The Abu Dhabi Company for Onshore Oil Operations (ADCO) has found another use for the hydrogen sulphide gas from which it extracts sulphur, after prices for the yellow solid crashed last summer: reinjecting the gas into oilfields to push out more crude. The toxic gas, which can be deadly if inhaled at concentrations as low as 500 parts per million, is a troublesome waste product from oil and gas production in the emirate. In February, it caused the deaths of three workers in an accident at one of ADCO's oilfields.
But a year ago, with sulphur prices soaring towards record levels of about US$850 a tonne, lifting and processing hydrogen sulphide from Abu Dhabi's largest onshore oilfields provided an unexpected boost to ADCO's profits. Its prices, however, have since decreased to below $50 a tonne, and the economics of sulphur recovery and storage are looking shaky. ADCO, a 60 per cent-owned operating unit of Abu Dhabi National Oil Company (ADNOC), is now exploring other sulphur disposal options aimed at boosting output from several large but ageing oilfields.
Last week, it awarded US$80 million (Dh293.8m) of contracts to the energy equipment suppliers General Electric(GE) and ABB for gas compressors, electrical systems and support services. The equipment will be used for gas extraction and reinjection at ADCO's Asah and Sahil oilfields. "By leveraging our experience in working with extremely resistant and advanced technology materials for compressor components, we are able to provide equipment capable of handling the highly sour and corrosive gas compositions of these fields," said Joe Mastrangelo, a vice president of GE Oil and Gas, the unit that will supply the compressors.
Mohammed Ayoub, the firm's Middle East general manager, said the contract was a good start in building what he hoped would become a lucrative regional business for GE, as Gulf oil producers drilled deeper to develop increasingly sulphurous oil and gas deposits. GE's main expertise in the field, Mr Ayoub said, was in high-pressure sour gas reinjection technology, enabling the firm to supply the type of equipment needed to pump hydrogen sulphide underground on a huge scale.
Small-scale injection of hydrogen sulphide into oilfields is nothing new. In Canada, which also has especially sulphurous oil and gas deposits, it has been going on for 20 years, along with safety studies showing a lack of evidence of buried gas resurfacing. But only recently has the specialised technology advanced enough to handle the needs of large oil developments. Just this year, GE completed tests on the world's highest-pressure sour-gas reinjection facility, which is due for installation at the Kashagan oilfield, under development in the Caspian Sea off the coast of Kazakhstan.
The oilfield, containing an estimated 38 billion barrels of reserves, ranks as the biggest oil discovery of the past 30 years. First production is expected in 2013 after years of delay. Although hydrogen sulphide is not harvested from gas projects for injection into oilfields, that could happen in future. The French energy group Total, which has been jockeying for sour-gas concessions in the Middle East and Caspian regions, has designed gas-separation processes for treating large flows of gas containing up to 60 per cent hydrogen sulphide and carbon dioxide.
The technology's main target, according to Total, is "very sour fields in the Middle East, which are currently undeveloped because there is no financially viable solution". ADNOC is already preparing to develop one such deposit, the Shah gasfield in Abu Dhabi, in partnership with the US oil company ConocoPhillips. It plans to extract up to 10,000 tonnes a day of sulphur from Shah for export. The plan calls for a liquid sulphur pipeline to link the gasfield to ADCO's biggest oilfield, Habshan, and to carry sulphur from both developments to coastal storage and export centres at Ruwais.