When a news story breaks announcing the release of seven oil and gas blocks for tender in the UAE, you’d be forgiven for thinking, “which ADNOC division is behind this initiative?” It wouldn’t be unreasonable either to suggest that Ras Al Khaimah was unlikely to be at the forefront of your mind as the source of the venture.
But that is precisely what has occurred and the ambitious emirate, so often overshadowed by its more illustrious cousins, is hoping it can add the hydrocarbon sector to its other front-line activities such as real estate and tourism. Nishant Dighe, the British chemical engineer who came in as CEO at state-owned RAK Gas more than two years ago, reveals the decision to roll out these blocks was some time in the making.
“When I joined in November 2015, there was a real low in the market and a lot of companies weren’t really moving forwards with exploration. We used that opportunity to really understand what we have in Ras Al Khaimah, so we used some consultants to kick off some studies, look at all the old wells and look at all the old seismic.”
In 2017, the firm appointed Thibaut Burckhart, a 20-year veteran with Royal Dutch Shell in various technical and managerial roles, to the position of exploration manager as its analysis continued. Dighe says that where the process is at now is the “culmination of at least 18 months work” and the fact some of the region’s oil and gas big beasts have been running their own licensing rounds recently is merely coincidental.
It was in April the licensing round was officially launched, with four offshore blocks and three onshore ones open for bidding, but what does Dighe himself think of the potential scale of what is on offer?
“We are very encouraged. The seismic data is excellent quality, we’ve got lots of companies reviewing the offshore fast-track data. The onshore doesn’t have newly acquired 3D seismic but with all the work we’ve done to pull it together, it’s very clear, this is an underexplored area; so, of course, we are very optimistic and the level of interest we’ve had is also a reflection of that.”
Ras Al Khaimah’s government will be keen to see any future bids lead to appraisal and exploration drilling before hopefully unearthing significant reserves. At present, Dighe’s firm oversees no domestic production since the long-standing offshore Saleh gas field, which was only producing gas and liquids intermittently towards the end of its active cycle, was shut-in back in August 2016.
RAK Gas is currently processing gas generated by neighbouring emirate Umm Al Quwain but Dighe suggests Saleh might yet see better days, “When we shut it in in 2016, it was in recognition that actually this field needs more work, there’s a lot of reserves left in it and we’d like someone to come in and take over and bring some fresh thinking.” The Wasia formation, the main production reservoir, is still at high pressure, according to Dighe and the gas condensate field still maintains “real potential”.
When the licensing round was unveiled, Ras Al Khaimah’s government also passed a law establishing the RAK Petroleum Authority (RAKPA) – Dighe combines his role as the head of RAK Gas with managing the new body as its chief executive. Surely the creation of an entity specifically set up as the “authority for, and the regulator of, the petroleum sector in Ras Al Khaimah” is indicative of high hopes among the emirate’s cognoscenti that these blocks are going to lead to significant new exploration and production (E&P)?
“Absolutely. We have set up the RAK Petroleum Authority to be able to follow industry best practice of having a separation between a national oil company, which is RAK Gas, and the government, which is now represented by the RAK Petroleum Authority.”
Petroleum consultancy Gaffney, Cline and Associates, based in Alton in the UK, has been advising Dighe’s team through the various stages of the release of the blocks and the CEO admits that there is indeed genuine expectation the new regulatory body will be required to handle the processing, management and award of several licences.
Unearthing new reserves in Ras Al Khaimah would not necessarily create major regional headlines following Bahrain’s vast offshore discovery earlier this year. It is believed the island kingdom’s copious shale oil deposits sit in its Jurassic rock formations – and RAK Gas, in its role of facilitating the current licensing round, has been encouraged by the potential of its own Jurassic system.
So could we also see notable unconventional plays in the emirate? Thibaut Burckhart is not convinced but he is undoubtedly upbeat about the stratigraphy of the Jurassic formation, “The Jurassic is an interesting topic, not so much for the unconventional but as a conventional resource. We think, with the new data, the Jurassic is an emerging play and we have seen a lot of interest, a lot of discussion about Jurassic prospectivity.”
RAK Gas has utilised “play based exploration” (PBE) as a means to evaluate and build its “rejuvenated” E&P potential. Burckhart explains that PBE emerged in the 1990s among the supermajors and it is a technology that he knows well from his previous career.
“It is basically a way to set geological opportunities within a coherent and consistent framework and rather than going one bump after another, it allows companies to make much better informed decisions about their exploration. This is the way we mature our portfolio before going to the data room.”
Burckhart describes PBE as a means of undertaking due diligence on a potential exploration opportunity. It looks at previous activity, assesses chance and risk as well as a set of common geological features so that companies can better understand a potential play and thus “the running room” within a given opportunity.
Burckhart had previously made reference to the “data room” and this is clearly one of the main selling points. RAK Gas has gone to great lengths to analyse and map out its geological profile in the hope this will make it much easier for potential E&P operators to consider making bids on its seven blocks.
Dighe reiterates the fact that when he came into his role, the firm’s data was very poor, particularly offshore, and this had to be addressed as a priority.
“You can’t expect companies to come and explore when there’s no seismic data. Today, people explore offshore with 3D seismic. So it became very clear to us that if we were to propel the exploration effort, we needed to go out and jump-start this by shooting seismic.”
RAK Gas initially approached the task with the anticipation of funding the acquisition of the seismic data itself, but after discussions with a number of firms, Dighe reveals such was the interest in the potential of the project, the plan for “proprietary seismic”, data that RAK Gas would pay for and own, soon became a “multi-client” model in which the seismic data specialist would also put its own money in – with the expectation of re-selling this information in the future.
Dubai based firm Polarcus was eventually selected to carry out the work and Dighe is happy with the results, “They did a fantastic job of shooting seismic all the way from the outer limits, to pretty close in to shore in about 15 metres of water depth. We did a bathymetry survey to bring that vessel in close and we have a fantastic data set now.”
RAK Gas currently has a fast-track data set available for scrutiny and a fully processed data set will be available this month. Dighe enthuses about the interest shown in its two data rooms in the emirate, and a further one located in London, stating they have been “fully occupied” since the licensing round commenced. But who is exhibiting interest and which region are they from?
Dighe says all seven blocks have garnered interest and he has seen a “horses for courses” approach with offshore specialists honing in on their area of expertise and onshore operators studying land based areas, as the potential bidders stick to their preferred E&P plays.
RAK Gas’ CEO reveals a diverse selection of firms has looked at the available blocks, ranging from large international oil companies to smaller players. Dighe won’t be drawn on any more specifics but stresses that every firm currently involved in the process is a “serious oil company”, with some possessing a previous background in the Middle East.
The mood music around the early stages of RAKPA’s licensing round is clearly positive with cutting-edge seismic data and strong interest from oil firms but a location with a global reputation for oil and gas production, Iraq, recently offered up eleven blocks for auction and five subsequently went unsold. If a country with such a strong identity and track record in the hydrocarbon industry as Iraq can struggle to find buyers, surely the same could happen in Ras Al Khaimah?
Dighe is very quick to stress his confidence in what RAK Gas is offering and immediately points to the detailed planning and organisation that has gone into the emirate’s licensing round with clear sign-posted deadlines. Although the RAK Gas CEO makes no direct mention of Iraq’s auction, that process involved several date changes and was ultimately held two months ahead of schedule.
“We’ve spent a lot of time planning the process. We’ve set up the petroleum authority, we’ve set up a process which culminates in November, allowing people to look at the data now, from April, allowing people to see the new seismic and the final processed seismic from July.
“We’ve got a very time-tabled programme that I think everyone feels comfortable with and we’re taking people through the steps. I feel very confident that we will have these blocks licensed at the end of this process.”
When asked if any firms have already made moves to put forward bids, Dighe reiterates the licensing round’s November deadline but does state that the highest bid would secure a block.
Clearly, Abu Dhabi is one of the world’s pre-eminent oil and gas centres. It not only has huge resources and major onshore and offshore activity but it is also a mature industrial hub with vast support networks and infrastructure – it is surely going to be a challenge for Ras Al Khaimah to make its own mark but Dighe comments that “Ras Al Khaimah has been producing hydrocarbons since 1984”. It also possesses a “well-developed” offshore and onshore pipeline network in addition to a gas plant in the north of the emirate.
“We are very established in terms of networks, access to market. We have a storage facility for oil in our processing facility in Khor Kwair, which allows for export of crude. We are very well positioned. I think a really attractive part of our licensing round is because of all this infrastructure there, commercialisation of any hydrocarbons is going to be very, very quick.”
Dighe elaborates that if the licensing round does lead to the discovery of marketable oil or gas then RAK Gas would “lead the way” in laying down more infrastructure in order to facilitate the commercialisation of new fields.
The RAK Gas CEO has been bullish about his project and keen to focus on the encouraging detail in the seismic data, and the emirate’s selling points, but the licensing round still has several months to run. Dighe will not speculate on what would constitute success once the bid wraps up late in the year, “The licensing round is the first step in a multi-phase process. Our objective is to bring in reputable oil companies to drill wells in the offshore and shoot seismic in the onshore.” Dighe says the plan is to take everything one step at a time.
He is also keen to downplay the possible impact of the licensing round on Ras Al Khaimah’s economic development, “Is it going to change Ras Al Khaimah? I mean obviously it will be a positive development, but it’s just another piece of the Ras Al Khaimah story, which is a much wider story than just oil and gas.”
