x Abu Dhabi, UAE Thursday 20 July 2017

Offshore oil production race is on for Abu Dhabi

With Abu Dhabi spending billions to boost its crude output and standing in the oil markets, offshore production is becoming a focal point for investment.

Abu Dhabi currently produces about 1 million barrels per day from its offshore fields, representing more than 40 per cent of its total output. Photocourtesy ADNOC
Abu Dhabi currently produces about 1 million barrels per day from its offshore fields, representing more than 40 per cent of its total output. Photocourtesy ADNOC
As Abu Dhabi is spending billions to boost its crude output and standing in the oil markets, offshore production is crystallising as a focal point for investment and technical innovation.
The emirate's two major offshore operators are busy building their production capacity and are engaged in ambitious projects that include the construction of whole islands in the Arabian Gulf.
Media coverage has so far focused on the renewal of Abu Dhabi's onshore concession, currently held by the Adco joint venture that expires in 2014. But the challenges and the scope of offshore oil have caught the industry's attention.
Abu Dhabi currently produces about 1 million barrels per day from its offshore fields, more than 40 per cent of its total output.
That figure will rise once the Abu Dhabi Marine Operating Company (Adma-Opco) and the Zakum Development Company (Zadco) have completed the expansion of their operations.
The offshore developments in Abu Dhabi stand out for their use of artificial islands for drilling and housing supporting infrastructure, the first time this technique has been used in the Gulf.
Next month, the first drill on an artificial island will be driven into the ground.
"We're talking weeks. They're working on it as we speak," said Morten Mauritzen, the lead country manager at ExxonMobil. ExxonMobil and Japan's Jodco are Abu Dhabi National Oil Company's (Adnoc) minority partners in Zadco.
Soon, Zadco will commence drilling on the remaining three artificial islands above the Upper Zakum superfield.
"The conditions are quite favourable out there for artificial islands because the ocean depth is only between 5 to 15 metres. If you go to other places - the Gulf of Mexico, the North Sea - it could be 1,000 metres," added Mr Mauritzen.
The importance placed on offshore production is reflected in the set-up of Adipec, Abu Dhabi's international oil and gas conference and exhibition that takes place in the capital today for the 15th time.
Demand by exhibitors keen to showcase their products and expertise was so strong that its organisers felt obliged to build a dedicated hall for offshore specialist service providers outside the vast exhibition centre.
Offshore players have good reason to flock to the region, as the investments made are huge.
The Middle East Economic Digest, which evaluates construction projects in the region, estimates that the UAE alone accounts for US$10bn (Dh36.73bn) worth of offshore oil and gas projects that are either being executed or planned. The vast majority of those projects lie in Abu Dhabi, the UAE's hydrocarbon heartland.
Offshore rigs will plunge their drills into the shallow waters of the Gulf in increasing numbers, as most of the region's oil producers are grappling with the challenges of extracting crude from under the seabed.
Saudi Arabia is spending as much as the UAE on increasing its offshore capacities, focusing on adding to its supply of natural gas. Qatar, the world's largest exporter of liquefied natural gas (LNG), has an offshore projects pipeline worth about $12bn.
While the technical complexity of offshore production exceeds pumping oil on land, Abu Dhabi's marine operators have not been shy to take on a challenge. Zadco became the first Adnoc subsidiary to call for a recovery rate of 70 per cent at its oilfields.
Recovery rates determine the amount of oil extracted from a reservoir, and a target of 70 per cent is twice the current industry average.
Ali Al Jarwan, Adma-Opco's chief executive, last week said his company was aiming to attain the same recovery rate. Such ambitions further the need for sophisticated technologies and expertise.
While Adnoc is intent on extending the lifespan of its oilfields, it is also busy increasing daily production to 3.5 million barrels, up from the current 2.8 million, by 2017. The added production will not only swell government coffers, it will also give the UAE more clout among its fellow Opec members.
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