Oil 2014: Abu Dhabi wants to exploit its oil reservoirs to levels far beyond current recovery rates, an ambition that analysts say would give experienced western oil companies an edge over Asian newcomers in the run-up to concession renewals.
Abu Dhabi targets big increase in oil recovery
Abu Dhabi wants to exploit its oil reservoirs to levels far beyond current recovery rates, an ambition that analysts say would give experienced western oil companies an edge over Asian newcomers in the run-up to concession renewals.
"The intention is to improve the recovery factor in Abu Dhabi to 70 per cent. This is our ultimate target," said Ali Al Jarwan, the chief executive of the Abu Dhabi Marine Operating Company (Adma-Opco), a state-controlled offshore producer.
The global average recovery rate lies at about 35 per cent, according to the Norwegian company Statoil.
Boosting the recovery levels of Abu Dhabi's depleting oilfields is a technical challenge that may exceed the capability of some of the companies vying for a stake in Abu Dhabi's oil sector.
"That is a very ambitious level," said Bill Farren-Price, the chief executive of Petroleum Policy Intelligence. "If they want to achieve that they would need to bring in some of the largest international oil companies, because it's going to involve the application of the leading enhanced oil recovery equipment."
He added that some of the less experienced companies, such as some of the national oil companies from Asia, may be ruled out.
Abu Dhabi National Oil Company (Adnoc) is preparing to renew its Adco onshore concession, which produces the bulk of the emirate's oil on land. The concession is up for renewal in 2014, and international oil companies are positioning themselves as viable future participants.
Adnoc's current concession partners in Adco are BP, Shell, Total, ExxonMobil and Partex.
A preliminary list of companies eligible for the new concession includes the above stakeholders, minus BP and Partex, as well as Korea National OilCorporation(KNOC) and China National Petroleum Corporation (CNPC).
Due to a growing thirst for oil in their home countries, the Asian national oil companies (NOCs) are playing an increasingly active role in the region. Abu Dhabi and South Korea this year signed an agreement allowing KNOC to explore vast swaths of the emirate for new sources of oil, and China is in similar negotiations for CNPC.
But question marks remain over their technical ability to produce at depleting fields.
Some of the current Adco concession partners are already working hard to demonstrate their technical competence.
Exxon is a partner in the Upper Zakum Development Company (Zadco), the joint venture exploiting the giant offshore Upper Zakum oilfield.
Zadco is the first Adnoc subsidiary to officially target a 70 per cent recovery rate.
France's Total has achieved recovery rates of above 50 per cent at the Abu Al Bukhoosh field, according to Gonzalo Dieste, a petroleum technologies adviser at the company.
Enhanced oil recovery- the methods used to boost recovery rates - has traditionally relied heavily on replacing the crude in reservoirs with natural gas. As Abu Dhabi is facing a shortage of gas, Adnoc is exploring other options, and has already tested the use of carbon dioxide (CO2) at its onshore oilfields.
Adma-Opco is also exploring the use of CO2 to increase recovery rates, said Mr Al Jarwan.
"There is research at Adma in how to do CO2 injection offshore. It is a feasibility study, it will develop later on into a pilot and then [go] full scale - but this is really long term," he said.
The concession operated by Adma-Opco - a joint venture by Adnoc, the United Kingdom's BP, France's Total and Japan's Jodco - will be relicensed in 2018.