Small Fields Vital for Sustaining UAE's Output

Developing Abu Dhabi’s small and remote oilfields will be crucial to maintaining the emirate’s capacity to pump crude oil from its onshore fields after 2017, says the head of the consortium responsible for managing those fields.

Onshore fields produce about half of Abu Dhabi’s oil, with the other half coming from fields in the Persian Gulf.

Abdul Munim al Kindy, the General Manager of the Abu Dhabi Company for Onshore Operations (ADCO), 60 % of which is owned by the Abu Dhabi National Oil Company (ADNOC), said the so-called marginal fields could yield as much as 250,000 bpd of crude.

That would offset the decline in output expected from larger fields after the company reaches its target sustainable capacity.

“It is not that we need these difficult fields to reach the 1.8 [million bpd target], but we certainly need the smaller fields to sustain production,” al Kindy said. “Whenever you see a drop or projected drop, we have something in our bag.”

ADCO, a consortium of ADNOC and five international oil companies, plans to increase its sustainable output capacity by nearly 29% from 1.4 million bpd, as part of ADNOC’s broader plan to boost Abu Dhabi’s total crude pumping capacity to 3.5 million bpd from about 2.8 million bpd by 2018.

To date, ADCO has awarded US$5.3 billion of contracts for projects to increase production from some existing large producing fields, including Abu Dhabi’s Shah, Asab, Sahel, Bab and Bida al Qenzan fields.

It is proceeding with the expansion project despite the looming expiry in 2014 of Abu Dhabi’s main onshore oil concession, awarded in 1939.

Mr al Kindy said the nature of any new concession after that date, and hence the structure of ADCO, was not his business but the direct responsibility of the Abu Dhabi Government.


Nonetheless, ADCO would increasingly need to access “marginal” and “tight” reservoirs to sustain its output. He noted: “Whomever ADNOC partners with will have to take on this kind of strategy and think creatively about bringing those reservoirs to the market and bringing the costs down. If it’s a 30-year production commitment, you need to sustain that from somewhere, and these are the reservoirs we have.”

ADCO has estimated that total costs for developing the smaller fields could exceed US$10 per barrel – a figure it is interested in cutting. The projection is significantly higher than the company’s current production costs, which some industry estimates indicate may be close to $1 per barrel.

Developing new fields – including a larger target, Qushawira – that are far from Abu Dhabi’s existing oil production infrastructure could be especially costly. Qushawira is about 120km from the nearest producing field, Asab, and would require a dedicated pipeline, said David Westerman, the assistant general manager of corporate support at ADCO. That distance would make it difficult to handle gas output from the new field, he added.

ADCO produces about 4.5 Bscf/d of gas from its oilfields, accounting for about half of the UAE’s total gas supply, which includes imported gas. Increasing Abu Dhabi’s gas output is a priority for ADNOC because the emirate needs more gas for power generation and petrochemicals production, and for pushing oil out of ageing fields.

Phase one of ADCO’s onshore oil expansion project would add 225,000 bpd of crude production capacity by 2012. Phase two, scheduled for completion in 2014 with the addition of a further 60,000 bpd of output capacity, would involve further work on the Bab field and the development of the untapped Qushawira and Mendar fields in Abu Dhabi’s south-east. - The National