Exclusive Interview: ADCO’s Abdul Munir Al Kindy

The resources belong, of course, to Abu Dhabi, and ADCO works as an operator firm within the ADNOC group umbrella. ADCO can trace its origins back to 1939 (laying claim to being the oldest organisation in the country). The company switched its legal status to operator on its 40th anniversary in 1979, and ever since has served its stakeholders – key minority IOC partners and the National interest.

The switch itself was largely administrative in its nature, but freed the company up to strike an incredibly efficient balance of technical skills from its upstream partners, combined with the capital backing and vast resource wealth of the ADNOC Group.

The mix has proved a potent one. In spite of the collapse of the oil price in November 2008, the company has forged ahead with its onshore E&P projects – and today is tackling some of the most technically challenging frontier projects anywhere on the planet. Sustaining production in mature fields and increasing output at new sites pioneering cutting edge enhanced oil recovery project schemes.

Oil & Gas Middle East spoke with Abdul Munim Saif Al Kindy, ADCO general manager ahead of the most recent ADIPEC conference leadership panel, of which he is this year’s chair.

The sense of history with ADCO is intermingled with the promise and hopes for the future of Abu Dhabi, the two inextricably linked when Al Kindy talks about his current role.

“The company began life with a concession and ten years later drilled its first well. Unfortunately that was dry and drilling moved on to Sharjah and Dubai. It wasn’t until 1958 that the company made its first discovery, and we began shipping in 1963. From there, well what you see around you in Abu Dhabi today is inextricably linked to ADCO.”

Indeed, the majority – 60% in fact – of Abu Dhabi’s crude output is thanks to the activities of ADCO. However, with a raft of new projects the numbers will reflect an even greater proportion of the state’s revenues to the onshore operator.

“Today it is around 60%, but we will play a more dominant role in crude output as we increase our oil production,” reveals Al Kindy.

The company is also the UAE’s largest producer of gas. “We produce around 4.5 billion cubic feet of gas per day from associated and non-associated production. Almost at point of source we pass this to our sister company GASCO,” he says.

The Carbon Conundrum

The company has major plans afoot to sustain that gas production. “There are some really interesting recycling projects which will enable us to reduce the natural gas we currently use for injection, such as CO2 enhanced recovery techniques which warrant a proper investigation.”

On November 11 last year the company began the first advanced CO2 injection project on a carbonate reservoir in the MENA region. “If we can technically assert the value of CO2 in terms of enhanced oil recovery then we may start a much wider EOR scheme at one of our major fields by 2016,” reveals Al Kindy.

The general manager says that whilst the technical challenges and commercial viability issues of EOR projects remain significant, the way the company is formed with key stakeholder partners means it has access global experience and knowledge when it comes to understanding of CO2 injection projects.

“One of the significant contributions which our major oil company partners make to ADCO is the input of technology, so between our stakeholder partners we can tap a wealth of experience and knowledge when it comes to CO2 injection. These partnerships have been quite effective in terms of shaping and contributing to our objectives and programs.”

Whilst many firms around the world are dabbling with carbon sequestration and storage, Al Kindy says the work being done at ADCO is helping the company consolidate a regional leadership role in developing and executing CO2 related EOR projects – actually increasing production.

“The application of CO2 has proven its worth in fully depleted reservoirs and sandstone formations, but some of the projects we have in our portfolio and in our sights will mean injection during the early stage of a big field’s life. We don’t really know exactly how the field will react because there are a lot of variables including porosity, geology et cetera.”

Al Kindy hints that a wider supply issue may develop fruitful relationships within Abu Dhabi’s own borders, and form part of a carbon masterplan. “Of course, the commercial aspect of establishing a carbon supply partner needs to be examined very closely, but I think we will have a lot of interesting opportunities to work with Masdar.”

Ahead of the curve

Abu Dhabi reinvigorated its status as a focal point for upstream oil and gas firms when the repercussions of a tumbling oil price sent shockwaves across the E&P world. By forging ahead with many of its upstream developments Abu Dhabi became the watchword for oilfield service companies not just within the region, but globally.

Problems for many operators were beginning to show well in advance of the global financial crisis and subsequent oil price freefall in 2008. When the futures markets for crude deliveries reached a peak in excess of $147, the problem for operators was to battle with was far from one of revenues – indeed it was spiralling costs. As the pool of able and available EPC contractors became stretched ever more thinly, the cost of upstream projects skyrocketed.

“The problem was, and always has been, that the industry as a whole tries to do the same things all at the same time. This is a cyclical industry, so to be an efficient operator you have to position yourself well ahead of demand curves.”

Al Kindy says that ADCO, with the blessing of the Supreme Petroleum Council, was able to push ahead with a lot of the projects it had slated, and has achieved quite exceptional gains from the timely access to EPC contractors during a market downturn.

“We have gained probably 30% on our budgets. This hasn’t just been approaching the market and demanding better prices, it can only come about through open and transparent competition.”

The general manager says that once the marketplace understands and trusts the openness of the process, real competition comes into play.

“For example, on a billion dollar project, if you had eight bidders, the variation in prices tendered can be a little as 1%. This is because all the contractors drive their margins in order to win business, and because of this we have seen some excellent results on our budgets and forecasts.”

“The SAS project (Sahil, Asab and Shah field development) was budgeted at $4.5 billion but was awarded for $3.5 billion, and the Bab compression facility, which was tendered for $1.5 billion was awarded for almost a 40% saving,” reveals Al Kindy.

The company has almost come to the completion phase for many of its big ticket projects, so the emphasis from the operator’s perspective has shifted to one of timely execution, bringing projects in on time and on budget.

ROAD TO ADIPEC

This November will see Abu Dhabi fling open its doors once more to the world’s upstream community for the colossal Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), which runs 1st – 4th November.

Al Kindy will be Chairing this year’s conference, and he says the timing of the event (which is held every two years), could not be any better. “It really is an interesting time for ADIPEC – It is ideal really. This is where the key industry issues surrounding the oil that will fuel us all for the next twenty years will be discussed. There is a real and fundamental urgency for suppliers and developers to come together and see what is out there and come up with new ideas,” he says.

“Whether you are looking at methods to sustain your production or increase your production, this is the time that everybody is doing it. ADIPEC 2010 is really coming at a critical juncture for the industry.”

The conference and exhibition is the largest gathering of upstream suppliers and technology firms in the Middle East, and the conference has always delivered topical and thought-provoking sessions.

“Speaking for ADCO, it will be really important for us to share views with peers in the industry and exchange technical know-how. The SPE (Society of Petroleum Engineers), has help made this industry quite an open one in the way it promotes the sharing of ideas, and myself and the steering committee have been working very closely with the SPE to bring experts to Abu Dhabi to discuss what they have been working on. Ultimately it’s a fantastic learning tool, and is really exciting for young engineers.”

The committee, through the SPE have been receiving and collating abstracts for a few months, but the excitement surrounding this year’s event is evident in the submissions to date. “By this time two years ago we had received 80, to date we have over 290 – a massive increase. Last time over 800 abstracts were submitted in total, and I hope we can exceed that.”

At the time of going to press Oil & Gas Middle East discovered the call for papers has been extended to April 15.

With the theme “Delivering Energy in the Low Carbon Era: Challenges and Opportunities”, the programme committee for ADIPEC 2010, co-chaired by Fareed Abdulla, ADCO and David Marsland, Shell, has set its focus on vision, surface and sub-surface technical topics and aims to produce the most comprehensive edition of ADIPEC yet.

The topics are set to draw out the best of the technical proficiency and futuristic vision from our industry experts including drilling and completion technology, future exploration and geosciences approaches, intelligent fields, CO2 management, enhanced hydrocarbon recovery, conservation strategies in HC production, HSE, the next generation of field developments and projects, and operations of the future.

“Someone wise once said to me that to be an expert in any field in the oil and gas industry starts with reading every SPE paper on the subject. Very slowly you build from there. This conference is going to be an excellent platform and tool for the delegates,” beams Al Kindy.

ADCO GM in profile

Abdul Munim Al Kindy joined the Abu Dhabi Petroleum Company (ADPC) in 1975, as an apprentice, and continued his further education in the UK. He graduated in Mechanical Engineering in 1982. He occupied a number of senior positions in all onshore fields and terminals. In 1990 he joined British Petroleum, on secondment, and worked in North Sea operations, commercial, and strategy development.

In 1997 he was appointed as the deputy general manager of ADCO, joined National Drilling Company in 2001, as General Manager. He returned to ADCO in 2007 as its general manager, and will be the chairman of the 2010 ADIPEC conference in November.

In the pipeline

The Abu Dhabi Crude Oil Pipeline Project aims to offset reliance on Arabian Gulf oil terminals while reducing shipping congestion through the Strait of Hormuz, essentially strengthening overall export capability on the eastern coast of the United Arab Emirates.

Originating from Habshan in Abu Dhabi – the current collection point for Abu Dhabi’s onshore crude oil production – ADCOP will terminate in Fujairah. The 48-inch-diametre pipeline has been designed to transport some 1.5 MMBPD of crude oil from ADCO facilities at Habshan over a distance of 370 km to an oil terminal in Fujairah for export through offshore loading facilities.

The scale of the project is immense and encompasses the construction of the main oil terminal and offshore loading facilities at Fujairah, in addition to the installation of the main pipeline.

“ADCOP is an IPIC project, and ADCO will become the operator once it is completed. When the pipeline is operational ADCO will have two terminals to export from, which gives the market new options and added security of supply,” explains Al Kindy.

Building a national workforce

Enhancing human capital and building a homegrown knowledge pool is one of Al Kindy’s personal priorities, though he stresses the company is already a high-acheiver in this field.

“We have a situation facing us where the future supplies of oil will be heavier, more sour, and in physically more challenging downhole environments to work in.”

Whilst important work is being made with enhanced oil recovery and digital oilfield improvements, Al Kindy says the solution will not simply come from improving pracitices and recovery rates.

“Technology is not the catch-all solution. We must ensure we have the human capital in development now in order to implement the developments the industry is working on now.

Al Kindy highlights the ageing staff issue which is facing every upstream operator. “Somehow this has to be tackled without dilution to the knowledge pool. We are continuously exploring how we can attract youngsters to the industry. There is an underlying image for the upstream industry with the youth of today.” The general manager points out that many college and university aged students view oil and gas as short term and environmentally damaging. “It’s more important than ever that this trend is reversed. Locally we have been aggressive in trying to find effective solutions. ADNOC pioneered the setting up of the Petroleum Institute, and we now have male and female collages covering five key disciplines, and we are seeing the quality engineers coming in. This is definitely already having a positive impact and is allowing us to see quality engineers who are easily integrated into our organisations come through the system.

We have prepared the ground work – in fact ADNOC has been a pioneer of integrating females into field work in this region.”