The United Arab Emirates, one of the 10th largest oil and natural gas producers in the world, intends to increase its oil production capacity to 3.5 million barrels of oil per day (MMbopd) by 2017 to meet the rising global demand.

“The UAE will also continue to diversify its own energy sources, while advancing viable clean technologies, in an effort to improve energy security and achieve sustainable development,” said General Shaikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, at the World Future Energy Summit.

With the country having one of the highest rates of per capita petroleum consumption in the world, UAE also plans to boost domestic natural gas production over the next few years to meet growing internal demand, according to the U.S. Energy Information Administration.

If domestic energy demand continues to expand at its current rate, the country will become a net natural gas importer in the near future. Furthermore, the United Arab Emirates Energy Minister Mohamed Saif Al Mazrouei stated that the country is consuming far too much energy and may have to raise prices to encourage consumers to change.

“What is sad is that consumption is double or triple the average of the world,” he told Reuters Jan. 22.

The UAE’s electricity output was around 98 billion kilowatt-hours, about one-tenth of Japan’s power output, in 2010. With the country’s population at around 5 million, per capita electricity consumption in the UAE equals to be about two times as much as the Japanese level, according to IEEJ’s report “Energy problems plaguing Abu Dhabi and their implications for Japan.”

As electricity consumption increases, UAE plans to expand its power generation capacity. If the country depends mostly on natural gas for the expansion, then the demand for the commodity will double, according to the report.

It is estimated that UAE’s natural gas demand in 2020 indicates that natural gas supply may have to expand from about 60 billion cubic meters to about 90 billion.

To meet this growing demand, Abu Dhabi is proceeding with gas development projects steadily while diversifying electricity sources and increasing crude oil production capacity, the company recently said in a December media tour.

BP Statistical Review of World Energy 2013 stated UAE’s natural gas production was about 5 billion cubic feet per day (Bcf/d) in 2013. Abu Dhabi is estimated to account for 94 percent of recoverable reserve shares, with the country expected to produce 2 Bcf/d under the recent natural gas development projects.

Therefore, Abu Dhabi should produce up to 6.8 Bcf/d in natural gas in 2020, according to the report. To help this quest, Abu Dhabi National Oil Company (ADNOC) has several projects in the works, including:

Gas Projects

Shah Sour Gas Field The $10 billion Shah gas field, located in inland 112 miles southwest of Abu Dhabi, began development in 2007. This project, originally between Abu Dhabi National Oil Company (60 percent stake) and ConocoPhillips (40 percent stake), launched to help satisfy the country’s growing domestic gas demand. ConocoPhillips withdrew from the project in 2010, so ADNOC selected Occidental Petroleum as development of the project in February 2011. Sour gas from the field contains hydrogen sulfide content of 23 percent and a carbon dioxide content of 10 percent. The project is expected to separate 500 million cubic feet per day (MMcf/d) in natural gas and 50,000 barrels per day in natural gas liquids and condensate from 1 Bcf/d in sour gas. First phase of the project entails digging 32 production wells in 2015.

Bab Sour Gas Field The Bab gas field, situated 93 miles southwest of Abu Dhabi, is a project between Royal Dutch Shell plc and ADNOC. Sour gas from the field reportedly includes a hydrogen sulfide content of 30 to 50 percent and a carbon dioxide content of 15 percent. While sour gas output is expected at 1 Bcf/d, no natural gas recovery volume estimate has been finalized.

Hail Sour Gas Field In 2011, Cosmo Oil Company was awarded a concession for crude oil development. Situated 62 miles west offshore Abu Dhabi, the Hail gas field was scheduled to undergo development bidding in May 2012 along with the Bab gas development. Sour gas from the formation includes a hydrogen sulfide content of 14 to 15 percent and production is expected to reach 400 to 600 MMcf/d in sour gas.



What’s Next?

Abu Dhabi plans to produce a total of 3 billion cubic feet per day in sour gas at the Shah and Bab onshore and other gas fields to increase natural gas output by 1 Bcf/d; and increase its oil production from onshore fields to 1.8 MMbopd.

With ADNOC planning to increase its oil capacity from 2.7 to 3.5 MMbopd by 2017, a company spokesperson at the media tour said, many are questioning how this goal will be achieved since the 75-year concession, which covers the oilfields run by the Abu Dhabi Company for Onshore Oil Operations, expired.

ADCO is now wholly operating the fields on behalf of ADNOC in the absence of international partners. ADNOC held a 60 percent stake in the partnership while the five companies held the remaining 40 percent.

Abu Dhabi has produced at its main onshore oil fields under concession agreements with BP, Shell, ExxonMobil, Total and Portugal’s Partex Oil & Gas, or their predecessor companies, since Jan. 11, 1939. ADNOC became a partner in the 1970s, joining with the international companies to form Abu Dhabi Co. for Onshore Oil Operations, or ADCO. Originally, the partnership was responsible for extracting 1.5 million barrels a day of Murban grade crude. With the government in charge of the emirate's oil reserves and its extraction for the first time since the discovery of oil in the emirate, Abu Dhabi's oil industry will take on a new shape. ADNOC will continue to produce and market oil from the fields through an operating unit, drawing an end to its partnership with BP plc, Shell, Exxon Mobil Corp. and Total SA, the company spokesperson verified.

ADNOC has begun evaluating bids for its onshore oil concessions that will come into effect in January 2015. These same companies are bidding for new production agreements to allow them to continue to pump oil in the emirate, but additional companies, from Europe and Asia, have been invited to compete for oil-development projects.