Algeria's older oilfields undergo major renovations

In spite of the fact that Algeria has some of the largest oil and gas reserves in Africa, is among the continent’s top-five producers in oil and is the single biggest gas producer, the age of its upstream facilities is beginning to show, with maturing production levels. Output for both oil and gas has slowed steadily over the past decade, which has exacerbated the impact that the drop in global prices has had on the domestic energy sector. As a result, in addition to increasing exploration – much of the country’s territory is unexplored – and opening new producing fields, the government is also looking to overhaul ageing fields. This is exemplified by efforts at the two largest hydrocarbons fields, namely Hassi Messaoud for oil and Hassi R’Mel for gas.

Maximizing Oil Output

The Hassi Messaoud field is the country’s largest and was discovered by Sonatrach in 1956. The field, which first began producing in 1960, is said to hold 3.9bn barrels of recoverable reserves and produces around 500,000 barrels per day. It is located in the central Hassi Messaoud Dahar province, which contains around 71% of the country’s proven, probable and possible oil reserves.

In 2014 Sonatrach signed a $618m (€557.1m) contract with Indian engineering and construction contractor Dodsal Engineering and Construction to maintain levels of production at the oilfield. The contract entails building a gas compression unit with capacity of 24m cu metres per day and a 180-km-long pipe network in the oilfield to inject gas into the reservoir to maintain current production rates.

More projects are in the works to continue boosting production at Hassi Massoud and elsewhere. For example, Sonatrach awarded a $339m (€305.6m) contract to Japanese consulting firm GJC in February 2016 to help increase production at the Hassi Massoud field. The state-owned oil and gas company is also looking to attract foreign investors to assist with enhanced oil recovery technology in the Berkine basin near the Libyan border and the Illizi basin, also at the border with Libya. “Sonatrach has begun to turn to foreign operators to support technology transfer and encourage the to use of new technologies,” François Gauthier, general manager of Algiers Liason Office representing MAERSK oil in Algeria, told OBG.

Maintaining Gas Production

On the gas side, Hassi R’Mel, discovered in 1956, is the largest natural gas field in Algeria, with estimated reserves of more than 2.4trn cu metres. As a major gas and natural gas liquids production and processing complex, the field had an average output of 100bn cu metres at its peak in the 1990s, but production has been steadily declining, hitting 75bn cu metres in 2008 and falling to 55bn cu metres in 2012. This can be partially attributed to delays in the development of the integrated liquefied natural gas Gassi-Touil project.

First gas for this project was delayed until early 2014, forcing Hassi R’Mel to overproduce marketable gas rather than re-inject a percentage of it for resource recovery. Consequently, some producing wells began to yield water, negatively affecting production levels. Sonatrach has been looking to enhance recovery and raise production to around 76bn cu metres per year by investing in new gas compressor lines as well as various debottlenecking facilities.

Piping In

Additionally, Sonatrach signed two engineering and construction contracts in July 2016 with domestic construction companies Alfapipe and Cosider for the construction of a 344-km gas pipeline connecting the country’s newer gas fields to Hassi R’Mel’s processing units. Gas from the Hassi Mouina, Hassi Ba Hamou and Ahnet gas fields will be transported to the Hassi R’Mel processing facilities and feed into the plant’s national dispatching centre. The pipeline will have an annual capacity of 21bn cu metres and is due to be completed over two phases by 2018, with Cosider and Sonatrach subsidiary the National Pipeline Company covering the $192m (€173.1m) engineering, procurement and construction contract for the works.

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The Report: Algeria 2016

Energy chapter from The Report: Algeria 2016