New shallow gas discovery likely to play pivotal role in UAE gas market

The United Arab Emirates (UAE) has announced the discovery of 80tn cf of shallow gas resources in place within the area between Saih Al Sidirah and Jebel Ali in the Emirates of Abu Dhabi and Dubai respectively, which will help the nation meet its goal of achieving gas self-sufficiency and plans to transition from a net importer of gas to a potential net exporter.

The announcement was made during the signing of a strategic cooperation agreement between the Abu Dhabi National Oil Company (ADNOC) and Dubai Supply Authority (DUSUP) to continue to explore and develop shallow gas resources in this area in a joint project named ‘Jebel Ali’.

The discovery of the 80tn cf of shallow gas resources was made within an area of 5,000 sq km between the two emirates, with ADNOC drilling more than 10 exploration and appraisal wells – the first time the company has explored for hydrocarbon resources in Dubai. ADNOC is utilising both conventional and unconventional drilling and completion technologies and methods to access the trapped gas, including horizontal drilling and hydraulic fracturing to enable optimal productivity while reducing the number of drilling rigs required. The gas produced will be supplied to DUSUP, to support Dubai’s economic growth ambitions and enhance its energy security.

As part of ADNOC’s 2030 strategy, the company also plans to tap gas from its gas caps and substantial unconventional gas reserves, as well as new natural gas accumulations, which will continue to be appraised and developed as the company pursues its exploration activities.

The discovery announcement came less than three months after Abu Dhabi’s Supreme Petroleum Council (SPC) announced increases in hydrocarbon recoverable reserves of 7bn barrels of oil and 58tn cf of conventional gas, moving the UAE from seventh to the sixth position in both global oil and gas reserves rankings with a total of 105bn barrels of recoverable oil, 273tn cf of conventional gas and 160tn cf of unconventional gas resources, says ADNOC.

According to Wood Mackenzie, the Jebel Ali discovery is ‘hugely significant’ for the UAE. Commenting on the news, Liam Yates, an analyst on its Middle East upstream team, the find ranks as the largest global gas discovery since Galkynysh (South Iolotan), the Turkmen field discovered in 2005. ‘The shallow nature of the find will mean that development costs will be much lower than some of Abu Dhabi’s sour gas resources,’ he notes. ‘A discovery of this scale will be a clear priority for development, but the timing will be dependent on where it fits into the UAE’s gas market. Large volumes of gas are associated with oil production, which is on the rise. In addition, ADNOC is pushing ahead with other major gas developments, such as the Hail and Ghasha project. The UAE will also need to honour its gas import commitments from the Dolphin project. But longer term, the field is likely to play a pivotal role in the UAE’s gas market and could lead to additional gas exports from the country.’

Meanwhile, Rystad Energy cautions that it is too early to conclude on Jebel Ali’s total volumes considering the find covers an area of 5,000 sq km and will need more appraisal wells to pinpoint the exact extent of the hydrocarbon spill point. However, the market analyst adds: ‘Even if this new discovery turns out to have only 8tn cf of recoverable resources – one-tenth of the preliminary official estimate – that would still be enough to enable the UAE to become energy independent by 2030, potentially removing its reliance on import volumes from neighbouring countries like Qatar. We also see a decline in domestic gas demand after 2030 that will further limit the need for imports.’

Photo: ADNOC