ABU DHABI GAS: The dash for gas

The first flush of Qatari gas is due to land at Taweelah in Abu Dhabi emirate next year. The arrival of Dolphin gas will be a seminal moment for the regional energy sector, representing a new era in cross-border co-operation. It will be no less significant for the UAE, as it grapples with an increasingly tight gas supply/demand balance.

Abu Dhabi will be the largest recipient of Dolphin's first-phase capacity of 2,000 million cubic feet a day (cf/d), taking up to 1,200 million cf/d for its power generating requirements in the eastern region and the Al-Ain area. The additional volumes will allow Abu Dhabi Gas Industries Company (Gasco) to redirect existing supplies to the other main call on the emirate's gas supplies, the oil industry.

The gas is certainly needed: this summer, several of the emirate's power stations have switched to run on fuel oil, as a result of gas supply constraints. But the more sobering fact is that the initial Dolphin deliveries will only provide temporary relief for Abu Dhabi.

Gas demand in Abu Dhabi is set to rocket over the next five years. Maturing oil reservoirs, coupled with a programme to

boost crude capacity by close to 1 million barrels a day (b/d), will see a steep rise in gas reinjection demand. According to its new five-year business plan, Gasco estimates that onshore reinjection demand for its supplies will more than double to 3,110 million cf/d by 2010, from 1,315 million cf/d today. The Bab field alone will need a 78 per cent increase in gas deliveries to 500 million cf/d. At the nearby Bu Hasa field, a 20 per cent increase to 270 million cf/d is projected over the period. Offshore, it is a similar picture: Abu Dhabi Marine Operating Company (Adma-Opco) will require 600 million cf/d just for reinjection into the Arab C and D reservoirs at Umm Shaif.

Gasco has not been sitting idly by. Over the past two years, it has pushed ahead with a $5,500 million investment programme, which has seen major awards on the third phase of the onshore gas development (OGD-3) project, the second phase of the Asab gas development (AGD-2) and the expansion of the Habshan gas plant. A fourth scheme, the offshore associated gas (OAG), is now being tendered. The programme will see Gasco's feed gas processing capacity rise to 6,700 million cf/d in 2009 from 5,300 million cf/d.

However, it is still unlikely to be enough to cope with all the onshore reinjection demand. 'With the non-associated gas reserves in Thamama C set to decline, the shortage in 2010 will increase to 788 million cf/d,' the Gasco business plan concludes.

The gas demand outlook in the power sector is equally bullish, especially after 2009. Abu Dhabi's current installed capacity of about 8,000 MW requires an estimated 1,900 million cf/d of gas feedstock. Abu Dhabi Water & Electricity Authority (ADWEA) will have sufficient existing capacity to meet power demand up until 2008. However, in the period 2008-13, substantial new capacity will be required to cope with a projected doubling in electricity demand, driven by a host of real estate projects.

Gas demand from the industrial sector is also set to grow. As part of its diversification drive, the emirate has drawn up ambitious plans for industry, the centrepieces of which will be new steel capacity at Mussafah and a grassroots aluminium smelter at Taweelah (see Briefing, page 7).

Abu Dhabi is hardly short of gas. The UAE has reserves of 214 trillion cubic feet, making it the fifth largest holder in the world. Of this total, more than 90 per cent are located in the emirate. However, the data tells only half the story. Much of the reserves are inextricably linked to oil production. At the same time, most have a high sour content, making extraction and processing an expensive business: for example, the Khuff gas reservoir has hydrogen sulphide content ranging between 20,000-200,000 parts per million (ppm), a level that has