UAE’s Shah gas project completion still a year away

But two Adnoc units on target to boost output as part of plans to reach an oil production capacity of 3.5 million barrels per day by 2017.

The $10 billion Shah gas project will not complete until early 2015, senior executives said yesterday.

But two units of Abu Dhabi National Oil Company (Adnoc) are on target to boost output as part of plans to reach an oil production capacity of 3.5 million barrels per day (bpd) by 2017.

“Shah, it will be delivered beginning of 2015. There was some delay but normal project management schedule is not guaranteed to go on target 100 percent ,”said Ali Al Jarwan, the chief executive of Abu Dhabi Marine Operating Company, better known as Adma-Opco, which produces offshore oil and gas.

He was speaking at the World Future Energy Summit in Abu Dhabi.

The joint venture between California’s Occidental and Adnoc will process 1 billion cubic feet a day of sour gas into 500 million cubic feet of gas after stripping it from sulphur. Occidental holds a 40 per cent stake in a 30-year contract to develop the technologically challenging field.

Willie Chiang, the executive vice president of operations at Occidental Petroleum, said in November the project was 90 per cent complete and was expected to start by the end of this year.

The Government is taking on expensive gas projects to feed rising power demand and industries as part of the efforts to free up oil for export and build a gas-fed manufacturing base that diversifies income away from oil. Gas is also re-injected into oilfields to maintain oil well pressure.

In 2012, the Government awarded Royal Dutch Shell a 40 per cent stake in the “ultra-sour” Bab gas project that is forecast to produce 520 million cubic feet per day of network gas by 2020, after impurities have been stripped.

Separately, Adma-Opco is on target to boost oil output from the current 620,000 bpd to 750,000-800,000 bpd by 2017 and 1 million bpd by 2020, Mr Al Jarwan said.

“The majority [of the increment] will happen by 2017. By 2017, 750,000 to 800,000 is the target,’’ he said, adding the project will cost “billions”.

As part of boosting oil output, Adma-Opco is doubling its rig count to drill more wells and is using enhanced oil recovery techniques.

“We are increasing our rig fleet altogether in Adnoc from currently 45 to 88 rigs to really follow the projects. In addition, Adnoc and its partners at the Zakum Development Company [Zadco] is on target to boost production to 750,000 bpd by 2017 and 1 million bpd by 2024,” said Ali Hassan Al Marzooqi, Zadco’s senior vice president. He declined to say what current production was, but in November he said at at the Adipec oil conference that current production was 585,000 bpd.

“We are targeting 750,000 [bpd] by 2017 and 1 million by 2024. The field itself has higher potential than even 1 million,’’ said Mr Al Marzooqi.

The country’s largest field has oil reserves estimated at 50 billion barrels.

Adnoc has a 60 per cent stake in Zadco, and the rest is held by ExxonMobil and Japan Oil Development, two partners that will contribute to the investments in the Upper Zakum field to reach the 750,000 bpd target by 2017.

The partners have yet to sign up to plans to boost production to 1 million bpd by 2024, a deal that will have to be agreed by the Supreme Petroleum Council of Abu Dhabi.