Although the UAE as a whole contains the world’s fifth largest proven oil reserves, some 97.8 billion barrels of crude, Dubai’s oil reserves are meager and mostly offshore. Until a new oil field, Al Jalila, was discovered in 2010, the Emirate had four operational fields: the older, more productive Fateh and Southwest Fateh oil fields and the smaller Falah and Rashid fields. The fields’ main operator is the Dubai Petroleum Establishment (DPE). Approximately 100,000 barrels of crude per day (bbl/d) of oil is currently produced in Dubai, which has reserves of around 4 billion barrels. Since the early 1990s, when production peaked at around 400,000 bbl/d, these reserves have been dwindling. By 2030, they are expected to be completely used up.
At 113.3 billion cubic meters (bcm), Dubai’s natural gas reserves constitute just 2% of the UAE’s total resources. The onshore Margham gas and condensate field is the Emirate’s largest, and began operations in 1984. Margham currently provides Dubai with nearly 4 million cubic meters per day (mcm/d), while offshore fields contribute an additional 2.8 mcm/d. The field is connected to Margham Plant, where raw gas is processed to produce retail condensate. Some of the leftover dry gas is transported to Jebel Ali Port, a major hub for the hydrocarbon trade. The natural gas from offshore oil fields is processed by the state-owned Dubai Natural Gas Company (DUGAS).
Energy consumption across the UAE is rising steeply, with the current 470,00 bbl/d of petrol consumed expected to increase by 27.5% by 2020. Since 2007, the UAE has been consuming more natural gas than it produces, with a shortfall of 10.5 bcm in 2009. Dubai is certainly contributing to this, because natural gas is the feedstock for approximately 95% of the Emirate’s generated electricity. Of the 11 power plants that currently supply Dubai with its 8,721 MW of installed electrical generating capacity, eight are part of the Jebel Ali Power and Desalination Station. The other three comprise the Aweer Power Station, which began operations in early 2012. Some 76% of the electricity generated at both stations is from gas turbines, while the remainder uses steam turbines.
Electricity demand in Dubai rose 9.6% between the summers of 2009 and 2010. Per capita electricity usage in Dubai is currently 20,000 kWh per year, and 130 gallons of water per day. There is no shortfall in electricity supply or demand at the moment; in 2011, the Emirate enjoyed a healthy reserve margin of 2,515 MW. Through 2012 and 2013, however, the research firm RNCOS expects electricity demand in the UAE to rise by a compounded annual rate of 10%. To accommodate this rising demand, Dubai intends to increase its installed generating capacity to 10,000 MW in 2012 from 8,721 MW at the end of 2011. Dubai’s desalination capacity is also keeping ahead of steeply rising demand. Installed desalination capacity in 2011 was 400 million imperial gallons per day (MIGD), compared to 276 MIGD of demand.
SHORING UP SUPPLY
The natural gas with which Dubai powers its grid mainly comes from Abu Dhabi and more gas-rich countries in the region. In 2008, Dubai signed a 15-year liquefied natural gas (LNG) contract with Qatar and its partner Shell for 4.1 bcm of gas each year. The first shipments began arriving in 2010. Known as the Dolphin pipeline, this project links Qatar’s natural gas reserves to Abu Dhabi, Dubai, and Fujairah, from where it extends to Oman. It was the first transnational pipeline in the Gulf region.
Dubai has been receiving 12.2 mcm/d of gas through a pipeline from Sharjah since 1992. A third pipeline from Abu Dhabi delivers natural gas to Dubai’s mature oil fields for injection, thus increasing recovery rates in the fields. The Dubai Supply Authority (DUSUP) is the body responsible for procuring, transmitting, storing, and delivering natural gas within Dubai. The pipeline network constructed and operated by DUSUP has a total length of 460 kilometers, and range from 48” high-pressure gas pipelines to 10” condensate lines.
DUSUP’s end customers include DPE, DUGAS, the Dubai Electricity and Water Authority (DEWA), the Dubai Aluminum Company (DUBAL), and the Emirates National Oil Company (ENOC). As part of its effort to shore up enough natural gas to expand Dubai’s installed electrical generating capacity, DUSUP began importing LNG through a floating storage regasification unit (FSRU) in Jebel Ali Port in 2010. The port, which mainly handles refined petroleum product trading, can accommodate tankers of up to 80,000 tons in capacity.
Although Dubai’s own oil and gas reserves are minor, the Emirate hosts several major international oil services firms. In 2007, Halliburton opened its regional headquarters in Dubai. In 2008, another enterprise opened headquarters in the Emirate: a joint venture between the British-UAE energy services company Petrofac and Mubadala Development, the Abu Dhabi state-owned industrial conglomerate. Shell’s Dubai-based branch, Shell Gas & Power, also provides an array of exploration and production services to companies operating in the region, and offers high-tech digital field capabilities, such as enhanced oil recovery (EOR).
The state-owned refiner and fuel marketer ENOC currently runs Dubai’s only refining facility at Jebel Ali. ENOC announced in mid-2012 that it was planning to increase the facility’s capacity from 120,000 bbl/d to 140,000 bbl/d by the end of the year. ENOC also signed a 10-year financing contract of $100 million for the construction of a 60-kilometer jet fuel pipeline from the bulk liquid petroleum terminal in the Jebel Ali Free Zone (Jafza) to Dubai International Airport. One existing pipeline already links to the airport, but the second pipeline has been planned in anticipation of increased jet requirements, and will be commissioned in late 2013.
ENOC is also busy on the domestic fuel retailing side of its business. Heavy state subsidies on fuel force ENOC and its UAE-owned retail sector competitor Emarat to sell petroleum at a federally capped price of $0.89 per liter for the lowest fuel grade. In 2011, ENOC’s losses amounted to approximately $1.5 billion due to the combination of higher international fuel prices and the UAE-imposed domestic subsidies. The company expects losses whenever global crude oil prices exceed $45 per barrel, according to ENOC Chief Executive Saeed Khoory, which it did for most of 2011.
CLEANING UP THE SCENE
Renewable energies currently contribute little to Dubai’s energy mix, although the Emirate has plenty of potential, especially in solar. By 2030, Dubai’s Supreme Energy Council expects natural gas to contribute just 71% to the Emirate’s energy mix, while solar power will account for 5%. The region’s first solar energy park will soon be constructed in Dubai, according to a government announcement in 2012. Dubai has also been involved in negotiations with Abu Dhabi about developing nuclear power, although nothing definite had been planned as of mid-2012.
Energy conservation is another focus of the Supreme Energy Council. Wrong usage wastes up to half of Dubai’s electricity each year. The Emirate needs more techniques that promote efficient energy usage, such as the district cooling services of Empower, a joint venture between DEWA and TECOM Investments that has a current capacity of 370,000 refrigeration tons spread over 17 projects at residential and business centers in Dubai. Technologies such as consumption-measuring submeters for each apartment unit in a building can also promote energy savings, according to Empower CEO Ahmad E. Bin Shafar, who says Empower has one of the largest such meter installations at the Jumeirah Beach Residence project.
© The Business Year