Andrew Vaughan, newly appointed country chairman of Abu Dhabi reveals the reasons that helped Shell win the challenging Bab field
Early in May, international oil supermajor, Shell won one of the most challenging gas field project hands down. The Anglo-Dutch major was selected by the Abu Dhabi National Oil Company (ADNOC) to form a joint venture and develop the ardous Bab Sour Gas field in the southwest of the emirates.
This decision had been prorogued since 2007. But Abu Dhabi, quite like the rest of the Middle East, is today looking to boost its gas output for increasing cleaner feedstock for power generation and petrochemical industries development.
Located 150 kilometres southwest of the Abu Dhabi City, Bab is one of the largest non-associated gas fields in the emirates; however, it’s technically an extremely challenging field. The field contains nearly 30% of hydrogen sulphide (H2S) and 10% of carbon di-oxide (CO2), both extremely dangerous, if not treated efficiently.
Considering that the UAE national oil company is looking to produce between 500 and 1 billion cubic feet per day, the development of the Bab sour gas project will generate tonnes of sulphur that needs to be treated responsibly. The field is located very close to the cities, so there is little room for error.
At the final stage of the bidding process for the Bab fields, Shell and Total were in the lead but the Anglo-Dutch super major edged out its French rival.
Shell’s history with this field goes way back to 1997 when it conducted technical and economic feasibility studies to inject sour gas to improve liquid recovery and sweet gas production.
Andrew Vaughan, the newly appointed vice president of Abu Dhabi, Kuwait and Syria and the Country Chairman of Abu Dhabi was overseeing this joint-venture for Shell back in the time.
Vaughan’s career in many ways has come a full circle, as he is takes over the new role as country chairman in the emirate of Abu Dhabi starting September, where he will also be incharge of the Bab project.
“This was one of our key new initiatives and I am proud that it’s become a reality today and look forward to being part of the next stage of its evolution,” he says. Vaughan notes the company will bring to this project, a strong local knowledge, as well as more than 60 years experience of successful sour gas field development globally.
“The company has a strong track record in delivering complex sour gas projects safely, on time and on budget based on the integration of our vast operationaexperience and with technologies covering the whole sour gas value chain,” he explains.
The project is estimated to cost $10 billion and ADNOC said the Bab mega project will include the installation of a new gas-processing and treatment plant, including a gathering system and sulphur-recovery facilities, able to process 1 billion scfd of sour gas.
The complex will yield 520 mmscfd of sales gas for delivery to the domestic distribution network by 2020. ADNOC will hold a 60% interest in the joint venture and Shell, 40%. The firm’s roots in this region are longstanding, going back 70 years to the early days of the region’s development.
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“The Bab field award reflects our ongoing partnership with the UAE’s oil and gas sector to support their evolving needs,” Vaughan notes.
The most interesting aspect of this project will be the technology or the combination of technologies that Shell will use to extract the natural gas.
In Vaughan’s thirty year oil & gas industry experience, he says, the best approach to developing contaminated gas fields involves an integrated approach to developing gas deposits using multiple technology solutions to ensure quality project design, cost efficiency and performance right from the exploration and appraisal phase right through to operations.
The highest sour gas content field that Shell has ever developed is the Bearberry field in Canada, which was an ultra sour gas field with 90% H2S content in 1969. Processing sour gas not only produces sweet gas but can also be processed further to produce commercial sulphur.
Today, Canada ranks third in world production of elemental sulphur and is the world’s largest sulphur exporter. In Abu Dhabi, the firm will be working on several processes to remove contaminants from the gas.
“We have two registered processes at Shell to address sulphur extraction. The Sulfinol process uses water, amine and sulpholane-based solvent that targets these contaminants, in addition to the high levels of organic contamination. Additionally, the Shell Claus off-gas treating process also improves recovery rates of sulphur from sour gas,” explains Vaughan.
But, Shell today is also focussing on lowering the cost for the H2S and CO2 separation plants, while ensuring process safety. One promising approach for this could well be the centrifugal separation, which uses the same principle that some modern-day household vacuum cleaners use to separate the dust from the sucked-in air, explains Vaughan.
But apart from participating in Abu Dhabi’s sour gas field development, Shell is keen to integrate itself with the emirates’ Economic Vision 2030, which also outlines increasing viability of domestic gas production. Besides greater sour-gas field development outlined in the vision, another area the UAE is focused on is research into alternatives to natural gas re-injection in the emirate’s oil fields.
One possibility is to use CO2, which would serve the parallel goal of advancing the country’s Carbon Capture and Storage (CCS) capabilities.
Vaughan sees an abundance of opportunities for CCS in the region, as many governments are starting to initiate green programmes and have begun realising the opportunity to monetise stored CO2 and use it to create value for the energy industry and economy overall.
He believes that renewable energy and carbon capture need to be working together in the future to lead to sustainability. CCS is one of the technologies available to mitigate emissions from large-scale fossil fuel use.
Globally, Shell is involved in a number of demonstration projects including the largest CO2 capture demonstration facility in the world. The Norwegian government is collaborating with Shell and other energy companies in an effort to test and verify carbon capture technologies, and bring down costs.
In the Middle East, there is a slow emergence of CCS projects and most of the region’s activity is in the UAE, where Masdar is driving a number of CCS projects.
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In fact, another opportunity to create value from these stored resources is to use them in processes such as Enhanced Oil Recovery (EOR). Again, the Anglo-Dutch firm is considered the expert in this with its pioneering success in the Sultanate of Oman.
Vaughan believes that EOR has a decisive role to play in the future of energy supplies.
“Studies have shown that making recovery just 1% more efficient would release 88 billion more barrels of oil equivalent to three years’ annual production at today’s levels,” he explains.
The benefit of this approach is that much of the infrastructure, both upstream and downstream, needed to produce and transport the oil, such as pipelines and roads, is already in place.
Additionally, there are no exploration costs involved because the oil’s location is known, he adds. What is evident with all of Shell’s recent and past wins, is the firm’s investment in its research and development wing. In 2012, Shell spent around $1.3 billion on R&D.
Vaughan expects the firm to continuing investment to further focus on key areas, such as extraction enhancements and refining.
The oil major does not want to be left behind with the renewable energy developments that are sweeping the Middle East at the moment. Abu Dhabi’s energy strategy for example targets 7% electricity production from renewables by 2020.
Specifically here in the UAE, a subsidiary of Showa Shell is now collaborating with ADNOC (Takreer) to demonstrate the feasibility of using state-of-the art thin film solar technology for refinery applications, explains Vaughan. He says, one of the more efficient ways to use renewables is by pairing it with traditional energy sources.
While the Anglo-Dutch major is involved in a range of energy projects, it has set its eyes firmly on the giant oil concession due for renewal in January 2014. The ADCO concession, which covers six main deposits, is the largest in the country with the capacity to produce about 1.5 million barrels daily.
When asked if the oil major believes it will bag the coveted concessions, Vaughan doesn’t let his guards down and only says, “we value our long and successful partnership with the UAE and look forward to continuing to play a role in helping meet its rising energy demands.”
