As high oil prices give policymakers greater flexibility to invest for the future, the government is likely to spend more money on supporting the development of enhanced oil recovery (EOR) in the years ahead. “The days of easy oil are over,” Mohamed Al Hamli, the oil minister for the UAE, said at the World Petroleum Congress in December 2011. “We are forced to go down the road of enhanced oil recovery.” In the UAE, where local demand for natural gas is surging, there is an added incentive to find a substitute for the large amounts of gas that are currently injected for the purpose of increasing crude oil production.
One possible solution is to use carbon dioxide as an alternative for the gas that is pumped into the ground to boost petroleum output. International oil companies are optimistic about the potential for developing carbon capture and sequestration (CCS) technology in Abu Dhabi, to use carbon dioxide in EOR. “The industry has realised that Abu Dhabi has oilfields of a scale and nature that are suitable for this sort of technology,” Morten Mauritzen, the president of ExxonMobil Abu Dhabi, told OBG. “We have been working with Abu Dhabi National Oil Company (ADNOC) and Masdar to explore sequestration and injection technologies.”
TESTING THE FIELD: In 2012 the Abu Dhabi Company for Onshore Oil Operations (ADCO) completed a pilot project that involved injecting 1.2m standard cu feet per day (scfd) of carbon dioxide into the Rumaitha field. According to Mohammed Zubair Kalam, special core analysis discipline expert at ADCO, the oil recovered at the field could be increased by up to 10%, and using this technology on all Abu Dhabi’s onshore fields would add 7bn barrels to crude production – over 7% of the UAE’s total proven reserves.
However, some stakeholders have stressed that carbon dioxide remains attractive only as a limited-term option. “Abu Dhabi does have real potential for CCS technology, but the constraints are linked to high start-up and operating costs,” Neri Askland, the country representative for Statoil, a Norwegian oil and gas firm, told OBG. According to ADCO, current production costs are around $5 per barrel, but this could top $20 per barrel with carbon dioxide injection. José Pereira, the Middle East representative for Partex Oil and Gas, explained, “At the current stage of life of existing reservoirs, we believe that there is no significant use [for CCS]. Investing in this type of extraction infrastructure will only be beneficial in the medium to long term.”
CHALLENGES: Investors must weigh the costs and benefits of employing carbon dioxide capture and injection methods, and one challenge is ensuring that the developments in CCS technology keep pace with advances in EOR methodology. “EOR and CCS are not only complimentary, but they need one another,” said David Robinson, a senior research fellow at the Oxford Energy Institute. Other challenges include the inability of suppliers and buyers of captured gas to agree on an appropriate price, both in the UAE and worldwide. Furthermore, in spite of an estimate by the International Energy Agency that 3000 CCS projects are needed by 2050 to mitigate the most damaging effects of climate change, some 11 such projects were cancelled or delayed in 2011, according to the Australia-based Global Carbon Capture and Storage Institute.
Still, Abu Dhabi appears committed to the technology. In early 2012 Masdar, the government-backed renewable energy and clean technology research and development centre, and ADNOC announced that sufficient progress had been made on the commercial front to allow a tender to be issued for a carbon capturing facility near the Emirates Steel plant to be pumped to the nearby Rumaitha oilfield.
MORE OPTIONS: Another method is nitrogen injection, which takes considerable effort. A joint venture between ADNOC and Germany’s Linde Group, known as Elixier, is looking to produce nitrogen for injection to improve output at the Habshan field with forced pressure. The project has several related engineering, procurement and construction contracts, including the construction of a $160m plant by Samsung Engineering by 2014.
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