Company squeezes Bunduq for all its worth

The Bunduq oilfield produces far more water than hydrocarbons after 35 years of production, but its Japanese operator hopes to keep it pumping for another decade with a costly makeover. Efforts to counter the natural decline of this small offshore reservoir are a dress rehearsal for the larger task that will face the Abu Dhabi National Oil Company (ADNOC) and partners - squeezing more output from giant fields that have been producing for decades.

Tens of billions of barrels are still locked in these fields but sucking them out will require more investment and technology. Enhanced oil recovery is already commonplace in most oil producers around the world, but Abu Dhabi is only just turning to the technology because of the sheer abundance of prolific reservoirs that flow naturally. "We cannot avoid the decline but we can sustain the production," said Yuji Shiozawa, the general manager of Bunduq Company, at a celebration to mark the company's 40th anniversary.

About 70 per cent of output from the Bunduq field, which lies on Abu Dhabi's border with Qatar and is shared equally between the two, is now water, according to Mr Shiozawa. The so-called "water cut" at some of the field's 49 wells is as high as 95 per cent, he added. In their first years of life, most reservoirs produce a pure stream of oil and gas. Mr Shiozawa declined to specify current output of the Bunduq field but analysts last year put it at 16,000 barrels per day (bpd), a far cry from a peak of 50,000 bpd reached in 1989.

Squeezing more hydrocarbons from reservoirs is the focus of most research into petroleum technology around the world and engineers can now expect to extract at least half of the oil from a typical reservoir. Bunduq began producing in 1975 at 30,000 bpd, but by 1984 a sharp fall in output had forced engineers to start injecting vast quantities of water into the sides of the reservoir to force out more oil, in a programme costing between US$300 million (Dh1.1 billion) and $400m.

Today, the company each day injects nearly as much water into the reservoir as the combined oil and water it takes out, Mr Shiozawa said. A second phase of enhanced oil recovery began in 2006, when the company started injecting natural gas into its wells to boost flagging reservoir pressure. The gas injection programme has proved the field's output "is better than expected", Mr Shiozawa said. The company, a joint venture between BP and a consortium of Japanese companies known as United Petroleum Development (UPD), will drill another eight wells this year, on top of the 49 that are already in the field, he said.

Bunduq, at a more advanced stage than most of Abu Dhabi's fields, serves as a place for engineers to test the advanced techniques that will one day be needed at larger fields in the emirate, said Thaddeus Malesa, a Gulf oil analyst based in Dubai for the energy consultancy PFC. "In this particular case it is about preparing themselves for the future and saying 'Okay, we may not be really making a [big] profit on this field … but we may be needing these techniques in the future'," Mr Malesa said. "Any type of field where that is being implemented, costs have gone up."

ADNOC officials have said they would also turn to untapped reservoirs to sustain output. The Abu Dhabi Company for Onshore Oil Operations, an ADNOC joint venture with international companies that pumps crude from onshore fields, has for several years been experimenting with the injection of carbon dioxide and nitrogen into wells to increase oil output. Such methods are estimated to cost several times as much as conventional natural gas injection.

Abu Dhabi Marine Operating Company, a joint-venture that produces oil from some offshore areas, in March started its own study of carbon dioxide injection. With the concession agreements that founded both companies set to expire in 2014 and 2018 respectively, foreign oil companies hoping to participate in Abu Dhabi's oil sector are jockeying to show off advanced but affordable technology. "[Enhanced oil recovery] is certainly a part of that equation," said Mr Malesa. "I think they're trying to attract proven firms that are willing to commit significant capital."

Bunduq's concession, which was granted directly by the Abu Dhabi and Qatari governments and does not include ADNOC as an equity partner, also expires in 2018. Mr Shiozawa declined to offer a prediction on whether it would be extended. [e-mail]