x Abu Dhabi, UAESunday 21 January 2018

Drive to find gas in Abu Dhabi accelerates

A local gas shortage and increasing long-term global demand for all forms of energy behind the push.

Abu Dhabi National Oil Company (Adnoc) is accelerating its efforts to find and produce more natural gas in the UAE's biggest emirate, according to a senior company official. Due to a local gas shortage and what he sees as increasing long-term global demand for all forms of energy, "we had to develop gas faster than we would have done", said Abdul al Kindy, the general manager of the Adnoc subsidiary Abu Dhabi Company for Onshore Oil Operations.

"The local demand for gas has gone beyond what anyone could have planned for, and that has added urgency to accelerate gas development," he said yesterday on the sidelines of an Abu Dhabi oil conference. But at the same time, the whole world needs more production capacity for both oil and gas, Mr Kindy said, despite the global financial and economic crisis that is softening oil demand and driving down crude prices. "If we ignore the financial crisis, and if we go back to the kind of demand we had, then you will have demand that cannot be met," he said. "Our (long-term) demand for energy is really surpassing anything that could be provided by oil, gas and coal, all combined."

Mr Kindy said Adnoc was not switching its focus from oil to gas, but had added gas to its original priority of oil development. He predicted the new gas strategy would start to pay off "two to three years down the road", with the start of production from the big Shah sour gas field development that Adnoc was pursuing in a joint venture with the US oil and gas company ConocoPhillips. On Monday, Adnoc and the Anglo-Dutch energy group Royal Dutch Shell announced an agreement to explore for and develop offshore gas deposits believed to be buried deep below the Gulf. Shell said it hoped to move quickly to a final agreement on the gas venture.

The European company's agreement with Adnoc closely follows a preliminary agreement it signed with Iraq to capture and market gas currently being burnt in that country as a waste product from oil production. Throughout the Gulf region, a shortage of gas for power generation and petrochemical projects would drive a continued need for more gas production, creating new opportunities for international oil companies to participate in the region's dominant oil and gas industry, said Steven Peacock, the president of the Middle East and South Asia division of BP.

The reason is that much of the region's large gas reserves are in the form of "sour gas" or "tight gas" deposits that are technically challenging to produce. Abu Dhabi's Shah gas field, for example, contains a high proportion of the deadly gas hydrogen sulphide, and can be produced only with the help of special corrosion-resistant materials, advanced systems for capturing emissions and many stringent safety procedures. By and large, the experience and technical resources to tackle such projects are in the hands of major international energy companies.

"We will continue to see opportunities to explore for and develop the more difficult gas," Mr Peacock said. tcarlisle@thenational.ae