Dolphin delivers

The grand ceremony took place under Royal patronage, and was witnessed by Sheikh Tamim bin Hamad, the Crown Prince of Qatar, and Sheikh Mohammed bin Zayed, the Crown Prince of Abu Dhabi.

The US$5 billion project is an unprecedented achievement for the region and the best example of Gulf co-operation to date.

During the launch, held at Ras Laffan on Qatar’s northern coast, 80 kilometres north of Doha, the two leaders toured the processing plant and export facilities.

The project was conceived in the early 1990s by the governments of the UAE and Qatar, and has been brought through to fruition by a private company, Dolphin Energy which is 51% owned by Mubadala, Abu Dhabi’s investment arm.

The project was undertaken in conjunction with international oil companies Total and Occidental, each holding a minority stake.

As the economies of Dubai, Abu Dhabi and Oman boom, energy demands have followed suit, and it is the need for greater electricity generation that has spurred the project on.

The 364km pipeline runs from Ras Laffan, on the upper tip of the Qatar Peninsula, to Taweelah in Abu Dhabi, one of the capital’s primary electricity and desalination plants. From there, the gas is piped overland to Dubai, Al Ain, Fujairah and Oman.

Earlier this year, Dolphin achieved its target production rate of two billion cubic feet per day (bcfd), roughly equivalent to 350,000 barrels of oil.

The pipeline was initially designed as the first part of a regional grid that could have stretched to Kuwait, and Bahrain, but early efforts to get every country to commit proved disappointing, and that network is now unlikely to take shape.

“In the 1990s, I was begging people to buy gas from Qatar. Now my problem is how to say no,” said Qatar’s deputy premier and minister of energy and industry, Abdullah al Attiyah at the launch.

Qatar’s vast North Field is the largest gas deposit in the world, with about 900 trillion cubic feet of reserves. The minister explained that despite the fields huge resources it was pertinent that overproduction be avoided.

Abu Dhabi itself has huge gas reserves, but production of its sour product is an expensive undertaking, and importing Qatar’s sweeter natural gas remains more economically viable.

Oil and Gas Middle East met Adel Al Buainain, general manager – Qatar, Dolphin Energy, at the historic inauguration.

Al Buainain is responsible for all of Dolphin Energy’s activities in the State of Qatar, including the 24 offshore gas wells and twin production platforms, the twin sealines to Ras Laffan and the Dolphin Gas Processing Plant at Ras Laffan Industrial City.

“Dolphin Energy’s gas project is the largest single energy initiative ever undertaken in the Middle East and the pipeline will be a unique source of clean, new energy for the Southern Gulf,” says Al Buainain.

“Through its supply of gas from Qatar, it also brings together three GCC nations – the UAE, Qatar and Oman – in a regional energy network for the very first time. We used to ship this product around, but the pipeline will bring obvious economic and efficiency benefits, but also improved cultural and social ties through greater co-operation.”

The contract is due to run for 25 years, and Al Buainain is confident that the demand is there despite rumours of Abu Dhabi’s planned gas development.

“Abu Dhabi’s sour gas development will be to provide extra capacity to the energy market there. The Dolphin project is likely to meet around 30% of the UAE needs, so that still leaves a significant energy demand to be met from elsewhere,” he says.

“The gas from the north field is sweet; some wells do have more sulphur content than others, but only around 1% so that is still considered a very clean product.”

The Dolphin Gas Project is a unique strategic energy initiative, which has been supplying increasing quantities of natural gas from offshore Qatar to the United Arab Emirates since July 2007.

After successively ramping up production in subsequent months, Dolphin achieved its target throughput rate of 2 billion standard cubic feet of gas per day (scf/day) in February this year.

Dolphin Energy Limited was established as a development company in Abu Dhabi in 1999 to implement the Dolphin Gas Project, and to undertake other important energy-related developments such as the Al Ain – Fujairah Gas Pipeline.

This was completed in December 2003 and commissioned in January 2004, creating the first ever cross-border refined gas transmission in the history of the GCC.

The mandate of Dolphin Energy is to produce, supply and transport natural gas from a dedicated section of Qatar’s offshore North Field to customers in the UAE and Oman, up to the agreed 2 billion bcf/d.

That gas is designed for domestic consumption, and is not expected to be sold on to third parties or made available on international markets.

“The capacity of the pipeline actually reaches up to 3.2 billions bcf, and our contract is only for 2 billion bcf. Up to that point the gas can be bought at a set price, with an incremental increase each year.

Any extra gas that flows through the pipeline will be bought on the spot market, and used at source,” adds Al Buainain.

The linking subsea pipeline – completed in August 2006 – is 364km in length, and 48 inches in diameter.

It is the longest and largest gas pipeline in the Middle East.

The costs of the complex upstream gas gathering and processing plant in Qatar’s Ras Laffan and the overall investment in the Dolphin Gas Project have made it one of the largest energy-related ventures ever undertaken in the region.

Dolphin Energy Limited was established in March 1999. French oil major Total, became a shareholder in 2000, and subsequently US owned Occidental Petroleum was invited to take equity in the company in May 2002.

The shareholding structure is Mubadala Development Company 51%, Total 24.5% and Occidental Petroleum 24.5%.

“Total and Oxy have proved excellent partners on the project, and their expertise has been very useful in the exploration and production phases of the project,” says Al Buainain.

By transporting natural gas from one of the world’s largest fields to the UAE and Oman, the Dolphin project will stimulate industrial and business investment in the region through secure, competitively priced natural gas supplies over many decades.

The Dolphin Gas Project involves activity along the entire ‘gas value chain’, from the development of gas fields to the creation of new industrial zones and projects, fuelled by the power generated from gas piped from those fields.

It therefore opens up new energy resources by meeting the growing requirement for secure, long-term and clean energy in both the UAE and Oman.

The initial construction and commissioning phase of the Dolphin Project has involved development of 24 offshore wells, two production platforms and a substantial gas processing plant in Qatar; then transportation by export pipeline of up to 2 billion cubic feet per day (bcf/d) of processed ‘sweet’ gas from Qatar’s North Field to customers in the UAE and (from June 2008) Oman.

Dolphin’s production reached full capacity in February 2008, and it is expected that average gas throughput volumes in millions of standard cubic feet per day (mmsf/d) will be divided between four major end customers.

ADWEC (Abu Dhabi Water and Electricity Company) will take that largest average daily delivery, receiving 788 mmsf/d.

Dubai Supply Authority is to receive around 730 mmsf/d and ADWEC (Abu Dhabi Water & Electricity Company) is scheduled to take around 141 mmsf/d. In Oman the receiver will be Oman Oil Company, which is expected to take 200 mmsf/d.

The company also supplies gas on shorter term contracts to the Federal Water & Electricity Authority (FEWA), Ras Al Khaimah Natural Gas Commission (since May 2005) and Sharjah Electricity and Water Authority (since April 2008).

Official agreements

Qatar’s role is central to the Dolphin Gas Project, for Qatar’s Government owns the natural resource that fuels the UAE’s new industries. The commercial details covering Dolphin Energy’s activities in Qatar are set out in two major agreements with Qatar Petroleum Company.

These are the Development and Production Sharing Agreement (DPSA) and the Export Pipeline Agreement (EPA).

These agreements provide for the development of the upstream facilities to produce sufficient natural gas from the Khuff formation in Qatar’s North Field; its transportation to a dedicated gas gathering and processing plant at Ras Laffan to strip out condensate, LPGs, ethane and sulfur for commercial sale – and transportation of the resulting processed gas through the 370 km-plus pipeline to the UAE.

Dolphin Energy is the Operator of all these upstream facilities.

Two Qatari Emiri decrees, announced on May 7, 2002, confirmed these agreements. Decree No 12 of 2002 endorsed the DPSA, and Decree No 13 of 2002 endorsed the EPA.

The decrees made these agreements effective from the date of signing, and formally confirmed Dolphin Energy’s rights and obligations.

The engineering task

The engineering mandate given to Dolphin Energy was to construct a 48-inch, 370 km-plus gas pipeline between Qatar and the UAE – and then to produce, process and transport each day through this pipeline up to 2 billion cubic feet of natural gas (approximately equivalent to 333,000 barrels of oil daily).

The task undertaken to bring the Dolphin Gas Project to production has therefore been considerable, with three distinct elements involved.

Upstream

Dolphin’s first requirement was to drill and plan the extraction of sufficient quantities of ‘wet gas’ from the natural gas-bearing Khuff Zone in Qatar’s North Field’s, gas which lies between 10,000 and 12,000 feet (3,000 -3,600 meters) underground. During 2006, two purpose-built production platforms were constructed to carry out the task.

The ‘wet gas’ produced is then piped some 80 kilometers to shore at Qatar’s Ras Laffan, where the Dolphin Gas Processing Plant was built between 2004 and 2007. This is the largest single build plant in the world, and it makes up the core element in the company’s operations.

Here Dolphin strips out valuable commercial products (such as condensate, LPGs, ethane and sulfur), with the result that ‘lean’ processed natural gas is then ready for transport by pipeline to the UAE.

Valuable by-products, mainly condensate, LPGs and sulfur are delivered from Dolphin’s Gas Processing Plant to various storage facilities, prior to export on a regular basis from exclusive loading berths. The ethane produced is sold within Qatar through a local company.

In January 2004, three substantial Engineering, Procurement and Construction (EPC) contracts were awarded by Dolphin to carry out all this work in Qatar.

The EPC contract for the Ras Laffan gas processing and compression plant was awarded to JGC Corporation of Japan, with the EPC for construction of the two offshore production platforms awarded to J Ray McDermott of the UAE.

At the same time, a Purchase Order was made for the plant’s six compression trains, driven by 52MW gas turbines supplied by Rolls Royce Energy Systems of the UK.

Midstream

The key Midstream element is the 48-inch subsea Export Pipeline from Qatar to Abu Dhabi, designed to transport up to 3.2 billion cubic feet per day, which was completed in August 2006.

The line pipe for the Export Pipeline was supplied by Mitsui of Japan, and some 440,000 tonnes of pipe were received.

The Export Pipeline was laid by Saipem of Italy, which was awarded the EPC contract in March 2004 – as well as a separate contract whereby Saipem also laid the twin 36-inch sealines that link Dolphin’s North Field wells to Ras Laffan.

Downstream

The principal downstream task was the construction and upgrade of onshore facilities in the United Arab Emirates to receive and distribute the natural gas arriving from Qatar.

New facilities were built for
Dolphin Energy at Taweelah in Abu Dhabi by the Technip (Abu Dhabi) and Al Jaber Engineering Services Consortium in 2006-7.

An agreement was reached with Abu Dhabi National Oil Company (ADNOC) for access to its gas distribution network. Joint Dolphin Energy and ADNOC teams have been cooperating to ensure smooth implementation and coordination of gas distribution.

A separate and important downstream activity was the construction of Dolphin Energy’s 24-inch gas pipeline from Al Ain to Fujairah, which was completed in December 2003. This pipeline was the first project of Dolphin Energy to come on stream.

Optimisation

Now that the construction phase is over Al Buainain says his role is shifting into another gear.

“I joined dolphin in August 2007. I joined at a very exciting and challenging time because the project was being handed over from the contractors and we were beginning plant operations and transporting the gas to the UAE,” he recalls.

Now that Dolphin is entering its phase of normal operations the focus has shifted onto maximising efficiency and ensuring smooth functions.

“Now we are moving to the operation mode, so now we are focussed on optimising the process. We are continuing open talks with QP because there is extra capacity in the pipeline, so if there is more available we would like to make the most of the capability our investment represents.”

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