Adnoc invites interest in Shah gas field

03 October 2008

Record $10bn energy project to develop onshore sour gas reserves will be tendered in 10 packages.

Abu Dhabi National Oil Company (Adnoc) is approaching contractors to establish interest in the largest energy project ever undertaken in the UAE - the $10bn plan to develop sour gas reserves from the onshore Shah field.

Adnoc is establishing a joint venture with US-based Conoco- Phillips to execute the scheme, after signing an agreement in July. Adnoc will take a 60 per cent stake in the venture (MEED 8:7:08).

Sources close to the project tell MEED the Shah Gas Development will be tendered in 10 engineering, procurement and construction (EPC) packages, which will be awarded on a lump-sum basis.

The entire scheme will be managed by a project company formed by the Adnoc-Conoco joint venture.

Sources say a wide range of contractors are being approached by Adnoc. A meeting will be held in Abu Dhabi on 13 October, when Adnoc will provide further details of the first seven packages on the project.

The deadline for expressions of interest is 20 October, and prequalification documents are due on 30 October.

The scheme will produce and process more than 1 billion cubic feet a day (cf/d) of sour gas.

The Shah field will be developed in three phases. The first phase involves the completion of 20 wells, with additional well drilling in two further phases over the life of the field. The scheme is expected to be completed in the fourth quarter of 2013.

The sour gas produced will primarily be used for reinjection into existing oilfields to maintain well pressure.

This will help free up other gas that can be used for power generation and industrial requirements.

It is crucial to the development of Abu Dhabi as it will give the emirate access to additional gas supplies and help address the growing imbalance between the demand and supply of gas across the federation.

Earlier this year, plans by Abu Dhabi Basic Industries Coporation (Adbic) to develop a new aluminium smelter in Ruwais were shelved after it did not secure a gas allocation from the government (MEED 18:4:08).

US-based Fluor Corporation is working on the front-end engineering and design (FEED) of the Shah Gas Development for Abu Dhabi Gas Industries (Gasco), the Adnoc subsidiary that is managing this part of the development.

The FEED is in three parts: a gas collection system and product pipelines, the gas plant and a sulphur management system.

The gathering system will take fluids from the Shah field wells to the Shah plant, and the product pipelines will then take gas, condensate and natural gas liquids to Habshan, 65 miles southwest of Abu Dhabi city. In total, there are 263 kilometres of pipeline.

The gas plant will have processing, treating, sulphur recovery and offsite facilities.

Gasco is also to construct a new sulphur management system, as the existing facilities will not be able to handle the large quantities of sulphur from the Shah project.

The system will transport sulphur from the Shah gas plant to an export and granulation facility in Ruwais.

It is designed to handle 10,000 tonnes a day (t/d) of sulphur from the Shah scheme and another 10,000 t/d from existing and planned sulphur producers in the Habshan area.

Canada’s Westmar is assisting Fluor with elements of the FEED packages in Ruwais, between Abu Dhabi city and the Saudi border, including the sulphur-handling terminal. Australia’s WorleyParsons is the project manager.

Demand for gas is growing by about 15-20 per cent a year in the emirate and, despite the recent addition of gas from Qatar via the subsea Dolphin gas pipeline, the authorities are continually seeking further supplies.

As well as the Shah Gas Development, Adnoc is considering the development of sour gas from its onshore Bab field (MEED 11:1:08).

Bab was originally included in the Shah scheme but was separated off in 2007 due to cost and safety issues (MEED 29:6:07).

The Bab field is located close to the Liwa oasis, and any leak of the hard-to-detect sour gas from the field could have serious health and safety consequences for the nearby area. Nonetheless, Adnoc is expected to proceed with developing the Bab field in the future.

Gasco says that special attention has been paid to health and safety considerations at Shah, but adds that, as it is using unmanned pumping stations rather than trucks to transport the liquid sulphur, the risks are vastly reduced.

Another sour gas field under consideration is the offshore Hail field, halfway between Abu Dhabi and Ruwais.

Although the field falls within the concession of Abu Dhabi Company for Onshore Oil Operations (Adco), development of the project will also come under the responsibility of Gasco.

Production of up to 500 million cf/d of sour gas has conservatively been forecast for the field from an initial outlay of $1bn.

Adco launched the Hail field in 2007 by inviting contractors to submit expressions of interest for the marine works (MEED 14:9:07).

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