Abu Dhabi National Oil Company taps unconventional and sour gas reserves

Increasing gas production has been one of the most significant trends in Abu Dhabi’s energy sector over the past decade. Since 2010 annual production has increased by nearly 50% to 3.1trn standard cu feet (scf) in 2017, according to Statistics Centre - Abu Dhabi. The trend reflects the emirate’s increasing efforts to increase the extraction of gas from a range of sources and prioritise the segment for investment.

Gas-fired power plants supply the lion’s share of Abu Dhabi’s electricity, and gas is a vital input for its growing desalination capacity. Gas is also used in a range of industries that are of great economic importance in strengthening the value gained from the emirate’s resources, enabling it to secure growing market share in global export markets and broaden the economic base. With large gas reserves, and pricing and policy priorities that make its extraction commercially viable, Abu Dhabi is working to increase self-sufficiency in gas and reduce imports of the commodity. Even with domestic demand growing strongly, these efforts are already bearing fruit: imports have fallen by 5% since 2010 to 754.4bn scf in 2017.

“There is stranded conventional gas that is yet to be commercialised, a vast amount of sour gas that is to be processed with higher safety and technical complexity, and unconventional gas, which is to be developed and scaled successfully,” Ali Vezvaei, president and CEO of engineering, technology and services firm Bilfinger Middle East, told OBG. “Currently, the UAE uses considerable volumes of natural gas to produce oil; however, as energy security and the gas value chain become a higher priority, more technology and capital are being allocated to develop these sour and unconventional assets, and the industry is starting to look rigorously at the commercial viability of other molecules, such as CO to free up natural gas,” he added.


In November 2018 ADNOC announced it had discovered gas deposits of around 15trn scf that will increase its proven reserves by 7.1%. According to the 2018 BP Statistical Review of World Energy, the UAE had 209.7trn scf of proven natural gas reserves at the end of 2017 – the seventh largest in the world – of which the vast majority were in Abu Dhabi.

Abu Dhabi National Oil Company (ADNOC) said that the new discoveries would allow the UAE to push forward a gas strategy to sustain liquefied natural gas production to 2040, as well as provide the opportunity to develop gas-to-chemicals capacity. “In line with its 2030 smart growth strategy ADNOC is focused on ensuring a sustainable and economic supply of gas for the UAE’s growing demand,” ADNOC told OBG. “To help achieve this the company will continue to leverage its existing gas reservoirs, tap into its giant gas caps and expand sour gas production. In addition, it has commenced an unconventional exploration drilling programme to explore for, and appraise, the potential of individual gas deposits in tight reservoirs.”

North-west Area

In January 2018 ADNOC awarded front-end engineering and design (FEED) contracts for the development of its offshore ultra-sour gas fields to the UK’s Bechtel and UAE-based TechnipFMC. Bechtel will carry out FEED work on the Hail and Ghasha fields, while TechnipFMC will conduct studies of the Dalma field. ADNOC has emphasised the importance of a detailed FEED phase to optimise project cost and scheduling, ensuring that the company’s goal of the most efficient use of its resources is achieved. The studies are due to be completed by the end of 2019, after which time ADNOC will offer engineering, procurement and construction (EPC) contracts for tender.

The three ultra-sour gas fields are known collectively as the North-West Area and allow access to the monumental Arab gas formation, which, studies suggest, contains many trillions of scf of recoverable gas. The North-West Area as a whole could produce more than 1bn scf of gas per day, covering approximately 20% of the UAE’s current demand, and equivalent to the gas necessary to provide electricity to some 2m homes.

The recent investments are having a significant impact not only on the gas segment, but the economy as a whole, and have implications for the emirate’s longterm security. “Gas projects like the Hail and Ghasha and Dalma fields will entail huge investment, which will help stimulate sector growth,” Krish Iyer, regional managing director for the UAE, Qatar, Iraq and North Africa at engineering services firm WorleyParsons, told OBG.

ADNOC Sour Gas

One of the companies at the forefront of gas development in Abu Dhabi is ADNOC Sour Gas, a joint venture with US energy multinational Occidental Petroleum (Oxy). The company, initially known as Al Hosn Gas, was founded in 2010 to optimise the value of the Shah gas field in Al Gharbia. Inaugurated in April 2016, the $10bn Shah gas project has the capacity to extract 1bn scf of sour gas per day, which is then processed at the Shah gas complex to produce 500m scf per day of network gas, 4400 tonnes of natural gas liquids and 33,000 barrels per day of petroleum condensates. The field supplies around 10% of the UAE’s natural gas needs, and has become a major supplier of sulphur, a by-product of sour gas processing.

ADNOC and Oxy are now working together to raise capacity at the plant by 50%. This will require substantial new investment. “Infrastructure for sour gas extraction and processing requires substantial capital expenditure as you need to invest in corrosion-resistant tubes, which are extremely expensive,” Stephen Lloyd, former senior vice-president and general manager of UAE Oxy Oil and Gas, told OBG. “But the country is looking to achieve independence in gas, and there is a high level of confidence from stakeholders, particularly following the delivery of the Al Hosn project.”

Supporting Infrastructure

ADNOC Sour Gas also has an extensive supporting pipeline network. Its sales gas pipeline stretches some 130 km to infrastructure operated by ADNOC Gas Processing, while its 67-km condensate pipeline connects to the Asab-Habshan gas line near Asab. Granulated sulphur is transported from Habshan and Shah to Ruwais, where there is a port and industrial complex, for export. Etihad Rail has an agreement to transport 7m tonnes of granulated sulphur each year, and carries 10,000 tonnes per day.

In October 2018 ADNOC Sour Gas announced that construction of a new sulphur pipeline was on schedule. Due for completion in 2019, the line will carry molten sulphur from the firm’s main processing plant to its granulation facility 11 km away. The EPC contractor for the line is Germany’s MMEC Mannesman, with 60% of the contract value flowing back to Abu Dhabi through in-country value requirements. “Natural gas offers many opportunities for EPCs, especially given the shortages the country experiences,” Toufic Khalik, managing director for the Middle East, Africa, Europe and Commonwealth of Independent States at Enerflex, an oil and gas services firm, told OBG. “The building of the Fujairah import terminal and willingness of ADNOC to develop sour gas projects despite their technical complexity and higher cost indicate that there will be many opportunities to develop this sector further.”


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The Report: Abu Dhabi 2019

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