Adnoc finds elixir for its oil fields

Adnoc finds elixir for its oil fields
Tamsin Carlisle, THE NATIONAL

Last Updated: May 08. 2008 10:11PM UAE / May 8. 2008 6:11PM GMT

Abu Dhabi’s quest to become a global hub for energy technology took a step forward yesterday when Linde Group, the German technology company, announced an US$800 million (Dh2.9 billion) joint venture with Abu Dhabi National Oil Company (Adnoc) to extract nitrogen from air and pump it into ageing oil fields.

The initial project of the companies’ “Elixier” joint venture would be among the largest in the world to use nitrogen on an industrial scale to boost oil production.

It calls for the construction of a US$65 million air-separation plant at the Ruwais industrial complex on Abu Dhabi’s coast, which would produce nearly 600,000 cubic feet of nitrogen gas a day for injection into oil fields from late 2009. The plant would also supply liquefied nitrogen and oxygen to industrial customers at Ruwais.

Nitrogen, an inert gas, is the major constituent of air, comprising nearly 80 per cent of the earth’s atmosphere. It is also one of several gases that oil producers around the world are increasingly employing to coax more crude from big deposits with falling production.

Nitrogen’s big advantage for enhanced oil recovery (EOR) projects is its ready availability: air is everywhere. That means the gas can be produced close to big oil fields, avoiding high transportation costs.

The drawback is the cost of the technology used to separate air into its constituent parts, a complex engineering process that involves passing gases through “molecular sieves” as they are cooled, reheated and compressed.

But Adnoc hopes to recoup that cost by pumping more of the natural gas found in oil reservoirs. Without the injection of another gas, such as nitrogen, the natural gas would have to be left underground to maintain the pressure required to push oil into produ­cing wells.

The commercial use of nitrogen for EOR is not new, and in the US dates back to the 1980s.

Still, the economics of such projects were often shaky. Now, soaring oil prices accompanied by rising natural gas prices on international markets are making the technology more economically viable, and much more in demand.

For Linde, the Abu Dhabi project could open the possibility of supplying other customers in the Middle East, said Stefan Metz, a company spokesman.

Indeed, Linde is already building eight air-separation plants at Ras Laffen in Qatar to supply oxygen to the Pearl project, a joint venture between Qatar Petroleum and the Anglo-Dutch energy company Royal Dutch Shell to make petroleum fuel products from natural gas.

In that project, scheduled for completion in 2010, nitrogen from the air-separation process is considered a by-product.

That is not the case with the world’s biggest air-separation plant, located in Mexico. At the end of the last millennium, output from Mexico’s Cantarell oilfield complex, site of one of the planet’s biggest crude deposits, had begun to falter.

In 2000, the country’s national oil company, Petroleos Mexicanos (Pemex), built an air-separation plant to pump out 1.2 billion cubic feet a day of high-pressure nitrogen for injection into the big offshore fields.

Oil production from Cantarell shot up 75 per cent over the next four years, peaking at 2.1 million barrels a day in 2004, when it accounted for nearly half of Pemex’s total output.

Although Cantarell crude production is again declining, billions of barrels of oil were pumped from the fields that otherwise would have stayed trapped below the seabed. Mexico, which had been slow to develop its large gas reserves as it expanded its industrial base, also reaped substantial economic benefits from producing Cantarell’s gas. The parallels between the UAE’s current circumstances and Mexico’s a few years back are striking: both countries are among the biggest oil producers in their respective hemispheres and, indeed, in the world.

The UAE today, like Mexico earlier this decade, is in the midst of an unforeseen industrial and population boom that has increased domestic gas demand faster than supply.

Other GCC countries have similar problems. Mr Metz said Linde was in negotiations to supply nitrogen to several potential new customers in the region, either from the Abu Dhabi plant or from additional air-separation plants that the firm hopes to build.

The German company’s clients already include Borouge, an Adnoc petrochemicals venture with the Austrian chemicals producer Borealis. In 2006, Linde was awarded a contract to build a large ethylene plant at Ruwais. Borouge may soon begin using oxygen supplied by Elixier.

tcarlisle@thenational.ae