PRODUCTION from the UAE’s Upper Zakum oil field, one of the world’s largest offshore fields, has been cut by 200,000-300,000 bpd from 600,000 bpd because of storage limitations, and output is likely to remain at the reduced level for two months, industry sources say.
The sources say the operator, Zakum Development Company (Zadco), a joint venture of state-owned Abu Dhabi National Oil Company (Adnoc), ExxonMobil and Japan Oil Development Company (Jodco), had slashed production because a depleted field used to store water and contaminants from Upper Zakum had reached its maximum capacity.
This had led to seepage and the buildup of residue in the pipeline from the field to the storage area, forcing the operator to reduce output.
Officials have decided to drill a new well to take the water and contaminants in an estimated two-month project, during which time production will remained at the reduced level, sources said. The export pipeline from Upper Zakum to the Zirku terminal off Abu Dhabi also needed to be repaired, they add.
But the capacity expansion project being undertaken by Zadco remains on track, sources said. Upper Zakum is being expanded to 750,000 bpd by 2015.
Adnoc, Zadco, ExxonMobil and Jodco declined to comment on the production reduction. ExxonMobil holds a 28 per cent stake in the joint venture, Jodco 12 per cent and Adnoc the remainder.
The UAE contains some 98 billion barrels of oil reserves or 8 per cent of the world’s total. Upper Zakum, which lies in deep waters some 50 miles northeast of Abu Dhabi, contains 50 billion barrels of oil reserves and is one of the most geologically challenging fields in the oil industry, which was a factor in the choice of ExxonMobil as a partner in the project despite competition from rival international oil companies for the plum stake in the field.
The consortium has opted to amend its original programme of building additional wellhead platforms and new flow lines in favour of building four artificial islands, the first of which appeared above water level in August 2010, to serve as drilling centres, Adnoc says.
Zadco has established a separate drilling division in collaboration with ExxonMobil to support the island-based drilling programme, the company says. While historically Zadco has drilled to a depth of 10,000 feet, the new technology will allow the joint venture to reach depths of 30,000 feet or more.
Adnoc has said the departure from a conventional drilling programme in favour of artificial islands would cut costs, although analysts say the plan would delay the project since it would take two to three years to complete land reclamation work.
At normal production, Upper Zakum accounted for roughly a quarter of the UAE’s total oil output, estimated at 2.5 mbpd. Upper Zakum and Oman crudes are eligible for delivery against the Dubai benchmark, along with Dubai crude oil.
