GCC embraces power of sour
Demand for sour gas in the region is on the rise and the UAE, with its pioneering projects in Abu Dhabi, is leading the bloc in sour gas production
Driven predominantly by demand for power and infrastructure needs, sour gas projects in the GCC have mushroomed over the years.
However, the utility of sour gas – demand for which is expected to double in the region in the ‘coming years’ as per an industry estimate – is not just limited to electricity generation. The high quality sulphur, which is produced as a by-product from sour gas, is also vital to a range of industries, from pharmaceuticals to garments, experts say.
“Sour gas is ultimately natural gas that contains significant H2S (hydrogen sulphide) and/or CO2. Once produced, sour gas is processed by separating out the H2S / CO2. The output is natural gas that can be used as a fuel source in power and energy intensive industries, or as a feedstock in petrochemicals. The supply and demand principles of sour gas are the same as those of natural gas,” Saji Sam, partner at Oliver Wyman, a consultancy firm, said.
Despite declining global crude oil prices, GCC governments and NOCs alike are pressing ahead with their plans of increasing sour gas production. ‘The UAE, in particular, is becoming the centre of international sour gas conditioning and despite oil price fluctuations sees no serious downturn in technical activity’, organisers of the Sour Oil & Gas Advanced Technology (SOGAT) say on its website.
The UAE is undoubtedly leading the bloc when it comes to the sour gas sector, and the number of projects the country has initiated to produce sour gas from the rich fields in Abu Dhabi, are surely ‘pioneering’. “We are very happy with the current level of production in our fields, Shah Gas being one of them. I think there is room to grow in this business,” H E Suhail Mohamed Al Mazrouei, UAE Minister of Energy, told Oil & Gas Middle East during ADIPEC in November. When asked about the UAE’s plans of investing in more sour gas projects in future, he said, “That is a question you could ask ADNOC.”
Truly the Abu Dhabi National Oil Company (ADNOC) is right at the forefront of the UAE’s industrious sour gas sector and its Shah gas project is by far the most productive in the country, if not the GCC. The project located in the Western Region of the emirate of Abu Dhabi and about 210km southwest of Abu Dhabi city, has been developed by Al Hosn Gas, a 60-40 joint venture between ADNOC and American giant Occidental Petroleum.
In October this year the Shah gas project - which was producing 500mn cubic feet (mcf) of gas per day, containing about 25% of H2S - hit optimum capacity and observers said it would ‘contribute significantly to the energy needs of the UAE for over 30 years’. “We started the project early this year and we ramped up. We are in now full production of one billion cubic feet (bcf) per day,” Saif Ahmad Al Gafli, CEO, Al Hosn Gas, said at the time.
Oil and gas industry services provider Honeywell has one of the biggest installations in Al Hosn Gas. “The project is successfully up and running. Honeywell has worked very closely with Al Hosn since early days. Considering the challenges of sour gas production, we wanted to make sure that we are part of every stage of the project’s (Shah gas) development.
More than a customer-vendor relationship it was more of a close partnership,” Yiannis Bessiris, Regional Business Leader - Advanced Solutions, Honeywell, told Oil & Gas Middle East.
“It gave the benefits. The project came online on time. There was operational excellence from Day 1. We are proud that we did that and about our partnership with ADNOC,” Bessiris said.
Apart from the Shah Gas field, ADNOC’s Shuwaihat gas field is another of its primary reserves of sour gas, currently in the nascent stages of production. ADNOC is developing the field - located 25km west of Ruwais in the Western Region of Abu Dhabi emirate – along with Austria’s OMV, and has earlier this year also taken on board German oil and gas producer Wintershall.
The Shuwaihat condensate field, which contains an estimated 20% of H2S in its gas, is the first major contract in the GCC for Wintershall, a wholly-owned subsidiary of German chemical giant BASF. ADNOC has mainly collaborated with Wintershall given the latter’s expertise in working on sour gas projects.
“We are working in about ten sour gas field projects in Germany, our home turf. We also have chemical drilling expertise from our parent company BASF. ADNOC has been picking their partners quite carefully and has put their trust on us. Therefore it was a milestone for us,” Mario Mehren, Wintershall’s CEO, told Oil & Gas Middle East during ADIPEC.
“We have finished the first appraisal well. We are about to start the second, which is going to be an offshore well; a first for Abu Dhabi,” Mehren revealed.
With regards to the update on the status of the Shuwaihat project, Uwe Salge, general manager Middle East, Wintershall, further elaborates: “At this stage we are happy with the results. Next year we will start with the second appraisal well which we expect to complete by 2017, which is when we will go for Shuwaihat 6 and then later on Shuwaihat 7. We will have little analysis phases in between. As we know that producing sour gas has its complexities, we need to complete a sequence of wells to fully understand what volumes are behind this. That would determine the development concept which we will plan in 2017.”
It is widely known that producing sour gas, especially in the GCC, is an expensive affair and involves the use of chemical methods. With regards the cost of the Shuwaihat project, Mehren said, “Producing sour gas is challenging and has to be done in a manner that is profitable to both companies (ADNOC and Wintershall). It is too early to talk about costs. We have just find with the first appraisal well, we have to finalise the analysis of that. We are more on the technical phase of evaluating, of getting to know the reservoir, the conditions that we have them. After that we talk about development and only then can we have an idea about costs.”
Even though the Shuwaihat gas field is not as big as the Shah, it is a productive asset for ADNOC, mainly because of smaller gas reserves that have been found nearby. “The Shuwaihat project may not necessarily produce as big as the Shah project. But we see that Shuwaihat also has some sister reserves. So if we are successful in the first phase of developing Shuwaihat, finding the right innovations and tools to produce cheaper, efficient and sustainable sour gas, then we can use the similar results to extract from the sister reserves. We would also be adding a lot of volume and substance to it. Although this might not happen soon, but eventually I hope it will be,” Salge further revealed.
The Bab gas field – located 150km southwest of Abu Dhabi city - is yet another major onshore sour gas production facility for ADNOC, to develop which it tied up with global oil and gas giant Shell. ‘The level of interest in the Bab project is currently very high and this field presents huge and complex technical challenges with the CO2 content in the feedgas at approximately 10%, and the H2S content varying from 30-40%. Targeted production is just over 500mcf per day of sales gas’, SOGAT organisers say.
Also worth mentioning is ADNOC and Occidental’s Hail offshore gas field, which is located about 100km west of Abu Dhabi city. ‘Hail is another potential sour gas project in Abu Dhabi, currently at the feasibility study phase. It is expected to produce 400-600 mcf per day of sales gas. The H2S content of this offshore field is 15%, which is lower than the onshore fields, but the offshore location, albeit in shallow water, may increase production costs,’ the SOGAT website says.
When it comes to Saudi Arabia, the Kingdom is not far behind in sour gas production, and Saudi Aramco, the world’s largest oil producer, is at the helm of affairs. Karan is the first major non-associated sour gas facility of Aramco, that was developed in 2011. The development produces an estimated 1.8bcf of gas per day offshore, which is then pumped for processing onshore at Aramco’ Kursaniyah gas plant. Karan’s gas is however low on sour content, containing just 2% of H2S and 8% of CO2.
Additionally, Aramco has built the Wasit gas plant to process gas from the offshore Arabiyah and Hasbah non-associated sour gas fields. Wasit’s total gas processing capacity is 2.6 bcf per day to produce 1.75bcf per day of sales gas. The H2S content of Wasit’s gas averages 4-8%, and the sulphur recovery section includes four SRUs (Sulphur Recovery Units) with a total capacity of 2,400 tonnes per day (t/d).
Wasit is considered important to Saudi’s generation capacity, especially during the peak summer months. ‘Start-up is due to begin this year with full production by 2016’, SOGAT says, although earlier media reports said ‘the plant is not expected to start processing non-associated gas before the end of the year due to technical difficulties’.
Aramco has also developed Fadhill, a greenfield development located 30km west of the city of Jubail in the Eastern Province of Saudi Arabia. The sour gas processing plant has been designed to process additional gas from the Kursaniyah and Hasbah sour gas fields. Fadhili’s arget production has been increased to 2.5 bcf per day, with start-up scheduled for late 2018. Aramco has awarded oil and gas services company Petrofac the engineering, procurement and construction (EPC) contract for Fadhili.
Qatar, the world’s largest natural gas producer, largely depends on its North Field natural gas reserve for producing sour gas. ‘On the Qatari side of the North Field, gas is brought ashore to the massive complex at Ras Laffan. Gas production will rise to 2.2 million t/a (tonnes per annum) by 2018 as more gas is processed’, SOGAT says.
The new Barzan gas project, developed by RasGas and Exxon and designed to provide gas for domestic use, is now in start-up, with Train 1 commissioned and Train 2 due to start up later this year or early in 2016. Barzan’s gas contains an estimated 20% of H2S and it currently produces an estimated 6.2bcf per day.
The Sultanate of Oman too is pressing ahead with its sour gas production and has two major sour gas processing projects. One is at Yibal Khuff Sudair and is a deep oil and associated sour gas deposit beneath an existing field, with an H2S content of 3%. Being developed by the Petroleum Development Oman (PDO) approximately 350 km southwest of Muscat, the 85,000 t/a sulphur recovery plant is due for completion this year, and commissioning of the gas project is expected in 2019. PDO has also awarded Petrofac the EPC contract for Yibal Khuff.
Oman’s other major sour gas project is the Rabab Harweel Integrated Project, one of the world’s largest miscible sour gas injection projects, for which PDO won the Best Oil and Gas Mega Project at ADIPEC 2015. The project in southern Oman is being developed jointly by PDO and Occidental, and is expected to produce 173mcf per day of gas containing about 4% of H2S, by 2019.
“In the context of the overall supply-demand situation, GCC countries have been developing their sour gas reserves, both on- and off-shore. Operators are overcoming the challenges including deep drilling and advanced technology to meet the specific requirements of some fields and the infrastructure necessary to handle and process the toxic and corrosive sour gas,” Sam, of Oliver Wyman, comments.
The viability of a sour gas project in the GCC depends on alternate sources of natural gas that it competes with. Development of sour-gas projects is also determined by the energy strategy of a country.
“For example, although sour gas development may not necessarily be economically competitive compared to alternate sources of gas supply, its development could still mean longer term energy security and diversification, employment creation, and localisation,” Sam further says.
In order to meet the needs of rising population and the associated support infrastructure, the power capacity of the region has to double by 2030. “In that regard,” Bessiris of Honeywell says, “I would say that there is huge demand for sour gas.”