OPEC to add 2 million b/d to NGL capacity

By OGJ editors
HOUSTON, July 13
-- Natural gas liquids and condensate projects slated for start-up 2009-10 in some countries of the Organization of Petroleum Exporting Countries will add 2 million b/d to capacity at peak output. That’s according to the recently released Oil Market Report from the International Energy Agency. Despite the current weak market outlook, said the agency, the long-lead time expansion projects are moving forward.

Almost all the projects currently slated to come online over the next 18 months have been plagued by delays related to construction, engineering, and other technical complications as well as by a shortage of skilled labor.

Country plans
IEA data show that Middle East producers Saudi Arabia, Qatar, Iran, and the UAE will provide 90% of the increase, while Nigeria will account for the remaining 10%. “The critical need to boost natural gas output for reinjection at aging oil fields” is a primary focus for many of the projects, said the report.

In the Middle East, a shortage of gas supplies to meet rapidly rising domestic demand from the electric power sector, at desalination plants, and for industrial use has also kept expansion plans on track, if not on schedule.

-- Saudi Arabia’s capacity increases account for 34% of the growth over 2009-10, with peak capacity additions totaling 660,000 b/d. The nonassociated Hawiyah NGL recovery project will provide about half of the growth, with peak capacity of 300,000 b/d by about 2011. The project’s start-up was delayed to 2009 from 2008, said IEA.

The Khursaniyah gas processing plant has also been overwhelmed with delays; installed capacity of 290,000 b/d NGL production is not expected to be operating until yearend 2009. An additional 70,000 b/d of condensate capacity is linked to the massive 1.2-million-b/d Khurais oil field development, which formally launched last month.

It is unclear, however, when the new capacity will be fully online, given Saudi Aramco’s “challenge of adjusting its surplus crude operating capacity in the current weak demand environment,” according to the report.

-- After overcoming considerable construction and technical delays, Qatar is on track to ramp up gas liquids by a further 545,000 b/d by yearend 2010 with six projects at North field. Major capacity increments are likely from Qatargas Trains 4, 5, and 6 with a combined capacity of 460,000 b/d.

Start-up of the Al Khaleej Gas Phase 2 Project (AKG-2), being developed as part of the Ras Laffan LNG expansion project, will contribute 40,000 b/d to condensate production capacity. AKG-2 is being developed to supply natural gas to domestic markets, while associated condensate and NGLs is for export.

-- IEA says Iran plans to increase its condensate and NGL capacity by about 245,000 b/d over 2009-10. The country’s massive South Pars project has suffered delays and costly overruns, but completion of Phases 6-10 will provide most of the growth in capacity.

The gradual start-up of capacity at South Pars 6, 7, and 8 is key to the country’s enhanced oil recovery project at onshore Aghajari field, according to the IEA report. The gas-reinjection project is designed to boost output levels by about 100,000 b/d but technical issues, the field’s age, and challenging corrosive issues with the pipeline, may limit the recovery rate.

Other projects in Iran, such as the Anaran development, are on hold at present. StatoilHydro pulled out of the project earlier this year, in part due to the costly overruns the company suffered during development of Phases 6-8.

-- The UAE plans to add about 340,000 b/d of installed capacity by yearend 2010, with start-up of the delayed 270,000-b/d Habshan OGD3 processing slated for later this year.

-- Nigeria’s start-up of the Total-operated Akpo gas and condensate project will increase Nigeria’s installed capacity by a further 175,000 b/d. The Akpo development came online ahead of schedule in April.

Nigeria’s gas liquids capacity also will increase this year by production from Agbami and EA fields, brought online in second-half 2008. These fields will peak at 50,000 b/d and 40,000 b/d, respectively.

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