ABU DHABI: Upgrade frenzy

16 September 2005
These are busy times for Abu Dhabi National Oil Company (ADNOC) and its operating firms. With oil prices riding high and the emirate's production forecast to increase by nearly 6 per cent to 2.5 million barrels a day (b/d) by the end of the year, significant investments are under way to maintain and upgrade its upstream networks.

This is partly a matter of necessity. Some of Abu Dhabi's oil fields have been in production for more than 30 years, and the need to replace ageing infrastructure is imperative. However, there is another factor. With present spare capacity at just over 250,000 b/d, ADNOC is working hard to maintain the UAE's position as OPEC's fourth largest producer.

'Vendors, suppliers and fabricators have their eyes riveted on Abu Dhabi,' says an international contractor. 'It will not just be contracts to replace nuts and bolts or compressors and slug catchers. We are now talking supply and installation contracts worth several hundred million dollars.'

An estimated $1,000 million is planned for investment over the coming few years to replace flowlines, main oil lines, production platforms, gas injection compressors, control systems and related equipment, both onshore and offshore (see table).

French connection

The contract awards are already flowing. In late May, France's Cegelec won two engineering, procurement and construction (EPC) contracts, worth more than $80 million. The first is to replace the ageing pneumatic system at the onshore Asab and Bab oil fields and to supply and install new integrated control systems. The second contract, placed by Abu Dhabi Company for Onshore Oil Operations (Adco), was to modify existing substations, the supervisory control and data acquisition (SCADA) system and the telecommunications network. Several more awards are due.

Meanwhile, Australia's WorleyParsons is due to complete by late September the front-end engineering and design (FEED) package for new SCADA systems to be installed at the offshore Umm Shaif and Lower Zakum fields. It is also due to complete by mid-2006 yet another FEED package involving the revamp of 41 wellhead towers at the Lower Zakum field. The contract will also entail installing integrity launchers for cleaning and maintaining pipelines and handling corrosion.

Maintenance and upgrade work is also planned onshore. Abu Dhabi Gas Industries Company (Gasco) is due to receive commercial bids by mid-September from contractors to carry out FEED works on upgrading facilities at Thamama C and Bu Hasa. In neighbouring Jebel Dhanna, work is already under way on the $60 million contract to upgrade the storage tanks and pipelines of existing facilities handled by Adco.

ADNOC is also focusing on handling rising water cuts and the growing need for gas reinjection. With the vast majority of Abu Dhabi's estimated 98,000 million barrels of oil reserves existing in associated form - oil along with gas - the two are closely linked.

More than $2,000 million of investment is planned for both onshore and offshore oil fields to maintain - or marginally increase - production levels. Adco has set aside $1,400 million for investment under the Sahil-Asab-Shah (SAS) scheme to modify the surface production facilities and serve gas lift requirements. The two-year project will boost production capacity by 60,000 b/d. The situation is not much different offshore, where Zakum Development Company (Zadco) plans to spend $700 million in upping production by about 90,000 b/d from the Satah, Umm al-Dalkh and Upper Zakum fields.

'Most of the new projects will be to reinject gas and water into the reservoirs and support in maintaining production,' says an Abu Dhabi-based industry official. 'Reinjection will continue to be the centrepiece of the emirate's oil industry. Besides, additional revenues will be generated from increased production of condensate and

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