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Unconventionals Make Progress in Abu Dhabi

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Global decarbonization targets are not stopping Abu Dhabi from pressing ahead with its self-declared goal of reaching self-sufficiency in natural gas production by the end of the decade. The initiative, led by state giant Abu Dhabi National Oil Co. (Adnoc), rests on three pillars -- the development of more of the emirate’s abundant but technically challenging resources, notably unconventional gas, sour gas, and gas caps in oil fields (WGI May1'19). The reason for the push is driven by a mix of domestic demand needs and geostrategic considerations. Abu Dhabi, like the entire United Arab Emirates, has seen domestic gas demand rise by around 6% annually over the past decade, fueled by demand from gas-fired power stations, industrial use and oil field injection (WGI Dec.6'17). To meet demand, the Gulf state, of which Abu Dhabi is the largest emirate and holder of almost all its hydrocarbon resources, now imports LNG via a floating regasification unit offshore Dubai when consumption peaks in summer. It also pipes in gas via the Dolphin pipeline from Qatar -- and continued to do so throughout the 3½ -year political dispute that saw relations between the Mideast Gulf neighbors frozen between mid-2017 and January this year. The breakdown in relations set off alarm bells in Abu Dhabi and is thought to have been the prime motive for the self-sufficiency drive. For some time, the question had been where the additional gas supplies would come from. But over the past three years, Adnoc’s integrated gas strategy has highlighted the potential for additional output of over 4 billion cubic feet per day by 2030. Projects being implemented under the strategy include the estimated $20 billion Ghasha ultra-sour gas development led by Eni, which -- with planned capacity of 1.5 Bcf/d by 2024/25 -- is now in the main construction tender stage. An 800 million cubic foot per day output hike, to 1.8 Bcf/d, is expected to come from the Shah sour gas development in which Occidental Petroleum holds a 40% stake alongside Adnoc’s 60%. Unconventional Gas Prospects Two gas caps in the Umm Shaif and Bab oil fields are meanwhile set to add some 500 MMcf/d each. Abu Dhabi's Ruwais-Diyab unconventional gas concession, the first development of its kind in the UAE, is earmarked for another 1 Bcf/d (WGI Nov.21'18). Progress on Ruwais-Diyab, targeting deep shale gas formations in the far west of Abu Dhabi, has been encouraging so far. Around 30 months into a seven-year exploration phase after which TotalEnergies can opt into a 40-year concession alongside Adnoc, the French major has now drilled and fracked a total of four wells, marking the end of the first exploration stage. Initial results are promising. With fracking of the fourth completed early last week, Total has moved to evaluate the well’s production, Kevin Hannaford, managing director of Total's unconventional E&P unit in Abu Dhabi, tells Energy Intelligence. Going forward, Total will continue to carry out long-term tests on the wells and next look at studying the long-term data gathered so far. The drilling rig that Total used on the last well has now been released, Hannaford said on the sidelines of the SPE/IADC Middle East Drilling Technology Conference and Exhibition in Abu Dhabi last week. In November, Adnoc and Total announced that first unconventional gas from Ruwais-Diyab had been delivered through a purpose-built, 33 inch pipeline and centralized early production facility at the Diyab field. From there, it was distributed via Adnoc's gas network. Total previously said target production from the shale formation, around 3,000 meters below ground, eventually would be in the range of 1 Bcf/d of low-sulfur, lean gas, maintained over a 20-year plateau. For the successful development of such volumes, an estimated 1,000-2,000 wells are expected to be required. Cost Reductions Making gas production from developments such as Ruwais-Diyab commercially feasible is in part due to cost reductions realized from the new type of partnerships Adnoc has pursued under CEO Sultan al-Jaber since early 2016. Adnoc Drilling, in which US oil-field services firm Baker Hughes took an initial 5% stake in 2018, has been able to transform itself into an integrated drilling services provider with the capability to offer a complete range of drilling services. This partnership has “propelled our transformation into the only national fully integrated drilling services -- or IDS -- company in the Middle East. The fruits of this decision are already evident and position us for greater expansion. Since we introduced IDS in October 2018, Adnoc Drilling has achieved 35% efficiency gains across its IDS rigs,” Adnoc Drilling CEO Abdulrahman al-Seiari said at the SPE/IADC event. The introduction of IDS, digital monitoring and benchmarking, and smart drilling has helped the company save some $2 billion in recent years, al-Seiari said. Thanks to such cost reductions, nonconventional gas resources are no longer too costly to develop in Abu Dhabi. Oliver Klaus, Dubai

Topics:
Exploration, Gas Demand, Gas Processing and Gathering, Gas Supply, Security Risk , Shale, Corporate Strategy
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