ADNOC signs deal with ExxonMobil, Inpex to raise Upper Zakum output

ADNOC signs deal with ExxonMobil, Inpex to raise Upper Zakum output
Darren W Woods, chairman and CEO of Exxon Mobil Corporation, Sultan Ahmed Al Jaber, UAE Minister of State and group CEO of ADNOC, and Toshiaki Kitamura, president and CEO of INPEX, at the signing ceremony in Abu Dhabi on November 14th.
Published: 26 November 2017 - 2:37 a.m.
By: Indrajit Sen

The Abu Dhabi National Oil Company (ADNOC) has recently announced it has entered into a partnership agreement with ExxonMobil Abu Dhabi Offshore Petroleum Company Limited and Japan’s INPEX Corporation (INPEX), to increase production capacity from the Upper Zakum oilfield to 1mn barrels per day (bpd) by 2024.

Under the agreement, ExxonMobil and INPEX have been granted a 10-year extension for the concession, which was due to expire on December 31, 2041, until December 31, 2051.

The agreement was affirmed at a ceremony, on November 14thon the sidelines of ADIPEC, attended by Dr Sultan Ahmed Al Jaber, UAE Minister of State and chief executive officer of ADNOC Group, Darren W Woods, chairman and chief executive officer of Exxon Mobil Corporation, and Toshiaki Kitamura, president and chief executive officer of INPEX.

“ExxonMobil and INPEX, alongside our other partners, have played an important role in the development of our oil and gas assets. This agreement is another milestone in our efforts to forge partnerships that bring technology, expertise and capital aimed at delivering greater economic value and levels of recovery from our resources,” Al Jaber was quoted as saying in a press release.

The Upper Zakum oilfield, located offshore Abu Dhabi, is the second largest offshore oilfield and the fourth largest oilfield in the world. Oil was first discovered in 1963 and ADNOC took the decision, at its own risk, to develop the field, in 1977.

Subsequently, in 1978, JODCO, a wholly-owned INPEX subsidiary, partnered with ADNOC in developing the field, followed by Exxon, in 2006. In the same year, the Upper Zakum joint venture partners began studying options to increase production capacity from 500,000 barrels per day to 750,000 barrels per day, eventually pursuing the plan to use an innovative artificial island-based development combined with extended-reach drilling technology to increase recovery and minimise infrastructure.

The megaproject involved the construction of four artificial islands in shallow water to create what is effectively an onshore environment in the offshore field.

Unlike the initial Upper Zakum development, which comprises around 450 wells and more than 90 platforms, the islands provide a large enough footprint to accommodate drilling rigs and house drilling and production equipment and personnel centrally in offices and living quarters, at lower cost and with enhanced safety and comfort for workers. The ongoing costs associated with platform jacket maintenance and satellites are eliminated.

“This agreement represents a new milestone for Abu Dhabi’s oil production and demonstrates ExxonMobil’s long-term commitment and partnership with the UAE,” Woods of ExxonMobil said. “We look forward to continuing our successful efforts to increase production capacity from Upper Zakum. By leveraging the strengths of the Upper Zakum joint venture partners, we are able to maximise the value of available resources.”

Kitamura said: “This outcome, in part, is a testament to the unwavering long-term partnership that INPEX has built and maintained with Abu Dhabi, as well as INPEX’s commitment to the development of the Upper Zakum oilfield since 1978. I am confident this plan will contribute to the energy security of Japan and prove to be beneficial for all stakeholders for many years to come.”

The development will continue to use extended-reach drilling and completion technologies that have proven effective in increasing offshore production.

Extended-reach drilling is about tapping into reservoirs from a distance, drilling first vertically, then drilling at high angle to access the reservoir target and finally drilling horizontally in the reservoir section to maximize reservoir access and recovery.

Through extended-reach drilling, the man-made islands at Upper Zakum avoid the need for additional platforms with costly offshore operations, and instead enable cheaper land-based drilling operations. Extended-reach drilling adds further value to drilling operations by reducing the need for costly subsea equipment and pipelines.

The development will also utilise reservoir characterisation and modelling techniques, as well as modularly expanding existing infrastructure and facilities to maximise capital efficiency and lower costs.

ADNOC and its partners have applied uncertainty modelling in the development of the Upper Zakum offshore oilfields, in challenging carbonate geological conditions, to prepare the ground for optimal value creation in the long term.

In recent years, the Upper Zakum development has set several drilling records in the UAE, including the longest well at 35,800 feet measured depth.

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