New technologies are being deployed across Abu Dhabi’s energy sector to extract as much oil and gas from the sea bed and desert sands as possible to reap the optimum return on investment. However, developing new technologies can be expensive, and in a commercial setting R&D budgets may be the first to be trimmed when the focus is on reducing costs.
Investors & Inventors
The mindsets and interests of investors and inventors may seem poles apart at first, but the richest oil baron in history owed a sizeable part of his fortune to investing in inventions. Standard Oil’s founder John D Rockefeller, who created a self-made fortune worth $340bn in today’s money, took a radical new look at the standard unit still used to measure oil today – the barrel.
First, Rockefeller realised he could make a lot more money by shipping oil in rail cars rather than in barrels, and second, he employed scientists to squeeze more value out of each barrel by inventing ways to make products, such as paint, anaesthetics and paraffin, from the refining process. By speculating in science, Rockefeller accumulated wealth.
In his opening address to the Abu Dhabi International Petroleum Exhibition and Conference 2016, Sultan Al Jaber, UAE minister of state and CEO of Abu Dhabi National Oil Company (ADNOC), demonstrated that openness to innovation and new ideas is at the heart of his vision for the energy industry in Abu Dhabi. “Time and again, our industry has shown that it can engineer around obstacles, create groundbreaking solutions and catalyse human progress,” he said.
Expertise & Enterprise
A prime example of that approach to oil exploration is UZ750, the Upper Zakum project, which should see Abu Dhabi’s offshore oil workers hit their 750,000-barrel-per-day (bpd) production target in 2017. The project has been the result of international collaboration in technology and engineering that has seen ADNOC’s partner ExxonMobil apply techniques it has used in Russia to pump oil in the Gulf. Through Abu Dhabi’s partnership with the US oil company, and with the input of a range of international expertise, new ground has literally been broken in the creation of several man-made islands, which serve the extended reach drilling (ERD) operation in the Upper Zakum field.
The exercise demonstrates the value that international oil companies (IOCs) can bring to Abu Dhabi’s oil and gas industry. Ali Al Janabi, chairman, Shell Abu Dhabi, told OBG, “As Abu Dhabi wells continue to age, they will require the expertise and knowledge of IOCs to maximise reserves recovery and profitability.”
In November 2016 ADNOC announced that one of its own technological breakthroughs had the potential to be used by oil exploration companies all over the world with the signing of a new licensing deal. Its agreement with drilling technology firm Schlumberger allows the company to employ ADNOC’s proprietary offshore drilling technology, the Stabilising System for Deep Drilling (SSDD), in its services. SSDD increases borehole stability, saving time and money.
The licensing agreement with Schlumberger is the first time proprietary ADNOC technology has been commercialised abroad. Upon the signing of the agreement, Abdul Munim Saif Al Kindy, director of exploration, development and production at ADNOC, said, “The international licensing of this technology represents an important milestone for the company. We are excited to see this invention shared through this global agreement, which will spread ADNOC’s technological expertise worldwide.”
While the oil wealth it has accumulated since the 1960s has transformed Abu Dhabi, providing its citizens with schools, colleges and universities, there is still scope to expand the research output from its higher education institutions. World Bank data on annual patent applications shows an explosion in new inventions and ideas globally from 1985 to 2014. During that time, the number of patents worldwide grew from 455,947 to 1.7m. International comparisons say something about the development of many countries in that period. The UK, Poland and South Africa all witnessed declines in new patents, while German patent numbers grew from 32,302 to 48,154. However, in South Korea numbers went up from 2702 to 164,073, closely following Japan, which faltered with numbers falling slightly to 265,959. In the US patent numbers ballooned from 63,673 to 285,076, but the country was still eclipsed by China, where numbers soared from 4065 in 1985 to 801,135 newly patented ideas in 2014.
In the UAE there were no patents registered in 1985, and by 2014 the number had risen to just 24. In 2016 steps were taken in Abu Dhabi to change this through the merging of three of the emirate’s leading scientific and technological institutions – the Petroleum Institute (PI), Khalifa University of Science, Technology and Research (KUSTAR), and Masdar Institute (MI) – into a combined seat of learning, although they are expected to continue operating from their individual campus locations across Abu Dhabi.
The merger aims to encourage collaboration in research across disciplines and help students take advantage of recent investments, such as the $90m research centre that opened at PI in 2016.
PI is owned by ADNOC and its main focus has been on educating undergraduate and master’s degree students in disciplines related to the oil and gas industry, but in 2016 its first doctoral programmes were validated. MI is a postgraduate university with a focus on renewable technologies and biotechnology, and KUSTAR offers a range of doctoral courses in the sciences, engineering and technology. Emirati students have earned PhDs from both MI and KUSTAR in recent years with theses related to a wide variety of topics, such as renewable solutions for desalination, lung cancer diagnosis and social media analysis. The hope is that these students will develop research clusters that could begin to produce home-grown intellectual property and offer benefits to both industry and society.
Extended Reach Drilling
ADNOC is focused on increasing crude oil production capacity by 400,000 bpd by 2018, and it has said it plans to expand its use of both enhanced oil recovery (EOR) and ERD. “You are seeing a substantial increase in ERD across Abu Dhabi, which allows you to get more out of a single well, and thus reduce costs,” Abdalla Al Suweidi, CEO of the National Drilling Company, told OBG. ADNOC says it will support partner research projects and technological implementation. The firm has employed ERD since the early 1990s, but with UZ750 it began using the technique to cluster wells and optimise production. EOR sees associated gas reinjected into wells in order to expand the lifespan of maturing fields, but ADNOC is intending to use less of this potentially valuable by-product and use more CO2 in the process instead.
The use of carbon capture utilisation and storage (CCUS) took a big step forward in 2016 when Al Reyadah, a clean energy joint venture between renewable energy firm Masdar and ADNOC, delivered its first captured carbon to oil fields for use in EOR. Al Reyadah captures the carbon emitted at Emirates Steel factories, processes the gas at its own carbon capture facility (CCF), and then transports it to ADNOC for use in EOR. The CCF was completed in 2016 and will sequester 800,000 tonnes of CO2 annually. There are 15 CCUS plants globally, but this is the first in the MENA region on a commercial scale.
The project will enable ADNOC to replace the gas it would have used in EOR and sell it instead. The successful completion of the project has been hailed by IOCs. According to Arafat Al Yafei, CEO of Al Reyadah, there is a strong investment case for CCUS. “Al Reyadah is turning CCUS into a commercial viable option that will support efforts towards a green economy and sustainability. We are very keen on attracting investment into these businesses, as well as venturing into the region. We have expertise in subsurface, capturing technologies and CO2 project management.”
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