ExxonMobil has passed a milestone in its huge Upper Zakum oilfield project offshore Abu Dhabi with the completion of major engineering works, the US company said.
“Civil works are now essentially complete on all islands,” Jeff Woodbury, Exxon’s head of investor relations, told analysts when discussing the company’s fourth quarter earnings on Monday.
“Drilling is ongoing from two of the islands and first production started in November of last year. Facility additions and drilling will continue over the next three years to reach the targeted production plateau” of 750,000 barrels per day.
Upper Zakum is one of the world’s largest oilfields, with an estimated 50 billion barrels in situ.
It is one of Exxon’s most important projects, especially after the Texas-based company chose to concentrate on Upper Zakum and not bid for a share of the new onshore Abu Dhabi concession after it expired at the beginning of last year.
Abu Dhabi National Oil Company (Adnoc) announced last week that France’s Total had been picked as the first partner in Adco, the new operating company for the 15 onshore fields, and as leader for fields covering about two-thirds of its production, which last year was about 1.6 million bpd.
Dropping out of the Adco concession made a dent in Exxon’s production, Mr Woodbury said on Monday.
Exxon’s 2014 production of oil and gas was down nearly 5 per cent on the year, with most of the decline owing to the loss of its 9.5 per cent share of the Abu Dhabi onshore concession, or 135,000 bpd.
Exxon’s fourth quarter earnings were hit by a combination of lower year-on-year production and sharply lower oil prices. Earnings of US$6.6 billion were down $1.8bn, or 21 per cent, compared to the year-earlier quarter. But Upper Zakum – the fourth largest oilfield in the world (second largest offshore) – is a significant project for Exxon, which owns a 28 per cent stake in the operating company, Zakum Development Company (Zadco), with partners Adnoc (60 per cent) and Japan Oil Development Company (12 per cent).
Last year, the Zakum concession was extended by 15 years to the end of 2041 and Exxon negotiated better terms, which included a per-barrel fee of $2.85, according to industry sources.
The $10bn project involves a number of innovative techniques to raise production from 500,000 bpd to 750,000 bpd, including the construction of four artificial “islands” in an oval shape, as well as drilling that goes vertically then horizontally to enable access to reservoirs kilometres from the platform base.
amcauley@thenational.ae
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