Oil giants make case for future role

The world's biggest oil companies seek Abu Dhabi's endorsement and hope to fit into ADNOC's plans to tap smaller fields in the future.

Oil rigs moored at Port Zayed. Horizontal drilling may yield more oil from some fields.

Engineers from the world's biggest oil companies descended on Abu Dhabi this week to talk drill casings and gas output, but also to make the case for why their companies should have a future in the emirate's oil industry. Ranging in size from ExxonMobil to Partex, a small Portuguese oil firm, the companies stressed their experience in tapping smaller oilfields, which figure prominently in the plans of the Abu Dhabi National Oil Company (ADNOC).

The Abu Dhabi Government is due to decide soon which foreign partners - if any - will own shares in onshore oil output after 2014, when the concession expires that now forms the basis of the Abu Dhabi Company for Onshore Oil Operations (ADCO), an ADNOC subsidiary. BP, which owns 9.5 per cent of ADCO, attended the conference mainly to present its technology, but the concession's expiry was a factor for all the big oil firms, said Steve Thomson, the company's subsurface manager in Abu Dhabi.

"It's certainly on everyone's mind," he said. "We'd like to be part of it." ADCO will have no direct role in the Government's review of the concession, but it will be looking for partners that have the capacity to cost-effectively develop so-called marginal fields, oil and gas deposits that are smaller, harder to reach or have complex geology, said Abdul Munim al Kindy, the general manager. The company has plans to tap a number of these fields to sustain its output at an expanded rate of 1.8 million barrels per day after 2017, he said.

"Marginal fields command a lot of thinking, a lot of capital investment," he said. "If those levels of production are to be sustainable, there is a need to access these fields and it needs to feature in any agreement if it's going to carry 30 years." A large group of executives and engineers from ADCO, which is 40 per cent-owned by a consortium of BP, ExxonMobil, Royal Dutch Shell, Total and Partex, yesterday heard how to reduce the investment burden of developing such fields, in which the cost of each barrel is the key variable in whether they are ever drilled.

Mr al Kindy said on Monday that ADCO was looking to reduce the cost of developing the wells from an estimated US$10 (Dh36.73) a barrel. Analysts estimate ADNOC's current costs of production are between $1 and $2 a barrel. Much of the challenge involved finding ways to reduce the cost of developing and operating the fields by using pre-built modular structures and automating production, said Cor Verlaan, the team leader for gas opportunities at Shell.

"It has nothing to do with the size of the field. It's marginal if it's expensive to develop," he said, noting that many such fields required drilling of more wells to produce oil and gas at the same rate as conventional fields. "The most important part is the drilling. In this area we should try to reduce the cost." Total, the French oil giant, detailed its efforts to raise oil and gas output from the Abu al Bukhoosh field off Abu Dhabi. The field is like a layer cake, composed of 15 layers of hydrocarbons each two to seven metres thick, separated by thin layers of rock, said Vincent Thebault, the head of reservoir engineering at the field.

The solution, he said, was to horizontally drill each layer individually, and inject water and natural gas to raise the field's pressure. "Oil production was very low, and when we converted it into a multi-horizontal well, we multiplied by five the production," he said. @Email:[e-mail]