Abu Dhabi’s new strategic partnershipsMay 7, 2019
Abdulmunim Saif Al Kindy, executive director of ADNOC’s Upstream Directorate, talks to TOGY about how ADNOC’s new strategic partnerships are supporting its upstream ambitions, the NOC’s approach to developing tight reservoirs and the role of unconventional reserves in the company’s integrated gas strategy.
How will strategic partnerships, such as the one with BHGE, aid ADNOC in reaching its goals?
A key enabler of our 2030 growth strategy is an expanded approach to strategic partnerships across all areas of our business.
One of the most significant partnerships we struck in 2018 was the agreement with Baker Hughes, a GE company (BHGE), which will enable and support the transformation of ADNOC subsidiary ADNOC Drilling into a fully integrated oilfield services business. BHGE has acquired a 5% stake in ADNOC Drilling valued at USD 550 million as part of this agreement. The partnership represents the first time that ADNOC has brought an international strategic partner in to acquire a direct equity stake in one of its existing services businesses.
In addition, ADNOC’s new exploration block licensing strategy is yet another way in which we are broadening and diversifying our partner base as we strive to create a more profitable upstream business.
In April 2018, we launched six new exploration blocks, both onshore and offshore, where successful bidders will enter into agreements granting exploration rights and, provided defined targets are achieved in the exploration phase, they will be granted the opportunity to develop and produce any discoveries with ADNOC.
The decision to offer these for open, competitive bids was made to accelerate the development of our untapped portfolio that lies outside of the immediate production areas, and will support our long-term production capacity targets.
Where will ADNOC be deploying its continuing EOR developments? Will it be using methods aside from CO2 injection?
Last year, ADNOC developed an EOR roadmap which tailors EOR techniques to over 100 candidate reservoirs based upon specific reservoir characteristics. It ranges from chemical EOR to miscible gas injection to novel hybrid EOR concepts, developed in conjunction with some of the world’s leading industrial and academic institutions. We have a prioritised list of 10 planned pilots, four of which will be executed by 2021. These pilots are aimed at testing new EOR concepts for carbonate reservoirs.
The majority of our EOR-enabled production is based on rich miscible gas injection, with 10 ongoing projects in various ADNOC Onshore fields. We also apply lean miscible gas injection at one of our fields, as well as CO2 injection at our Rumaitha and Bab onshore fields.
We will be expanding our carbon capture facilities to meet a six-fold increase in demand, for injection in the Bu Hasa and Asab fields in addition to Bab and Rumaitha.
How do you maximise value so as to increase production in the most cost-efficient manner?
We are adapting to changing dynamics in the energy market by maximising operational efficiencies, increasing our crude oil production capacity while also optimising costs and deploying cutting-edge digital technology – all to ensure we remain competitive.
We are continuing to deliver operational and cost efficiencies as we maintain our operating cost per barrel at a leading low base. The careful consolidation of our Adma-Opco and Zadco offshore operations has contributed to this, and we are striving for more efficient operations while maintaining our focus on safety and asset integrity. We are also increasing business value through strategic investments, embedding group-wide best practices and leveraging synergies.
This is also supported by improvements in drilling performance which are well under way and set to reduce well [drilling] duration by 30% by end-2019 compared to the 2015 baseline. The drilling efficiency improvements alone are expected to unlock operational savings of up to USD 1 billion as we increase drilling activities across our conventional and unconventional fields and meet continuously rising global demand for oil and gas.
Achieving this drilling performance and efficiency gains is supported by ADNOC’s Drilling Real-Time Monitoring Center (RTMC). Powered by big data from live and historical operations, the facility uses advanced analytical algorithms to track drilling performance and well delivery progress against plans. RTMC can also automatically benchmark ongoing activities against 2,000 historical wells to identify efficiencies and reduce non-productive time.
As at RTMC, digitalisation is enhancing performance and maximising efficiencies across ADNOC, whereas the upstream business is a key driver of new value-enabling digital solutions.
The Thamama Subsurface Collaboration Center brings together experts from across the ADNOC Group in a purpose-built, immersive subsurface environment to come up with innovative solutions to subsurface challenges. In the centre, the multi-disciplinary teams interpret advanced seismic surveys and correlate them with well data and core samples to generate detailed geological models of the reservoirs.
Equipped with these detailed geological models and advanced visualisation technology, they are investigating fluid flow behaviour in reservoir rocks to come up with the optimal and most efficient field development plans for the emirate’s complex carbonate reservoirs.
The offshore sour gasfields of the Ghasha concession are an example of where we have used the data visualisation tools and cross-discipline collaboration facilities in the Thamama Subsurface Collaboration Center to optimise well trajectories and integrate the surface and subsurface development plans to maximise efficiencies. Next to optimising cost, this also helped to minimise the environmental footprint.
In addition, the Thamama facility helps identify opportunities to unlock previously untapped resources and maximise recovery from our maturing reservoirs, as well as increase the efficiency of enhanced oil recovery technologies and better tailor them to Abu Dhabi’s oil and gas reservoirs.
We employ methods such as carbon capture, utilisation and storage and are also developing new EOR technologies such as simultaneous polymer and water injection to re-energise and maximise the value of ADNOC’s maturing fields, aiming for an ultimate recovery rate of up to 70% at the end of field life, where commercially viable.
What is ADNOC’s strategy for securing the technology and financing to develop fracking of tight reservoirs?
In November 2018, the Supreme Petroleum Council approved ADNOC’s integrated gas strategy, which will enable the UAE to become gas self-sufficient with the potential to become a net gas exporter. In addition to unlocking new ultra-sour gasfields and new exploration concessions, and concurrently producing from gas caps in our major oil producing fields, producing 1 bcf [28.3 mcm] per day of unconventional gas before 2030 is a pillar of this strategy.
A major milestone quickly followed the approval of the gas strategy, with the award of a 40% stake in the Ruwais Diyab Unconventional Gas Concession to France’s Total. The agreement includes a six- to seven-year exploration and appraisal phase, which will be followed by a 40-year production term. This was the first unconventionals concession of its kind in the region.
As ADNOC embarks on the exploration and development of Abu Dhabi’s unconventional gas resources, it will undergo an accelerated learning curve which will help drive efficiencies in drilling and hydraulic fracturing and allow us to create higher value from what is a more challenging resource compared to the giant conventional oil and gasfields of Abu Dhabi.
ADNOC Drilling and its new partner, BHGE, will help enable this and maximise local value generation through the exploration, development and production of these challenging gas resources. We expect to see an accelerated application of innovative methods which will help us to drive efficiencies in drilling and hydraulic fracturing.
Total is certainly recognised within the industry for its pioneering role in the development of unconventional resources and has considerable historic expertise in production methods such as horizontal drilling and hydraulic fracturing. We have also received significant interest from other potential partners wanting to join other unconventional oil and gas concession areas that we are considering.
What role will unconventional reserves from Ruwais Diyab, the mega-project at Ghasha and development of gas caps such as Umm Shaif play in your integrated gas strategy?
Gas is playing an increasingly significant role, particularly in power generation, as it is projected to represent one-quarter of the world’s primary energy consumption by 2040, with much of this new growth driven by fast-developing Asian economies.
At ADNOC, we are combining our industry-leading experience in developing sour gas reservoirs with a commercially focused approach based on new technologies, a reframed business model and a balanced exploration programme of seismic and drilling activities capable of delivering new resources at globally competitive unit costs.
Our integrated gas strategy is designed to consolidate our position as a major gas player by unlocking new gas resources, enhancing ADNOC’s global market presence and maximising the value of Abu Dhabi’s significant gas resources.
In sour gas, in November and December of 2018 we signed a trio of agreements granting Eni (25%), Wintershall (10%) and OMV (5%) stakes in our Ghasha ultra-sour gas concession, which comprises the Hail, Ghasha, Dalma, Nasr, Sarb and Mubarraz sour gasfields. These are estimated to hold trillions of cubic feet of recoverable gas with the potential to produce more than 1.5 bcf [42.5 mcm] per day of raw gas, enabled by a fully digital field concept, remote operations and advanced drilling techniques.
In developing the Hail, Ghasha, Dalma and other ultra-sour gasfields in the concession, ADNOC will capitalise on its world-leading expertise and successes in ultra-sour gas development, gained from the development of the Shah field, and create an ultra-sour gas centre of excellence for the region. We will also leverage our expertise and that of the UAE in artificial island construction and land reclamation.
Another key pillar of our integrated gas strategy is Abu Dhabi’s unconventional gas deposits. In November 2018, ADNOC signed its first-ever unconventional gas concession agreement with Total, giving the French oil and gas major a 40% stake in the Ruwais Diyab unconventional gas concession. Overall, ADNOC expects to produce about 1 bcf [28.3 mcm] per day of gas from the emirate’s tight reservoirs’ gas resources before 2030.
We are also embarking on a unique development to produce simultaneously from the Umm Shaif gas cap as well as the oil rim, which has been a major producing asset for some time. This development is the first of its kind at such a scale.
In addition to the offshore sour gas, unconventionals and gas caps, we also plan to increase our onshore sour gas production and processing at Shah, as well as unlock new gas opportunities through the conventional exploration blocks that have been offered up for competitive bidding.
How will the targeted 10% increase in energy efficiency be achieved by 2020?
In 2017, we made a commitment to further decarbonise our operations and reduce energy consumption by 10% by 2020. Our energy efficiency strategy is to reduce ADNOC’s gas consumption by 156 mcf [4.42 mcm] per day, saving a total of USD 1 billion by 2020.
Efficiencies are being driven through upgrades in equipment and processes, as well as through better group-wide energy management through our Panorama Digital Command Center, and we are going to drive further cost savings and enable the creation of maximum value from our gas resources.
Not only will delivery improve profitability, it will also enable ADNOC to achieve its strategic goal of meeting Abu Dhabi’s rising energy demand from domestic gas supplies. In addition to our own energy efficiency initiatives in the upstream, our colleagues are also working on demand-side management by influencing improved energy performance by its stakeholders and contractors in support of an energy-efficient economy in the UAE.