Switching to oil recovery
New official study on UAE oil sector downgrades exploration
THE UNITED Arab Emirates is switching to the deployment of advanced technology at the expense of exploration to maximise its oil recovery rates as costly programmes to hunt for more oil are unlikely to result in major discoveries, according to a new official report.
The bulk of expansion projects are being carried out by Abu Dhabi, which controls more than 90 per cent of the UAE’s oil and gas, and at least $10 billion will be invested to raise the country’s crude output capacity to three million bpd in 2006 and 3.7 million bpd in 2010.
The 350-page report for 2006, just released by the Ministry of Information and Culture, said Abu Dhabi alone has around 92.2 billion barrels in proven oil reserves and that at present production levels, they can last as long as 129 years.
In Dubai, industry sources said the emirate has embarked on an ambitious programme to maximise recovery rates after a steep decline in its crude output over the past few years.
Oil and gas exploration in Abu Dhabi is primarily carried out by companies within the Adnoc group. While most of this is undertaken by operating companies ADCO, ADMA-OPCO and ZADCO, Adnoc also has its own sole risk programme.
The exploration programme, which began in 1950, has already yielded huge reserves of oil, and the research emphasis has now shifted from finding new fields to a more thorough examination of existing known reserves, along with some high-tech exploration of deep oil and gas prospects. The aim is to maximize the output of each structure through improvements in extraction methods and expansion programmes.
It is predicted that efforts currently under way, involving an investment of over $10 billion, will raise the UAE’s sustainable crude output capacity from around 2.5 mb/d at the beginning of 2004 to 3 mb/d in 2006 and 3.7 mb/d by 2010.
The long awaited development programme planned for Upper Zakum requires a very high level of technical expertise as a result of the low reservoir pressure and porous rocks. Introduction of an additional technical partner, in the form of ExxonMobil, provided a boost to the project.
Abu Dhabi:
Bringing capacity up to theoretical maximum
 With proven crude oil reserves estimated at 92.2 billion barrels, the emirate has 94.3 per cent of the UAE’s total reserves and 9 per cent of the proven world oil reserves (1016.8 billion barrels). At the current rate of pumping Abu Dhabi’s oil reserves will last for 129 years.
Its largest oilfield, Upper Zakum, contains an estimated 50 billion barrels of reserves in-situ, with estimated recoverable reserves around 16 to 20 billion barrels, using extensive water injection.
In terms of production capacity, Abu Dhabi’s land-based and marine facilities are roughly equal. Onshore production capacity in 2004 averaged 1.2 mb/d whilst offshore capacity stood at 1.25 mb/d. Actual production levels have, however, been higher in recent years from the onshore fields run by ADCO, which exceeded offshore production by ADMA-OPCO, ZADCO and the other companies.
In 2004 for example, ADCO produced around 1.15 mb/d whereas offshore production ran at around 805,000 b/d. The latter figure was made up by 380,000 b/d from ADMA-OPCO, 375,000 b/d from ZADCO and 50,000 b/d spread between the four other offshore fields (Mubarraz/Neewat al-Ghalan, Umm al-Anbar, Al Bunduq and Abu al-Bukhoosh).
ADCO will boost its capacity from 1.2 mb/d to 1.4 mb/d; ZADCO is taking the production capacity of the Upper Zakum field from 550,000 b/d to 750,000 b/d and ADMA-OPCO is raising the sustained capacity of the Umm Shaif and Lower Zakum fields to 600,000 b/d, which is presently regarded as peak capacity of the complex rather than a sustainable level.
Meanwhile, ADCO also produced 130,000 b/d of 57.5 degree API condensate (0.11 per cent sulphur) from the Thamama formation of the Bab field, which started up in 1996. Two additional gas projects were completed in 2001, at Bab and Asab, boosting condensate production to 210,000 b/d (130,000 b/d at Bab and 80,000 b/d at Asab) and two other projects due to be completed in 2008 should raise ADCO’s condensate production to around 355,000 b/d. Condensate production is not counted in OPEC quotas.
Abu Dhabi Company for Onshore Oil Operations (ADCO) generates more than half of Abu Dhabi’s oil production, and it is one of the ten largest operating oil companies in the world and the largest crude oil producer in the southern Arabian Gulf.
ADCO is engaged in a major expansion project hat will add nearly 400,000 barrels per day to its production capacity. These include raising capacity of four fields in north-eastern Abu Dhabi (Al Dabbiya, arn Yaphour, Rumaitha and Shanayel) from 10,000 b/d to 110,000 b/d; bringing the small Huwaila field on line at an initial rate of 10,000 b/d; raising the Bu Hasa field’s capacity by 180,000 b/d and that of the Bab field by 100,000 b/d.
Offshore, ADMA-OPCO’s two fields, Umm Shaif and Lower Zakum, are close to optimum capacity. The Lower Zakum field has 321 wells tapping into five productive zones spread over 1270 square kilometres, whilst Umm Shaif has 268 wells spread over its 360 square kilometres of seabed.
The plan here involves bringing sustainable capacities up to their theoretical maximum capacities. This is being done, both through drilling of new production and injection wells, and by expansion of gas injection facilities.
The Umm Shaif Crestal Gas Injection Project, due for completion in 2006, is a key part of this programme and involves installation of a 600 million cubic feet per day (cf/d) gas injection system. Gas from the Khuff reservoir is being re-injected into the Arab C and D reservoirs to boost oil production. A similar gas injection project, completed in 2004, is also drawing gas from the Umm Shaif Khuff reservoir and boosting production of Lower Zakum.
Dubai:
Diversifying away from oil likely to gain pace
DUBAI’S proven oil reserves in 2005 were officially estimated at four billion barrels, but the recoverable portion may be less than half this figure, with industry sources estimating them at 1.6 to 2 billion barrels.
Almost all of the emirate’s oil reserves are located in the original concession area of the Dubai Petroleum Company (DPC), whose four offshore fields - Fateh, Southwest Fateh, Falah and Rashid - account for its entire output of crude oil and associated gas.
 Whilst oil output has generally declined over recent years, a programme of field development entailing the drilling of infill wells, horizontal production wells and water injectors has raised its reserve/production ratio and 2004 was the first time in recent years that production was actually up on the previous year’s figures.
DPC installed water and gas injection facilities on a large scale to maximise recovery rates, and all the associated gas produced at its four fields is now re-injected into oil reservoirs. Condensate is also produced from the wholly government-owned onshore Margham field.
The calculation on how long Dubai can keep its oil wells flowing depends on which set of figures one adopts for recoverable reserves. According to the French Comité
Professionnel du Pétrole, Dubai produced 340,000 b/d in 2003 and 350,000 b/d in 2004. This analysis indicates that it has a reserve-production ratio of 31.3 years.
While oil revenues have played an important part in Dubai’s development, the emirate has followed a vigorous strategy of reducing its dependence on hydrocarbons. The sector accounted for 6.7 per cent of GDP in 2004 compared to 24 per cent ten years previously or 50 per cent in 1985. Dubai’s government expects the figure to reach less than 1 per cent by 2010.
According to industry sources, Dubai has installed enhanced recovery systems and other facilities to maximise flow rates at its oilfields in a bid to slow the decline in production. Further development work is taking place at the Margham gas field to stem the fall in gas/condensate output there.
DPC, by far the largest producing venture in the emirate, has drilled infill wells and horizontal production wells to boost recovery at Fateh, Southwest Fateh, Rashid and Falah.
Faced with limited resources within its own territory, Dubai has also been looking elsewhere for opportunities in oil exploration and development. One such venture is that of Dragon Oil, an Irish-registered company in which Emirates National Oil Company has a 51 per cent shareholding, which has an interest in oil production in Turkmenistan, where its production reached around 20,500 b/d by the end of 2004, up from 13,217 b/d in 2003 and 10,383 b/d in 2002. It expects production at these facilities to reach 40,000 b/d by 2008/09.
The oil sector in Dubai is gradually receding and becoming a marginal contributor to the gross domestic product while such sectors as real estate, industry, tourism and trade are gaining ground.
Official figures show the oil sector accounted for only 5.8 per cent of GDP in 2005 although it jumped by nearly 18 per cent because of the surge in prices.
In the long-term, the oil sector is expected to fall to just two per cent of GDP as the emirate pursues one of the most aggressive policies in the Arab world in economic diversification.
Experts expect such a policy to gain momentum in the near future as the emirate’s new ruler Sheikh Mohammed bin Rashid Al Maktoum, the vice president and prime minister of the UAE, is a strong proponent of openness and economic diversification programmes.
Sheikh Mohammed became ruler last month following the death of his brother HH Sheikh Maktoum bin Rashid al Maktoum while visiting Australia.
“Sheikh Mohammed has always shown strong enthusiasm for efforts to turn the emirate’s economy into a non-oil economy,” said Mohammed Asumi, a Gulf economist. “Such a trend was the hallmark of the policy of late Sheikh Rashid and Sheikh Maktoum. I am confident Sheikh Mohammed will pursue this policy.”
Sharjah
Sharjah’s oil reserves are put at 1.5 billion barrels of crude oil and condensate.
The three onshore gas and condensate fields account for the bulk of the emirate’s hydrocarbon reserves, since the Mubarak field contains less than 50 million barrels of oil and 1500 billion cubic feet of associated gas.
The emirate’s hydrocarbon production has been in decline since the mid-1990s but following a similar trend to that in Dubai, production in 2004 was actually up on the 2003 figure. Crude and condensate combined production was 48,000 b/d in 2004 compared to 46,500 in 2003. Liquids production in 2004 was made up of about 6000 b/d of crude and 12,000 b/d of condensate from the offshore Mubarak field and 30,000 b/d of condensate from the onshore Saja’a field.
Sharjah passes on 20 per cent of its revenues from Mubarak to Umm al-Qaiwain and 10 per cent to Ajman.
Ras Al Khaimah
Ras Al Khaimah’s liquid hydrocarbon reserves have been estimated at 100 million barrels of crude and condensate, but its only production consists of 700 b/d of condensate from the Saleh field.
There has been a recent surge of exploration activity in Ras Al Khaimah. Indago, a London listed company, took over exploration rights to the onshore Hagil acreage, in the northern part of Ras al-Khaimah. Last month Indago said drilling had been completed at the Hagil-1 well but results showed it was not commercial.
Umm
al-Qaiwain
Umm al-Qaiwain’s sole interest in oil production remains its 20 per cent share of the revenues derived from the offshore Mubarak field.
China’s Sinochem, has the right to explore the whole of Umm al-Qaiwain’s onshore and offshore territory for oil and gas reserves. It has carried out both an onshore 3D seismic survey and some offshore exploratory drilling.
Fujairah
Naftogaz Middle East, a UAE-Ukrainian consortium, plans to invest up to $600 million in exploration for oil and gas reserves in Fujairah. The company signed an exploration concession agreement in 2005 for the whole of the onshore and offshore areas of Fujairah. Initial targets are expected to be onshore to the west of the Hajar Mountains, in the Habhab area, not far from Sharjah’s successful onshore gas and condensate fields at Saja’a, Moveyeid and Kahaif.
The agreement is for a 30 year term, with initial seismic studies due to be completed within two years. Any eventual output will be shared by the emirate and the contractors.
|
