Industry Trend Analysis - Sour Gas To Ease Import Reliance - SEPT 2017

BMI View : Sour gas developments in the UAE will significantly erode import demand, depriving the global LNG market of an important pillar of medium-term demand growth.

The Abu Dhabi National Oil Company (ADNOC) has plans to invest USD20bn in the development of the North West Area project, comprising the Hail, Ghasha, Delma, Nasr and Shuwaihat sour gas fields. The project is in the early stages, with the front-end engineering and design (FEED) contract yet to be awarded. However, ADNOC estimates a cumulative resource base of around 142bn cubic metres (bcm) for the five fields combined and plateau production of 10bcm a year.

Sour gas resources are higher cost and more technically challenging to develop. The gas contains a large cut of hydrogen sulphide and carbon dioxide, which corrodes equipment and infrastructure and demands a high degree of processing. However, the UAE has garnered considerable experience in producing sour reserves. The emirates' Shah sour gas development, discovered in the 1960s, is the largest of its kind, globally. It was brought on stream in 2015 and is now producing at peak capacity. The operator Al Hosn Gas - a joint venture between ADNOC and Occidental Petroleum - has plans to increase output by 50%.

Sour Gas Offers Upside Risk
UAE Dry Natural Gas Production Forecast, bcm
e/f = BMI estimate/forecast. Source: EIA, BMI

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