FACTS: Abu Dhabi needs gas for domestic market

Sam Fletcher
OGJ Senior Writer

HOUSTON, Oct. 1 -- Abu Dhabi currently imports 740 MMscfd of natural gas from Qatar via the Dolphin Pipeline and likely would buy more if the Qatari gas moratorium were lifted, according to FACTS Global Energy (FGE).

“The Dolphin Pipeline has extra capacity of 1.2 bscfd,” FGE said in a recent report. “If the Qatari gas moratorium is lifted, the UAE would be an easy source of incremental exports if the price is right. Given that Abu Dhabi is developing high-cost domestic gas and considering using oil for power generation, there is likely an increasing willingness to pay higher gas prices.”

In 2005 Qatar—third-largest gas producer in the world behind Russia and Iran—placed a moratorium on additional gas development projects at its massive offshore North field, pending results of a study of the field’s reservoirs that is not expected to be completed until after this year. That means that no new projects are likely to be signed before 2010, said FGE.

Meanwhile, Abu Dhabi is the largest gas producer in the UAE with production of 4 bscfd of gas for sale.

Abu Dhabi has several new projects pending that could produce large amounts of gas, condensate, or other gas liquids in 2010-15. However, some of that gas will be reinjected into the Emirate’s oil fields. Some 1.4 bscfd of gas currently is reinjected into Abu Dhabi’s oil fields to maintain oil production levels.

Hungry gas market
Abu Dhabi’s domestic market currently consumes 2.3 bscfd of gas, with electric power production representing almost 60% of the country’s total gas consumption and the rest going to industry. Gas represents almost 99.8% of the fuel mix in electric power generation, which increased 13% in 2008. Gas demand for power generation is expected to increase at an average growth rate of 8-9%/year during 2008-20. Demand also is increasing rapidly as a result of the expanding local, petrochemical, and industrial projects.

However, large gas reinjection requirements to maintain Abu Dhabi’s oil production are expected to limit the amount of gas available for the domestic market. As a result, national leaders are considering increased use of alternatives for generating power, including construction of the country’s first oil-fired electric power stations.

The Abu Dhabi Water & Electricity Authority is talking with major steam turbine manufacturers that could supply equipment for oil-fired plants. It may result in the planned Taweelah C independent water and power project (IWPP) becoming the first to run exclusively on liquid fuel, FGE reported. The planned Fujairah 3 IWPP could be the Emirate's next steam turbine power plant, it said.

Pending projects
Abu Dhabi’s Onshore Gas Development III (OGD-III) will construct a gas processing plant in the Habshan Zone of Bab field with the capacity to process 1.3 bscfd of raw gas and produce 1.2 bscfd of dry gas, 4.3 million tons/year (tpy) of NGLs, and 130,000 b/d of condensates. The gas will come from the Thamama F reservoir and, after liquids separation, will be reinjected into the oil reservoir. The engineering, procurement, and construction contract was awarded to Bechtel Corp. in December 2004. The project is slated to be completed at yearend and start commercial operation early 2010.

The Asab Gas Development II (AGD-II) calls for installation of two gas treatment and NGL recovery units with a total capacity of 743 MMscfd. It is designed to recover 2.3 million tpy of NGL. Residual gas will be reinjected back into the reservoir for pressure maintenance purposes. The EPC contract was awarded to Bechtel in July 2005 and operations are scheduled to start by the end of this year.

In addition, the third NGL extraction train at Ruwais is under construction to treat NGLs from the OGD-III and AGD-II gas projects. Ruwais is expected to extract 2.3 million tpy of ethane, 4.4 million tpy of LPG, and 2.1 million tpy of naphtha. The project is expected to be completed in 2010 and will provide feedstock for the petrochemical expansions (Borouge II) in Abu Dhabi.

Borouge’s current production capacity is 600,000 tpy of polyethylene. With the Borouge II expansion, the complex capacity will increase to 2.1 million tpy in mid-2010. Borouge II includes 1.5 million tpy ethane cracker. In June, Borouge awarded a $1.1 billion contract to the Linde Group for construction of a 1.5 million tpy ethane cracker (Borouge III). The expansion also includes construction of polypropylene and polyethylene units, a low density polyethylene unit, and a butane unit, as well as related offsite utilities and marine facilities. The contract will be executed on a lump sum turnkey basis and will be carried out by the Greek Consolidated Contractors Co. (CCC).

Borouge III is expected to be on stream by yearend 2013, using feedstock from expansions of the Abu Dhabi National Oil Co. (ADNOC) refinery and gas processing expansions at Ruwais (Habshan 5). FGE said completion of the new expansion will give Borouge the world’s largest ethane cracker complex.

The Integrated Gas Development (IGD) project is designed to produce 2 bscfd of high-pressure gas from the offshore Umm Shaif and Khuff reservoirs. It is expected that 1 bscfd of gas will reinjected into the Umm Shaif oil field and the remaining 1 bscfd will be treated in the Habshan gas processing plant (Habshan 5) for the domestic market. Habshan 5 is expected to produce 900 MMscfd of sales gas for industrial projects, as well as fulfill power generation requirements in Abu Dhabi and the northern Emirates. The project will also produce 4.4 million tpy of NGLs. The NGLs will be treated in the fourth Ruwais NGL extraction unit. The IGD project is expected to be completed in late 2013.

In July, Abu Dhabi’s Gasco, a subsidiary of ADNOC, awarded lump sum EPC contracts to different EPC contractors:

• Construction of the gas processing plant at Habshan (Habshan 5) to a joint venture of the Japanese JGC Corp. and Italian Maire Tecnimont SPA.

• Contraction of utilities and offsite work to South Korean Hyundai Engineering & Construction Co. Ltd.

• Construction of Ruwais’ fourth NGL train to a joint venture of Petrofac Ltd. and South Korean GS Engineering & Construction Corp.

• Construction of storage tanks to Chicago Bridge & Iron Co. NV.

The OGD-III, AGD II, and IGD projects are expected to increase gas reinjection during 2009-20 by an extra 3 bscfd of gas, FGE reported.

Shah gas development
Development of ultra-sour gas reserves in the Shah gas field is the most expensive gas project in the UAE and is expected to produce only 500-600 MMscfd of gas for new industries, power generation, or reinjection into the oil fields, said FGE. ADNOC selected ConocoPhillips to develop the field. That involves drilling 20 wells plus construction of necessary infrastructure, with gas scheduled to start flowing by first-quarter 2015.

Development cost is estimated as high as $10 billion, making it the country’s largest and most expensive nonassociated gas project. Through development of the Shah’s gas reserves, roughly 1 bscfd of raw gas, 1.6 million tpy of NGL, 30-40,000 b/d of condensate, and 3.4 million tpy of sulfur will be produced. After gas treatment, 500-600 MMscfd of dry gas could be available for domestic market or reinjection purposes.

ADNOC wants to proceed with development of the Hail and the Bab sour gas fields. The Hail gas field is expected to add an extra 400-600 MMscfd of gas, while Bab would produce 1.3 bscfd of gas. However, Abu Dhabi has not yet awarded EPC contracts to develop these fields, and these projects are unlikely to come on stream before 2015-16, said FGE.

Contact Sam Fletcher at samf@ogjonline.com.

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