Adnoc Review

Gas exploration ... Adnoc takes to unconventional methods

Gas exploration ... Adnoc takes to unconventional methods

Adnoc boosts gas exploits

Mega gas exploration using unconventional methods and awarding gas concessions to foreign partners has put the UAE on course of becoming a net exporter by 2030

 

Adnoc is unlocking vast reserves of natural gas by tapping into gas caps, undeveloped reservoirs and unconventional resources.

Exploiting gas caps on oilfields, major sour gas developments, deep gas and even unconventional gas will all play a part in meeting Abu Dhabi’s rising appetite for the feedstock.

“We have been aggressive in moving forward with these developments since 2018,” Abdulmunim Saif Al Kindy, Adnoc Upstream Executive Director.

He added: “They will all come together in about 2024-25 and are part of our strategy to meet local demand fully.”

By 2030, Abu Dhabi intends to be self-sustainable in terms of energy with the expectation of being a net exporter.

Exploration is also under way. Five blocks have been awarded and an offering is in progress for a second round, also covering five blocks. These should be awarded by the first quarter of 2020.

Adnoc remains open to working with partners on a host of opportunities, although the company has expressed its support for foreign companies to support In-Country Value (ICV). Al Kindy says amounts are not specified, rather it is a question of how the value of such local content is assessed. “This can be achieved through a number of means, including infrastructure in the country, recruitment of nationals and procurement from the local market.”

“We’ve also continued our unconventional gas exploration, we’ve derisked an area that is quite massive and can deliver 1 bcf (28 mcm) of gas but we continue with our gas exploration and we have extended the area of unconventional oil and gas potential way beyond what we had envisaged.”

With an eye on unconventional developments, the company has been bolstering the capability of its Adnoc Drilling unit, in which Baker Hughes bought a 5 per cent stake in late 2018, for $550 million. “Not only are we drilling wells faster, with a 25 per cent improvement in drilling time, we are also doing it cheaper.” The gas produced under this unconventional programme will have similar prices as that of gas produced in other basins, Al Kindy says.

These resources mark the next revolution in the Arabian Basin, he says. “I believe we are on the verge of a major change in the UAE and neighbouring countries. The important thing for us is to identify all the enablers, the mark of success is to bring gas to the market using Henry Hub as a marker. You need to bring all the costs down.”

Talks are under way on pipelines and extraction plans for the unconventional gas, with first gas into the market in 2020. “It’s relatively small, with three wells to start.” There is no need to bring in additional partners to this work as yet, the official says. “Total is very active and forthcoming.”

Meanwhile, work on the gas cap development is a first in the world. “Super-giant fields with super-giant gas caps,” Al Kindy described them as, saying wells had been drilled with the aim of exploiting these. This oil and gas co-development work will provide 500 million cubic feet (14.2 mcm) per day from Umm Shaif and the same from the onshore, from Bab.

The two gas caps have 35 trillion cubic feet (991 billion cubic metres) between them, covering a large area. Bab has been producing oil since 1963 and the challenge for Adnoc is to produce the gas without having an impact on the crude output. Studies and pilot work are under way in order to preserve this balance, which have been successful thus far. It is this desire to develop the gas without having an impact on oil that has led Adnoc to set the targets of 500 mmcf from each gas cap, even while there is potential for higher volumes.

There is a possibility that Bab could be developed with a partner, Al Kindy says, saying the company’s model was based on working with others. “It’s under review and we will decide whether value can be maximised through partnership.” The development of Bab will match that of Umm Shaif, with the only difference being that it is onshore and so may be somewhat more straightforward.

Also playing an important role is the Ghasha sour gas project, which will produce 1.5 billion cubic feet (42.5 million cubic metres) per day. A number of foreign players have signed up to work on this project. Last year,

Adnoc awarded a 5 per cent stake to a subsidiary of Russian Lukoil energy firm in the gas concession that comprises the Hail, Ghasha, Dalma and other ofshore sour gas fields in the emirate. The concession marks the first time a Russian company has joined an Adnoc concession, and builds on the strong and strategic bilateral relations between the UAE and Russia. An Adnoc official said execution had begun on the project.




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