World View
ADNOC expects to unlock 1 Bcf/d from the Ruwais Diyab Unconventional Gas Concession located 200 km west of Abu Dhabi city with operating partner Total. (Source: ADNOC)
Permian in the Middle East? UAE stepping up to replicate US shale boom
The UAE’s unconventional resources show promising results, with production potential comparable to the most prolific North American shale plays.
Faiza Rizvi, Associate Editor
I

n November 2020, Abu Dhabi National Oil Co. (ADNOC) commenced gas production from its unconventional gas field—a milestone that helped the world’s third largest oil producer inch closer toward its gas self-sufficiency goal by 2030.

In an exclusive interview with E&P Plus, Mohamed R. Al Zaabi, senior vice president of unconventional and exploration with ADNOC, discussed the tremendous potential of unconventionals in the United Arab Emirates (UAE) and his company’s commitment to working with international partners to develop the UAE’s capital city, Abu Dhabi’s unconventional resources.

E&P Plus: Can you give us a macro outlook on the potential of Abu Dhabi’s unconventional oil and gas resources?
Al Zaabi: Abu Dhabi has abundant unconventional oil and gas recoverable resources that will support ADNOC’s drive toward gas self-sufficiency for the UAE and provide long-term energy security to the UAE and our global partners. As we continue to appraise our unconventional resources estimated at 22 billion barrels of unconventional oil and 160 Tcf of unconventional gas, we see very promising results, with production potential comparable to the most prolific North American shale oil and gas plays.

In addition, we see great prospects beyond this area including in our tight oil and gas reservoirs, which we are further exploring and appraising.

The potential for an unconventional oil and gas industry in the UAE is evident, and we are committed to working with international partners to develop Abu Dhabi’s unconventional resources to mutually benefit the UAE, its people and our future international partners.

The development of this industry is underpinned by the UAE’s trusted and reliable investment environment, our infrastructure and excellent geographical location.

E&P Plus: Is digitalization playing a key role in unlocking the unconventional reserves?
Al Zaabi: ADNOC is firmly committed to developing Abu Dhabi’s vast unconventional resources and has allocated substantial capital to de-risk these resources over the past few years. This has enabled significant unconventional recoverable resource discoveries through our exploration and appraisal activities covering 25,000 sq km onshore.

Since we began exploring for unconventional resources, we have successfully customized North American unconventional technologies to Abu Dhabi’s reservoir conditions. Doing this has expedited our learning curve, driven efficiencies and reduced our costs.

ADNOC is also using digitalization and artificial intelligence to turn our vast amount of operational information into data that we can use to harness efficiencies. For example, during the pandemic our remote operations monitoring capabilities have enabled us to maintain operations by managing real-time drilling and fracturing, providing sites with technical and decision-making support to bring online our unconventional wells.

The progress we make can be further expedited as we secure strategic value-add partners that bring advanced technology and capabilities as well as deep expertise in unconventionals.

E&P Plus: What are the opportunities for North American companies to tap into Abu Dhabi’s unconventional resources?
Al Zaabi: When you look back, ADNOC launched its unconventional exploration and de-risking program in 2015. Since then, we have announced significant unconventional resources, completed a dedicated gas exploration campaign and produced first gas just two years after we announced the first unconventional gas concession in the Middle East.

This is just the beginning, and we know we cannot maximize the full potential of Abu Dhabi’s unconventional resources alone. We need multiple operators or partners such as was required for U.S. shale basins.

There is huge opportunity for the growth of unconventionals in the UAE; the acreage is contiguous across an area exceeding 25,000 sq km with year-round accessibility, and the proximity to infrastructure and market is a plus in addition to a very efficient permitting process.

Mohamed Al Zaabi headshot
“This is just the beginning and we know we cannot maximize the full potential of Abu Dhabi’s unconventional resources alone. We need multiple operators or partners such as was required for U.S. shale basins.”
—Mohamed R. Al Zaabi, ADNOC
The flexible and customizable commercial terms and work program, allowing partners to work directly with ADNOC to tailor the terms and design of the development with the option to divide it into phases to maximize value and lower risk is also appealing to potential partners.

100% operatorship is another opportunity for international partners, which allows for a flexible and cost-focused operating model. Ruwais Diyab Concession is one example where ADNOC is a 60% nonoperating partner and Total holds a 40% stake but is the operator.

E&P Plus: Explain the role of unconventionals in ADNOC’s broader upstream growth strategy.
Al Zaabi: Abu Dhabi’s unconventional oil and gas resources will make a key contribution to the delivery of ADNOC’s 2030 strategy. For example, unlocking unconventional gas will play an important part in achieving gas self-sufficiency for the UAE. Ruwais-Diyab, our unconventionals gas flagship project with our partner Total, has demonstrated the viability of quickly unlocking gas as we progress toward providing 1 Bcf per day from this concession before 2030.

We are also seeing promising production results across all our oil and gas exploration activities in the Al Dhafra region in the west of Abu Dhabi city where we are conducting sole risk operations.

To support ADNOC’s unconventionals growth strategy, the Integrated Drilling Services [IDS] and fracking capabilities of ADNOC Drilling, ADNOC’s start-to-finish IDS drilling business, will be instrumental in delivering our mandate to unlock the abundant, untapped unconventional oil and gas resources across Abu Dhabi.

As we progress toward ensuring a sustainable and more economic gas supply, we will benefit from our unconventional resources being located near ADNOC’s Ruwais industrial area. This enables operations to leverage ADNOC’s expansive existing infrastructure and enables efficient logistics and operational management while also providing the potential for the future growth of an unconventionals gas industry in the UAE.

E&P Plus: What, according to you, are some challenges that you face in the area of unconventional resource development, and how do plan to overcome those?
Al Zaabi: One key challenge when developing an unconventional oil and gas industry, especially in a conventional resources-rich country like the UAE, is the ability to produce at very competitive costs compared to conventional resources.

Fortunately, we have all the components to ensure unconventionals in the UAE become commercially viable and profitable. In addition to having a laser focus on cost reduction, our early field development economics, based on actual well production results, show competitive costs compared to early play entries in North America and in the region. Critically, our well performance and reservoir quality of our unconventional plays also show lower decline and potentially higher recovery factors.

“As we progress toward ensuring a sustainable and more economic gas supply, we will benefit from our unconventional resources being located near ADNOC’s Ruwais industrial area.”
—Mohamed R. Al Zaabi, ADNOC
The high-value acreage spanning across Abu Dhabi and our OFS [oilfield service] market will positively contribute to reducing the cost of unconventionals and creating synergies across our operations. Leveraging the expertise of our partners will also play an important role in cost reduction.

Our data show that when we reach full field development, our current costs will significantly decrease, and we expect they will be competitive even with the most commercial North American shale plays.