10,000 units are consumed.
However, strategic steps are being taken to set the ball in motion. For instance, the Authority for Electricity Regulation Oman (AER) – Oman’s power sector regulator – has begun taking steps to allow homeowners to install rooftop solar panels, and allow the surplus electricity to be sent back to the grid. Moreover, companies like Majan Electricity Company, Knowledge Oasis Muscat, and Sultan Qaboos University already have solar systems in place.
It seems that now would be the perfect time to make the shift to solar energy. This is also a notion shared by prominent oil companies in Oman.
“Solar power – it’s so simple yet efficient,” says Marwan Chaar, a spokesperson for GlassPoint, a company that specialises in effecting solar projects in the oil and gas industry.
“Oman is one of the countries in the GCC that has an abundance of potential to make use of solar energy – which is an environmentally-friendly source of power – in many applications.
“We started with the Miraah solar plant (southern Oman), and it was the result of a successful pilot that took us to a commercial scale. But now, what’s next is deploying this in the future in other oil fields in Oman, as well as in other applications in the same sector.”
Unlike most solar plants, GlassPoint’s plant doesn’t undertake production of electricity. Instead, it uses thermal energy produced in the form of steam for enhanced oil recovery (EOR) process to extract heavy and viscous oil at the Amal oilfield. This, reportedly, enhances the well’s productivity by up to 300 per cent!
“What’s next for us is for us to continue our focus, which is to supply solar steam to the oil fields. We’ve been very clear on our mission, which is to reduce gas consumption and carbon emissions in oil field operations.
“The usage of steam is extremely high in Oman. Over 100,000 tonnes of steam is being injected in different oil fields in Oman – so the potential is very high,” he says, before ending the interview.
That said, solar is just one such way the country can effect its stand against heavy reliance on oil and gas for energy generation. Recently, plans for a full-fledged wind farm in Dhofar surfaced, foreseeing an annual output of 160 gigawatts per year of clean energy.
The project – which is a joint venture between the Oman Power and Water Procurement Company (OPWP) and the Abu Dhabi Future Energy Company (Masdar) – will see a total of 13 wind turbines will be installed on a 1,900-hectare site in the Wilayat of Dhofar.
While these schemes are aimed at developing the nation’s infrastructure, all while tapping in on the abundant renewable and clean energy sources, many economists are now raising their concerns as to whether all these projects have come a little too late, and more importantly, if it’s the right time to ditch the “unpredictable” oil-based economy and switch to a more modern outlook – like a knowledge economy.
On paper, it all sounds enticing: a knowledge economy is – in its simplest form – defined as a shift from traditional economies and into one in which production and the use of knowledge are paramount.
As per an Omani economist and college professor, who declined to be named, this will “inevitably break the feigned shackles posed by the oil-centric economy that once drove this nation”.
In a heated interview with Y, he asks: “There’s no doubt that an oil-based economy has always worked for Oman. But do you think that the vast wealth that this nation has amassed over such a short period will impact us for the better (?)”
“Even in 2018, we face issues such as lack of adequate and quality education, under population, and underdevelopment. And handing over a bucket full of money – oil money to be specific – will never solve our problems.
“What it gave rise to, however, is a land of disparity: a handful of rich that get richer and a middle-class that struggle to find footing for survival.
“This is precisely why we need to take a cue from countries such as Norway and Japan that focus on education, and more so, on incorporating technology in our daily lives.
“This forms the basis of a knowledge economy – taking what’s the latest in field of technology, and incorporating it within our societies. In return, this will provide us with skilled individuals, a strong information and communication technology (ICT) infrastructure, and a landscape that is tolerant of changes.
“We also see nations like Germany and United Kingdom take on the knowledge economy to bounce back from economic instabilities and, up to an extent, fend off rough situations; even if it means that there’s stiff competition among individuals within the society.”
According to the professor, countries that are already pursing a knowledge economy will have a generation of professionals rising up to adopt problem-solving skills to solve crises – but he believes that a “good deal of” Oman’s youth has been tarnished by a “lack of motivation” by their antecedents.
“A strategy for sustainable development should be in place in every country, and such has been the case in the GCC state of Qatar. It has spent a great deal of their wealth oversees and in procuring properties and assets around the largest metropolitan areas.
“So, if tomorrow something was to go wrong, they would always have their fortunes in countries to fall back on,” he says, before going on to explain that Oman must begin investing heavily on its greatest asset: tourism.
“You see, it’s certain that the good old days of oil money are over. It’s either time to buck up and strive for a stronger future and a greater country, or lay here expecting the fortunes to turn.
“But, if you didn’t get the memo: it’s the end of an era.”