Undaunted, the Das island-based gas-processing firm is once again defining a new path for itself. In the 1970s, it decided to construct the region’s first LNG plant. Three decades later, it is poised to build a new liquefied petroleum gas (LPG) train. In both cases, gas extracted from Abu Dhabi’s offshore crude oil fields is turned into a new source of marketable energy. ‘This [the LPG expansion] is the biggest project Adgas has initiated since 1994,’ says a project source. ‘The sole work coming out of Adgas since it commissioned its third LNG train has been their annual maintenance and the related shutdowns.’
Adgas owns and operates a gas liquefaction plant comprising three trains, with total design capacity of 3.5 million tonnes a year (t/y). However, following extensive debottlenecking the trains produce a total 6 million t/y of LNG, plus about 1.7 million t/y of LPG, 535,000 t/y pentane and 338,000 t/y sulphur. Nearly all the LNG is sold on long-term contracts to Tokyo Electric Power Company (Tepco).
The proposed new gas processing unit – train 4 – is estimated to cost $350 million-400 million and will have capacity of 1 million t/y, with LPG as the main product, plus small volumes of pentane and sulphur. The new LPG train will utilise additional volumes of associated low-pressure gases produced as a result of increased oil production planned to start in 2005 from Abu Dhabi’s offshore fields. At present, gas to Das island is supplied from the offshore Zakum and Umm Shaif fields through 46-inch-diameter and 18-inch-diameter main gas pipelines.
Train 4 will be designed to utilise 220 million cubic feet a day of associated gas at varying pressure streams. The gas will be processed through gas compression, acid gas removal, gas drying, pre-cooling and fractionation to make the final products of LPG – propane and butane – and pentane.
In addition, sulphur will be recovered from the acid gas, while other light hydrocarbon derivatives – methane and ethane – will be used to fuel train 4; excess gas will be redirected to fuel trains 1 and 2.
As well as the new LPG train, which will be built to the south of existing trains 1 and 2, the project will include construction of utilities for the new train.
The project will be carried out on a fast-track basis with the new facilities to be commissioned by late 2004/early 2005. Adgas is expected to issue the engineering, procurement and construction (EPC) tender by mid-November. Japan’s Chiyoda Corporation has carried out the front-end engineering and design (FEED) package for train 4, while the US’ Stone & Webster, part of The Shaw Group, is providing project management consultancy services.
Although up to seven companies are prequalified to bid for the EPC contract, not all are expected to do so. Industry sources say three contractors – JGC Corporation of Japan, AMEC of the UK and Chiyoda Corporation with Paris-based Technip-Coflexip – are expected to price the main package.
The small number of bidders is unlikely to affect project implementation. ‘This is not a numerical game. The project will go ahead despite the few bidders,’ the source says.
Industry executives say that one reason for the low number of bids was the expectation of undercutting from a prequalified South Korean firm. Ironically, that firm is now unlikely to bid.
Another deterrent is the nature of the EPC contract. ‘Availability of space is a major constraint on Das island. The focus will be on modularisation – manufacture, assembly and tie-in with the existing units utilising the ro-ro [roll on, roll off] facilities on Das,’ says the source. ‘Major equipment, new facilities and large portions of the process train will have to be prefabricated and brought in on a barge.’ Along with the construction of a new LPG train, Adgas is also planning an expansion of the jetty. The UK’s Halcrow Group has carried out a study for the proposed facility, which includes dredging and land reclamation. Plans are also being firmed up for an additional LPG storage tank.
While utilisation of additional volumes of gas was a prime factor in Adgas going ahead with an expansion of its facilities, industry sources maintain that the main product had to be LPG, rather than LNG. ‘Adgas had to construct an LPG train to face off competition from others in the region. The Middle East has been a traditional supplier of LPG to the Far East and Adgas is keen on increasing its market share,’ the source says. Indeed, the vast majority of the planned output from train 4 is to be sold to Japanese buyers under term contracts.
Despite plans to set up an additional LNG train at a later date, finding space on Das will be a major challenge. ‘It has been a squeeze putting in three LNG trains onto Das and fitting in another [LNG] unit will be difficult,’ says the industry source. ‘The option for Adgas would probably be to further debottleneck its first three trains and produce additional volumes.’
The medium-term LNG strategy for Adgas will be to seek new buyers in Europe, given the proposed deregulation and a substantial increase in demand for gas. A start was made with the recent signing of a four-year sales and purchase agreement with the UK’s BP for 750,000 t/y of LNG, to be sold on to buyers in Spain.