ADNOC, the UAE’s state-owned crude producer, will award onshore oilfield service contracts in 2012 as part of a US$10 billion programme to boost output 30% by 2017, reported Bloomberg.
Adco, the onshore entity of ADNOC is on track to raise output by 400,000 bpd to 1.8 million bpd, according to the company’s chief executive officer.
“We hope to add 213,000 barrels a day by 2012, which will come from new reservoirs and new fields,” Abdul Munim Saif al-Kindy told the newswire on 19 October. “The rest, some 200,000 barrels a day, will come from increasing production from existing fields of Bab, Asab and Qusahwira, for which we plan to award related projects starting 2012.”
The UAE is going ahead with its plans to boost onshore output even after the financial crisis reduced oil demand in 2008 and 2009, the first two consecutive years of declining consumption since the 1980s, which forced OPEC to make a record output cut to support prices.
Al-Kindy said that in the downturn of 2008-2009 when global oil demand fell by 1.7 million bpd, Abu Dhabi made savings of 30% in equipment costs by awarding contracts during this period.
Capacity increase
Abu Dhabi, which holds more than 90% of the country’s oil reserves, aims to boost total capacity to 3.5 million bpd from about 2.8 million now by developing offshore fields operated by other units of ADNOC, which owns 60% of Adco. The consortium of Royal Dutch Shell, Total, ExxonMobil, BP and Partex hold the rest.
ADNOC expects to spend about $50-60 billion in the next decade as more capacity is developed, al-Kindy said. The investment and the new oil capacity that is expected to come on stream will require more exploration and drilling in order to maintain this level of capacity he said. It is expected that this will lead to an increase in oilfield operations and an expansion to the associated petrochemical and fertiliser plants, he said.
Oil ‘bound’ to rise
“Oil prices are bound to stabilise and go higher, as we’ve seen historically, because oil and gas are the dominant fuels for growth,” al-Kindy said. “If you measure crude against the equivalent energy from solar or wind, you’re talking about $250- $300 a barrel. At current prices there is no viable alternative to oil.”
Once onshore capacity reaches 1.8 million barrels a day, the challenge will be how to sustain it, either through new reservoirs, exploration efforts, or by developing smaller, tighter new reservoirs, al-Kindy said. Adco is shooting seismic surveys and plans to explore some wells in 2011, Bloomberg reported him as saying.
“The average cost of production for the additional capacity will range between $6 and $7 a barrel and up to $30 for the smaller, more capital intensive fields,” said al-Kindy. “We have a 25- year plateau period for big reservoirs. About 60% of our prospects are in the southeast, in smaller fields, and for these smaller reservoirs, we need to work out optimum plateau periods that are economic.”
In a bid to reduce its usage of the gas it produces Adco is also looking at ways to reduce its use of up to 40% of the 5 billion cubic feet of natural gas produced daily in the UAE. In collaboration with Masdar, the emirate’s government-backed clean energy organisation, Adco has begun a pilot project to replace the gas it uses in enhanced oil recovery with carbon dioxide.
The company is in talks with Masdar to capture CO2 from pollutant sources such as power plants, transporting it and injecting it into oilfields. Masdar plans to capture 5 million metric tonnes of carbon emissions annually starting between 2012 and 2014, it said in January, according to Bloomberg.
“We have started a pilot at Rumaitha. Should we succeed in proving the value of using CO2 as an EOR medium, in this pilot, this would replace gas,” al-Kindy said. “We currently inject about 150 million cubic feet a day of gas in that field, which could be released or partly released into the grid. We can target releasing 300 million cubic feet a day from the northeastern fields.”
