Abu Dhabi's state oil company has successfully tested a new technique that uses carbon dioxide to boost output from its oilfields, a senior executive said yesterday.
The technology has the potential to transform the oil industry in Abu Dhabi while cutting greenhouse gas emissions.
Using the system, the emirate would become the world leader in the use of carbon dioxide in oil reservoirs, said Abdul Munim al Kindy, the chief executive of the Abu Dhabi Company for Onshore Oil Operations (ADCO).
Full-scale injection of carbon dioxide into just one of the emirate's large oil reservoirs would require a volume of gas six times greater than the total used in the industry across North America, he noted.
"What we have done is demonstrate the viability of enhanced oil recovery [with carbon dioxide] and we have similar views coming from Saudi Arabia and Kuwait," Mr al Kindy said.
But Abu Dhabi Government policy and a regulatory framework that would help make the technology competitive with other techniques to enhance oil output is still in its "early days", Mr al Kindy added.
ADCO hopes to deploy a large-scale carbon injection system within six years but only if it can secure an economic supply source from Masdar, the Government's clean energy company.
Regulation is needed "to define a better or more representative price for the exchange of [carbon dioxide]", Mr al Kindy said.
When injected into an oil reservoir, carbon dioxide forces more hydrocarbons to the surface. The technique has been used for some time in sandstone reservoirs in the US and Canada.
A pilot test at the Rumaitha field had shown the system worked in the Gulf's carbonate rock reservoirs. Its use was now only "limited by the availability" of cost-effective carbon dioxide, Mr al Kindy said on the sidelines of the ADIPEC oil and gas conference in the capital.
Full-scale use of carbon dioxide at Rumaitha would substitute 30 million cubic feet of natural gas that is currently injected into the field each day, he said. ADCO hopes to have the injection scheme started by 2014 and running at full speed by 2016 at the latest, he said.
ADCO is in discussions to buy the necessary gas from Masdar, which in turn will capture it from a steel plant and three power stations.
The Government says the scheme would offer three major advantages: an increase in oil output; diversion of greenhouse gas emissions underground; and substitution of carbon dioxide for natural gas currently used.
Abu Dhabi is facing a looming shortage of natural gas for its power stations.
But the advance of the project has been challenged in part by the high costs faced by Masdar in separating the carbon dioxide from other gases power stations emit. Without a government subsidy or other forms of outside support, Masdar's only potential revenue source on the project is the sale of the gas to ADCO.
A government carbon policy is needed to ensure that ADCO, the buyer of the carbon dioxide, is not the only one having to pay the high costs of capturing the gas, Mr al Kindy said.
Without regulation, "you end up with one party bearing most of the cost", he said. The first and easiest source of carbon dioxide will come from an expansion of the Emirates Steel Industries's plant in Musaffah.
Later stages of Masdar's carbon capture plan call for the installation of special filters that divert an additional 5.9 million tonnes of carbon dioxide from three power plants. Initial engineering studies have shown the technology proposed for two of the plants is not well developed and would prove extremely expensive, said Satish Kumar, a carbon capture engineer at Masdar Carbon.
"The technology is proven technically but it needs substantial technical and operational expenditure, which makes these projects economically unviable," he said.
cstanton@thenational.ae
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
