Adnoc sets 2020 as opening target for $10 billion Bab gas project

Adnoc is working hard to increase the gas supply in the emirate, as the formerly abundant raw material has become a scarce commodity. Rich-Joseph Facun / The National

Abu Dhabi National Oil Company expects to start production at the Bab sour gasfield in 2020, and could award the lucrative construction tenders as soon as 2015.

The project will add more than 500 million standard cubic feet (scuf) of gas to Abu Dhabi's strained supplies, as Adnoc invests heavily to stave off a shortage.

Shell last month clinched the US$10 billion deal to develop Bab, the second sour gas project in Abu Dhabi. An interim agreement between Adnoc and the Anglo-Dutch major outlines the parameters of development.

The focus is now on the front end engineering and design (feed) stage, where the technical requirements and costs are determined.

"Very soon we will select a consultant to help us with the pre-feed and feed contracts," said Mohammed Sahoo Al Suwaidi, the director general at Adnoc's Gas Directorate. "The target is to award [the construction contracts] in two to three years from now."

Bab will add 520 million scuf of usable gas to the emirate's supply. The 1 billion scuf that will flow from the wells is greatly reduced once it has been stripped off the sulphur that sours the gas.

The project is part of a five-year investment cycle into Abu Dhabi's oil and gas sector worth $40bn, about $25bn of which will be invested into developing gas resources, said Mr Al Suwaidi.

Adnoc is working hard to increase the gas supply in the emirate, as the formerly abundant raw material has become a scarce commodity.

Used as feedstock in all of the emirate's power plants, it is subject to a spiralling demand for electricity, driven by industrial development and wasteful consumption.

Gas is also used for reinjection into oilfields to maintain wellhead pressure, and finds use in petrochemical production.

The national oil company last month announced the completion of the $11bn integrated gas development, a set of facilities and infrastructure that collects and processes associated gas from offshore oil production.

The development supplies 800 million scuf of gas, as demand in Abu Dhabi increases by 15 per cent per year, Mr Suwaidi told The National last month. Adnoc is looking both onshore and offshore for further opportunities to increase gas production, he said yesterday.

Shah, which is developed by Adnoc and the US oil major Occidental, and will produce the same amount of gas as Bab, is set to become operational next year.

The gas in Bab's reservoirs is even more sour than Shah's, said Mr Al Suwaidi, making the project more technically challenging, and increasing the danger posed by the highly toxic sulphur.

"Everything we do will ensure that we manage the environment correctly," he said.

Adnoc is also pursuing targets to increase oil production.

Adco, the Adnoc-led concession for the emirate's main onshore fields, has boosted its capacity to 1.6 million barrels per day (bpd), up from 1.4 million bpd. Production is set to increase to 1.8 million bpd by 2017, Fareed Abdulla, a senior vice president at Adco, told Bloomberg.

Abu Dhabi is striving to increase overall production from about 2.8 million bpd today to 3.5 million bpd in 2017.

The Adco concession, which is held by the oil majors BP, Total, ExxonMobil and Shell, will expire next year, and international oil companies currently bidding to be part of the are new consortium. They are expected to submit their bids by October.