UAE has world’s 4th largest oilfield

ExxonMobil was awarded a 28 per cent stake in Upper Zakum by Adnoc in a deal to develop the complex field and raise its output by 40 per cent (FILE)

The UAE is pushing ahead with the development of the world’s fourth largest oilfield to expand its output by nearly 40 per cent to 750,000 barrels per day and maintain its position as one of the top global hydrocarbon exporters.

The US giant ExxonMobil is developing the offshore Upper Zakum, home to a staggering 50 billion barrels of proven crude, making it the fourth largest oilfield on earth, according to a senior company executive.

“Beneath the glistening waters off the coast of Abu Dhabi lies one of the world’s largest oilfields… some 50 miles northeast of the emirate’s capital, an estimated 50 billion barrels of oil sit below the sea,” said Morten Mauritzen, ExxonMobil’s lead country manager in Abu Dhabi.

“Ranked as the fourth largest on earth, the Upper Zakum field is made up of layer upon layer of complex reservoirs…on the water’s surface, a handful of manmade island are taking shape,” he said in a report obtained by Emirates 24/7 at the Abu Dhabi International Petroleum Exhibition which concluded on Thursday.

Mauritzen said the artificial islands would replace more than 100 conventional steel drilling towers around the super oilfield. He said multiple wells would be drilled, an “innovation” that ExxonMobil hopes will save billions of dollars during the six-year development as well as benefit the environment.

“We looked at the local expertise in constructing islands, said Mauritzen, a Norwegian. “And we thought we are onto something here.”

He did not mention the other three largest oilfields in the world but Saudi Arabia’s Khurais field is rated as by far the biggest crude reservoir on earth, pumping in excess of five million bpd since it was discovered over 70 years ago.

ExxonMobil was awarded a 28 per cent stake in Upper Zakum by the Abu Dhabi National Oil Company two years ago under an agreement allowing the US firm to develop the complex field and raise its output by 40 per cent.

Once completed, the project will lift the field’s capacity to around 750,000 bpd in 2015 and enable it to pump at maximum production for 24 years.

Upper Zakum project is part of an ongoing programme launched by Adnoc to expand its oil output capacity to around 3.5 million bpd within the next seven years from nearly 2.6 million bpd at present. The programme also covers development of the emirate’s gas fields, including the Shah sour gas venture.

Adnoc, which runs Abu Dhabi’s hydrocarbon sector, controls 60 per cent of the Zakum Development Company (Zadco), Upper Zakum operator. The remaining stake is held by the Japan Oil Development Company (Jodco).
“We looked at the development plan and came up with a new concept that has dramatically changed the way we look at Upper Zakum,” Mauritzen said.

He said the idea was to build four artificial islands and utilise ExxonMobil’s extended-reach drilling technology, which allows wells to be drilled vertically and horizontally to target reservoirs several miles away. Similar technology has been tried and tested in ExxonMobil’s concessions in Northeast Russia, he added.

“We have proven this is feasible in Upper Zakum…this spring, Zadco drilled two successful pilot wells to demonstrate that these long wells can indeed be drilled.”

Mauritzen said the artificial islands have safety and environmental benefits as well as cost reduction benefits in the “$multi-billion range.”

He said the plan to develop the massive offshore Upper Zakum is going ahead despite recent furore over the offshore oil production worldwide following the massive leakage in British Petroleum’s concession in the Gulf of Mexico.

“This incident showed how important it is when you drill wells that you have the right procedures, trained people and you have proper risk management processes…our view is that if you focus on all these things, you are managing the risk of offshore drilling in a very responsible way and that goes whether you drill from a platform or from land,” he said.

Mauritzen noted that the costs of offshore drilling are high, adding that investment in Upper Zakum expansion will be huge. “ExxonMobil alone plans to spend several billions of dollars on the project,” he added.

He recalled that when the first development phase of Upper Zakum began in the 1970s, other giant oil companies turned down the “opportunity” to develop the field, concerned that it would prove too costly and technologically challenging.

“The reservoirs are made up of low-permeability rock which makes it expensive and difficult to extract oil….it also means that hundreds of well need to be drilled..there are some 450 wells scattered across Upper Zakum,” he said.

“Zadco has to increase production to 750,000 bpd from one field…you don’t find many fields around the world that produce this much and our challenge is to build capacity and to sustain it…you need to have a very good understanding of the sub-surface—how the reservoir is composed, how it will perform, how it changes geographically, so as you go forward and know where to put the new wells…and that’s really where a company like ExxonMobil can make a huge difference…it is our technical experts, our processes for understanding and planning the reservoir for the next 20 years or so years.”

In a recent study, the UAE Society of Petroleum Engineers said the development plan for Upper Zakum is based on drilling from numerous Well Head Plat form Towers (WHPTs), adding the project might be delayed as it requires much more WHPTs and hundreds of kilometers of new pipelines connecting the towers.

“The increasing demand for oil and gas and the corresponding demand on industrial capacity to engineer, procure and build the necessary facilities has dramatically increased the expected cost of the planned expansion,” it said.

“This market condition has also increased the expected time to complete expansion projects with the consequence of delays in achieving the strategic oil production targets…uncertainty in offshore rig availability and their escalating day rates may also contribute to more delay and rising costs.”

It said other factors that could hold up the project or prompt a change in development plans include the field’s complex reservoir geology, the limited flexibility in the current WHPT scheme and more than expected workovers.

“Sustaining plateau target production rates require recovery schemes that will be difficult and costly with the WHPT concept,” it said.

“Large scale enhanced oil recovery (EOR) applications will be very challenging from WHPTs scattered across the field.”

ExxonMobil's contract involves increasing the field’s capacity by nearly 200,000 bpd. Discovered in 1964 by the Abu Dhabi Marine Oil Operations Company (ADMA-OPCO), the field is spread over an area of nearly 1,200 square kilometers, almost double the area of Bahrain.

It is one of the most complex fields in the oil industry because of high rock porosity and low pressure. This is why BP and Total in ADMA-OPCO joint venture were reported to have refused to invest in the field in the early 1970s.

The study gave no figures on the project’s costs but it was earlier estimated at around $1.5 billion (Dh5.5 billion). Industry sources expect the costs to have surged by more than 50 per cent because of higher construction expenses.