ABU DHABI - Zakum Development Co.

Upper Zakum, a super-giant discovered by ADMA in 1964, is 30 km long and 25 km wide located south-east of Umm Shaif. Its producing JV is owned 88% by ADNOC and 12% by the Japan Oil Development Co. (JODCO). It is one of the most complex fields in the oil industry, because of high rock porosity and low pressure. This is why BP and Total in ADMA

refused to invest in the field, not even after world oil prices quadrupled in 1974, despite the fact that it had up to 50 bn barrels of oil in place.

At the initiative of the national company's then general manager, Krouha, the field was retained by ADNOC and developed with funding provided by ADNOC and JODCO. The Zakum Development Co. (ZADCO) was established in 1978 for this. With Algerian executives then in charge of the state company's management, ADNOC spent $7 bn to develop the field for a targeted capacity of 1m b/d. But this was never reached. The first phase was completed in 1986 with a capacity of 350,000 b/d, involving 35 platforms and 275 wells. The wells included 150 oil producers, 116 water injectors, 8 observers and one for delineation. But the field never produced at that level, an oil glut having led to a collapse of prices in 1986. At times Upper Zakum produced less than 170,000 b/d.

The Upper Zakum crude is 33.9 deg. API with 1.8% sulphur. Because of heavy spending on it, this field is a priority for ADNOC and its production at capacity is allowed at the expense of the other operators. The field's capacity now is 500,000 b/d and ADNOC wants to raise this to 600,000 b/d by end-2005 through further development work. ADNOC's share in ZADCO is to be reduced to 60% and the remaining 28% is to be sold. Bidders for this stake include JODCO, BP, TotalFinaElf, ExxonMobil and ChevronTexaco. After the equity sale, ADNOC could merge ZADCO and ADMA-OPCO to save costs as they share several offshore facilities. It is estimated that through such a merger the two companies would save up to $200m per annum.

Upper Zakum produces gas. This has been supplied since May 1984 to ADNOC's GG-II gas gathering plant, where condensate is extracted and sent to Upper Zakum's Central Supercomplex for a further stabilisation of the field's oil production. In late 1985, the Zakum Central Gas Treatment Plant (CTP) came on stream to supply lean gas to ADMA-OPCO's production complexes at Lower Zakum. The second phase was launched in October 1989. John Brown Offshore of the UK was awarded the main contract for this in February 1992. Work involved the drilling of 100 additional wells, five new platforms, gas lift facilities, a new power plant and new storage tanks. For the gas lift, non-associated gas was to be supplied from the Khuff reservoir at the nearby Abu Bukhoosh field (operated by TotalFinaElf). The field's capacity was raised to 400,000 b/d in January 1994. After further expansion, this rose to 470,000 b/d in the fourth quarter of 1994, to 500,000 b/d in mid-1995 and to 540,000 b/d by end-1998. But the field's capacity now is limited to 500,000 b/d.

In 1994, ZADCO launched a project to install gas compression and dehydration facilities on the nearby Zirku Island. This now recovers associated gas which used to be flared at Upper Zakum. A 40-km, 10-inch marine pipeline supplies the gas to the LNG complex on Das Island. The field's installations and processing plants also serve the other offshore fields which have been taken up by Japanese companies.

The capacity of ZADCO's crude oil processing facilities on Zirku island are to be expanded from 600,000 b/d to 700,000 b/d by 2005. This will be done through a debottlenecking of the three existing trains and a standby unit. Commercial bids for a contract to do a four-phase conceptual study for the project were submitted on Nov. 25, 2002 by Technip-Coflexip, Worley, Foster Wheeler, VECO, Tebodin and Mott MacDonald. JODCO's involvement in ADMA in the 1970s and in Upper Zakum (ZADCO) in the 1980s led to other E&P partnerships with ADNOC. Thus two new ventures were established, one for Umm Al Dalkh field and another for Satah field, both offshore operated by ZADCO.

On Jan. 1, 1994, ZADCO became the operator of the Arzanah offshore field, which was discovered in 1973 and relinquished by Amerada Hess of the US after 20 years of operation. Located in the north-east of Abu Dhabi's waters, the field's capacity is 20,000 b/d, of 44 deg. API oil with 0.8% sulphur.

ZADCO has three wellhead platforms and a central production manifold platform in the field, and a 55 km pipeline carrying the oil to a processing plant on Arzanah island. Arzanah also can produce up to 76 MCF/d of gas. ZADCO has de-commissioned old wellheads, platforms and other facilities at the field.

ADNOC-TotalFinaElf Operations: Total has long been an associate of ADNOC in various projects, both upstream and downstream, including the LNG venture, Gasco and Fertil. It has helped ADNOC at Upper Zakum, in new offshore operations undertaken by the national company since the early 1980s, and in the Abu Bukhoosh field which straddles the median waters with Iran.

Total Abu Bukhoosh Oil Co. (TBK) was formed in January 1973 to develop, operate and own the oil produced from Abu Bukhoosh, discovered in 1969 by ADMA. This is an extension of Iran's Salman field.

TBK was in early 1973 owned 51% by Total (the operator), 24.5% by Charter Oil of the US, 12.25% by Sunningdale Oil of Canada and 12.25% by Amerada Hess. In early 1991, Charter Oil sold 60% of its equity to Total. Thus Total's TBK stake rose to 65.7% and Charter's was cut to 9.8%.

In subsequent ownership changes, Charter Oil and Sunningdale Oil sold their equity to Total whose stake rose to 75% and to Amerada Hess whose share reached 25%. In June 1996 Amerada Hess sold its 25% to Indonesia Petroleum (Inpex) of Japan, after the acquisition was approved by Total and ADNOC. Inpex won the deal in competition with Taiwan's Chinese Petroleum Corp. (CPC) which had bid for the stake since late 1995.

The field, some 45 km north-east of Das Island, came on stream in June 1974. Its capacity was raised in phases to reach 60,000 b/d of (32 deg. API with 1.8% S) oil in 1986, producing from Arab reservoirs. But now the capacity is limited to 30,000 b/d.

During the war between Iran and Iraq, the field's topside facilities were hit by missiles in October/November 1986. As a result production, then averaging 57,000 b/d, stopped. Although the production platform was not hit, the attack caused serious damage to the service platform and other installations.

The field resumed production in May 1987. Its sustainable capacity fell to 40,000 b/d in 1991. Further development work brought the field's capacity to 45,000 b/d by 1995 and later to 60,000 b/d. But the field's sustainable capacity has declined in recent years.

The field also produces 10,000 b/d of condensate and has a large Khuff reservoir of non-associated gas developed by Technip Geoproduction. This is now supplying gas to the LNG complex on Das island. The Khuff reservoir is to be developed further, together with a similar reservoir at Umm Shaif, under a project supervised by ADMA-OPCO, for a production stream of 640 MCF/day from mid-2004 (see ADMA-OPCO profile above).

In 1995, Total began work on a new EOR system, using gas injection techniques developed in a two-year pilot study, with the aim of boosting recovery by 15m barrels over 10 years from the Arab D2 reservoir. A series of horizontal injection wells were drilled in 1996, with locations optimised through 3D seismic studies.