Sour hour

The project is technically challenging, the resource is highly sour, and the need for development is great.

Although there are several factors that combine to explain the timing of the development, the driving one is the growing need for domestic electricity generation feedstock.

The UAE as a country, and the region as a whole, is facing a genuine gas-crunch. Unthinkable just a decade ago, but a reality all the same, the Middle East is running low on fuel to support its industrial and residential needs. With economic growth outpacing even the fastest growing nations outside of the region, development is rampant, and with that economic success comes an insatiable appetite for power.

“The timing question can be summed up in two words,” says Nick Coles, founder of the Sour Oil & Gas Advanced Technology conference and exhibition (SOGAT). “Sheer necessity. Abu Dhabi alone expects to triple its resident population in the coming decades and Dubai is already expanding at a phenomenal rate. Power generating capacity has to be stepped up at least to keep pace.”

The fact that the UAE, a country blessed with enormous conventional hydrocarbon reserves, is looking seriously at the construction of nuclear power plants, two as of October, highlights how significant that need for extra power is. On top of fuelling the country’s commercial interests comes a huge demand for desalination, a colossal drain on electricity capacity region-wide.

 

The UAE holds the world’s fifth largest gas reserves, the majority concentrated in Abu Dhabi, and much of that is extremely sour. The Shah Field, recently scooped by ConocoPhillips, and the open Bab Field are both among the most sour reserves considered recoverable, with an H2S content around 30%. To put that into context, Qatar’s vast North Field is sour, but only 5% H2S.

“H2S content is the most important thing to consider when you look at sour fields, because it is corrosive, dangerous, and the magnitude of sulphur content in Abu Dhabi’s fields mean that compared to conventional or sweet gas, it is expensive to work with,” explains Mohammad Ayoub, operations leader and region general manager, GE Oil & Gas.

The main challenges are two-fold with sour gas. Firstly there’s the economic factor – the production costs involved are very high, and secondly, the technical challenges of dealing with the sour product – essentially stripping it of all impurities, is no easy task. “Also, with products which are very sour, such as the Bab and Shah Fields in Abu Dhabi, there are other challenges pertaining to sequestering the by-products,” explains Samuel Ciszuk, energy analyst – Middle East and North Africa, Global Insight.

On a smaller scale these impurities can be captured, stored and sold, thus maximising the economic gain from every cubic foot produced. However, on the scale of the proposed Abu Dhabi fields the vast quantity of sulphur produced each day exceeds not only local markets, but the entire global demand for sulphur, raising further challenges to the exploitation of resources.

“There are many uses for the by-products of sour gas production, but with the scale of the Abu Dhabi developments, the problem is that the operator would very quickly acquire mountains of sulphur powder. It’s a hazardous product and there’s simply no need for such a quantity on world markets,” adds Ayoub.

To combat the sulphur mountain scenario, once the material is sequestered from the gas an alternative storage solution needs to be met quickly. One solution is reinjection. By pumping the contaminants back into the field not only is it safely stored, but it increases the recoverable assets too. However, over time this will lead to an increasingly sour product, placing further strain on the infrastructure and processing facilities.

“Properly treating and disposing of contaminants in a safe and ecologically sound manner is one of the biggest challenges the gas industry is currently facing. Being successful in this endeavour also means unlocking enormous hydrocarbon resource potential, while providing a substantial benefit for the national economy of the country in which they are located,” says Ayoub.

 

Breakthrough

Several highly significant technological developments have been delivered in recent years. Metals and alloys which are resistant to the corrosive effects of sour gas, are now deliverable at a more affordable price.

“In the Shah Field the gas is extremely sour, extremely corrosive, with something like 30% hydrogen sulphide as well as other impurities. My understanding of the technology is that just five or six years ago this would have been regarded as either not possible, or if it was, then certainly not economically viable,” says Ciszuk.

GE Oil & Gas is claiming a position at the forefront of developing equipment suited to sour gas reinjection. “We were the first – and today still the only – company able to supply equipment that can handle sour gas with pressures of more than 600 bars. GE has also delivered the highest pressure sour gas compressor ever built and fully tested at the record 820 bar discharge pressure,” explains Ayoub.

To achieve the above, Ayoub says the technology challenges have been enormous.

“An H2S leak would kill anyone in the vicinity very quickly, so assuring a zero leakage design able to withstand pressures up to 1000 bars, and finding a supply of materials reliably able to withstand extremely corrosive atmospheres has been a significant challenge, but one we are ready to tackle. Combining all of the above would have been unthinkable just 10 years ago,” he says.

Sour gas has by no means been tamed, and at this time remains very challenging for everyone. It tests the engineering to its full capabilities, but also it pushes the supply chain to its limits. The kind of materials needed to handle gas at these very high pressures is quite exotic. Processing plants require massive quantities of incredibly high grade steel, which is difficult to manufacture and shape. The global production of these high-end products is very expensive and the supply is fairly fixed.

Partly because of the oil and gas industry boom over the past 24 months, and partly because of the technology demands, the Shah Field development ranks among the most expensive production projects slated world-wide. Although no official figures have been confirmed by either ConocoPhillips or ADNOC, it is widely regarded to be in the US $11 billion to US $13 billion range.

 

Sour hub

The cost of sour gas production and processing projects is huge, but so are the wider ambitions harboured within the Emirates. In order to make the dream a reality a solution must be found, and sour gas is leading the drive. The scale of the projects, and the technical expertise which will descend on Abu Dhabi in the coming years will transform the knowledge geography in the sour field.

“The UAE, in a relatively short space of time, will find itself a global leader in the field of sour gas development and cutting edge technology deployment,” says Ayoub. “We don’t see the same deployment or enthusiasm in Saudi or Kuwait reservoirs. The reserves are sweeter and, for Kuwait, water injection is the big challenge in the future because historically this has been the favoured solution,” he adds.

The significance of the win for ConocoPhillips can’t be overstated, and the fact that they’ll concentrate their own expertise, and that of successful partners, in Abu Dhabi for the years ahead will make the UAE capital the de facto port of call for other NOCs looking to expand their sour capabilities. ConocoPhillips will be the first company to build and deliver on a project of this scale and nature. They’ll establish themselves as a leader at a critical juncture in time.

“In unlocking these reserves at a time and in a region where other countries who sit on sour oil and gas are experiencing a gas crunch is massive for ConocoPhillips. These other countries will no doubt start thinking seriously about this kind of development,” observes Ciszuk.

There were a large number of bidders tendering for the Shah Field, and it’s no secret that Occidental was seen for a long time as the front-runner. Ultimately, everyone wants to be a pioneer, so it’s a feather in the cap of ConocoPhillips.

Time and again we have heard IOCs and oilfield service companies say they are committed to the region, and quite often support their claims with a demonstration of that commitment. As we move forward it is highly likely this will be the case across the board for all the successful partners in the sour projects.

All of this will help cement Abu Dhabi as a centre of excellence and learning in this important energy field.
 

“GE is very serious about being a leading player in developing the region’s sour gas potential,” says Ayoub. “GE Oil & Gas invests more than US $100 million each year on research and development and a good portion of that is being directed at sour gas. We see ourselves aligning with this sector more and more in the future.”

Where better to learn than at the heart of an industry? In the first of what may be a raft of similar commitments, GE is already looking to establish a centre of excellence for sour gas research and development in the region. “We want to grow ahead of the curve and be a stakeholder in the development of this in the Middle East. We have agreed to build research and development centre in conjunction with Mubadala in Abu Dhabi, and this may well become quite focused on sour projects.”
 

The wider significance of these projects has been largely overlooked, but the deal signed in July, and the projects that remain on the table will surely combine to raise the profile of Abu Dhabi as a niche knowledge hub. And the electricity the projects will help produce will keep the UAE economic miracle powered up.