The UAE and its neighbouring sultanate, Oman, have embarked on coal-powered plant projects to boost electricity capacity, aware that demand for gas would soon outstrip supply.
In the UAE, Abu Dhabi National Energy Company (Taqa) is now studying a Dh3.67 billion coal-fired power plant in the capital. The study, according to project information specialist ProLeads, is slated to be completed in the second quarter of next year.
And Dubai Electricity and Water Authority (Dewa) Managing Director and Chief Executive Saeed Mohammed Al Tayer told Emirates Business construction of a Dh6bn power station to generate electricity using hydrogen extracted from coal may begin in August this year.
Meanwhile, Oman is earmarking Dh7.34bn for two coal-powered plants. ProLeads figures seen exclusively by Emirates Business show the Sultanate has two coal projects in the pipeline, one is owned by Petroleum Development Oman and the other by Oman Power and Water Procurement Company. Studies on both are expected to be completed in the second quarter of next year.
Coal is a popular but dirty source of power. According to World Wide Fund, coal is the most carbon-rich of all fossil fuels. But it said burning coal generates 70 per cent more carbon dioxide than natural gas for every unit of energy produced.
Dewa said although electricity will be generated from coal, it will use a technology that aims for zero emissions and the entire process will be done outside the emirate.
Gas is the ideal feedstock for power and desalination plants because it is more cost-efficient and cleaner than coal, diesel, medium fuel oil, LPG, crude oil or kerosene but the shortage of it has pushed Gulf countries to search for other sources.
Despite sitting on top of some of the world's largest gas reserves, sources say some Gulf states face blackouts and lowered crude production due to a growing shortage of gas and insufficient power generation capacity.
Last summer, Gulf crude production dropped by 600,000 barrels per day as injection gas was sent instead to electricity generation plants during peak demand. The slump happened mainly from the UAE, which suffered from a one billion cubic feet per day natural gas deficit. The oil output drop though did not last long enough to have any major impact on global oil needs.
Opec Secretary-General Abdallah Al Badri said the diversion of gas to power plants originally intended for re-injection happened for only "a few weeks of the year".
"It does not mean there will be a shortage in oil production," Al Badri said.
Abu Dhabi does not yet face power cuts due to lack of gas as Adnoc is still able to divert its re-injection gas.
However, it may experience blackouts within four years if it fails to build power capacity by 2012. Dubai may also suffer, which could slow its building projects.
Abu Dhabi will either have to build a new plant or extend the lifespan of current ones, director of planning and studies at Abu Dhabi Electricity and Water Co, Keith Miller, told a recent conference in Abu Dhabi.
He said Abu Dhabi could expect to suffer a 774MW shortfall in power capacity by 2012. And without any new plants being developed, the shortfall is to reach 2,000MW just one year later.
Oman has begun to look elsewhere for supplies. The most obvious of which is will flow through the Dolphin Energy pipeline. Though significant, the 200 million cubic feet a day of gas will only provide partial relief to the Sultanate's looming gas shortage. Muscat has looked at importing gas from other neighbours, including Iran.
3.67: Billion dirhams is the cost of a study that is assessing the viability of a coal-fired plant in the capital.