Fuel for the Future

Fuel for the Future

Despite low oil reserves, Dubai remains the second largest oil producer in the UAE after Abu Dhabi. The Dubai government made significant energy investments during the oil boom years throughout the 1990s, including exploring new methods of enhanced oil recovery (EOR) and gas extraction to maximize its reserves. Other investments have been made in improving the efficiency of the Emirate’s utilities. The Dubai Integrated Energy Strategy 2030 plan has outlined key targets to diversify the Emirate’s energy sources. The drive for renewables has also seen the adoption of unique green-friendly initiatives to reduce the carbon footprint of government buildings.

OIL & GAS

The Dubai Supreme Council of Energy (DSCE), formed under Emiri decree, is the governing body tasked with developing strategy and policy for the Emirate’s energy sector. State-owned Dubai Petroleum Establishment (DPE) is responsible for ensuring that current resources and the exploration of new resources are in line with the Emirate’s long-term energy goals. Today, DPE is responsible for the Fateh, South-West Fateh, Falah, and Rashid oil fields.

In 2010, Dubai announced the discovery of the Al-Jalila Field, a new offshore oilfield, but has yet to provide any estimates of its reserves. Dubai Petroleum Establishment (DPE) operates the small field with production expected to begin in late 2014. The Emirate also recently discovered a deep shale gas reserve, the potential for which is still being assessed.

Emirates National Oil Company (ENOC) owns and operates Dubai’s oil refinery situated in the Jebel Ali Free Zone. ENOC is currently developing a new terminal at the zone that will connect to Dubai International Airport via a 60-kilometer jet fuel pipeline. The new terminal will have a storage capacity in excess of 141,000 cubic meters. The $142 million terminal is set for completion in late 2013, with the pipeline also branching off to Al Maktoum International Airport.

In 2013, ENOC commissioned its newest Fujairah facility. The new facility, with a storage capacity of over 240,000 cubic meters, “will significantly contribute to further establishing the Emirate as a regional hub for the oil and gas trade,” Saeed Khoory, CEO of ENOC, told TBY. The facility, built at a cost of over $100 million, is the 11th terminal of Horizon Terminals Limited, a wholly owned ENOC subsidiary. It is directly linked to the Port of Fujairah and has 10 bays of tanker truck loading tracks and associated facilities.

ENOC is expanding its ENOC Lubricants & Grease Manufacturing Plant (ELOMP), located at Fujairah Port. Spread over an area of 63,500 sqm, ELOMP has a current blending capacity of 100,000 metric tons (MT) of mineral and synthetic lubricant-based oils and 5,000 MT of grease production per annum. “With the completion of its new phases, it will have the capacity to produce over 250,000 MT of lubricants and grease, which is almost 12% of total lubricant production in the UAE,” Khoory told TBY.

ENOC is pursing several green initiatives and has signed an MoU with its subsidiary Emirates Gas (EMGAS) and Dubai Municipality to treat land and sewage waste to generate compressed natural gas (CNG). With its subsidiary, ENOC is setting up an advanced facility to convert waste to bio-methane, and then into CNG. The converted gas will be used as “automotive green fuel,” as Khoory explained to TBY.

ENOC’s phenomenal growth has seen the company develop a strong international presence from Singapore to Africa. ENOC’s terminal business has a network of nine terminals with a presence in the UAE, Saudi Arabia, South Korea, Morocco, Djibouti, and Singapore.

Dubai’s natural gas reserves—113 billion cubic meters (bcm)—account for just 2% of the UAE’s total. The Margham Field is the Emirate’s largest onshore gas field. It began operations in 1984 and covers an area of 60 acres. Margham currently provides Dubai with nearly 4 million cubic meters per day (cm/d), while offshore fields contribute an additional 2.8 million cm/d. Since 2007, the field has been used as a dry gas storage facility, and since 2008 it has been storing imported gas during the winter months. By using Margham as a storage facility, Dubai has managed to reduce the amount of oil products burnt for electricity generation to zero. State-owned Dubai Natural Gas Company (DUGAS) is responsible for managing gas supplies and the Margham Field.

Despite local reserves, increasing commercial and residential demand has led Dubai to supplement the domestic production of gas through imports via an undersea pipeline from Qatar. The pipeline, owned and operated by Dolphin Energy, currently pumps 2 billion standard cubic feet per day (scf/d) from Qatar to the UAE. The pipeline has an overall capacity of 3.2 billion scf/d. In 2011, Dubai began importing LNG at floating re-gasification facilities throughout the summer.

ELECTRICITY & WATER

The Dubai Electricity & Water Authority (DEWA) is the state-owned utilities supplier for the Emirate. Distributing electricity from 11 power stations in Aweer and Jebel Ali, DEWA is the sole provider and distributor of electricity in Dubai.

In 2013, DEWA opened M Station in Jebel Ali. The new station, used for electricity generation and water desalination, is the largest power and water plant in the UAE. The station generates 2,060 MW of electricity and 140 million imperial gallons of desalinated water per day. “M Station facilitates our goal of achieving a total production of 9,646 MW of electricity, and 470 million imperial gallons of desalinated water per day, to meet the current and future needs of the Emirate of Dubai,” HE Saeed Mohammed Al Tayer, Vice-Chairman of Dubai’s Supreme Council of Energy and Managing Director & CEO of DEWA, told TBY.

Dubai’s energy demands have increased on average by 7.1% during 1Q2013. The need for power increased from 2,247 GW in March 2012 to 2,471 GW in March 2013.

DEWA recorded a 3.9% increase in electricity consumption in 2012 when compared to 2011, and demand for electricity grew by 4.3% over the same period. Water consumption increased by 4.1% year-on-year, with demand recording 4.4% growth. Annual electricity consumption reached 31.81 GWh in 2012, compared to 30.51 GWh in 2011. Water consumption increased from 81 billion imperial gallons in 2011 to 84.5 billion imperial gallons in 2012. During winter, demand for power dropped by approximately 50% and demand for water fell by 10%.

In 2012, residential consumers accounted for 27.94% of all electricity consumption and commercial consumers accounted for 47.33%. Residential users represented the highest proportion of electricity consumers, at 73.61%. Commercial users accounted for 24.94%. Residential consumers accounted for 57.82% of water consumption and commercial consumers used 28.17%. Residential users represented the highest proportion of waters consumers, at 80.43%, whereas commercial users accounted for 18.82% of all consumers.

Despite increasing demand, DEWA has maintained strong competitive efficiency results. DEWA has reduced loses in the grid to 3.5%, and water losses to 10.8%. Comparatively, Al Tayer told TBY that electricity losses in Europe and the US are 6%-7%, while water losses in North America stand at 15%.

In 2013, DEWA opened its sustainable building in Al Quoz, the largest government building in the world to secure a LEED Platinum rating. The building’s green features reduce energy consumption by 66% and water consumption by 48%. At 340,000 square feet, the building was constructed under DEWA’s Green Buildings initiative. Recycled materials accounted for 36% of all construction materials used.

RENEWABLES

The Mohammed Bin Rashid Al Maktoum Solar Park Project was announced under the Energy Strategy. The park will have the capacity to produce more than 1,000 MW of solar energy once it is completed by 2030. ENOC is involved in the financing process.

In 2013, the Dubai Global Energy Forum brought together more than 4,000 energy stakeholders from the UAE, the Arab region, and other foreign countries. The forum concluded with six key recommendations: underline the importance of cooperation between the private and public sector, develop a legislative framework that facilities the application of technologies and encourages investment, prioritize energy efficiency, leverage the potential of renewables in the region, highlight the government’s role in national strategies, and take immediate action to conserve resources.

Heeding the call, Dubai Municipality is continuing to invest in solar power and other energy-efficient technologies. The municipality has noticed considerable savings since installing solar street lights, hot-water systems, and other changes to air conditioning use in municipality buildings. The Dubai Municipality has installed a 20,000-liter solar powered hot water system at the Dubai Abattoir. Previously relying on diesel, the power generated through solar panels is expected to save the municipality AED300,000 in 2013. It will take just two-and-a-half years to recover the investment.

With Dubai’s hydrocarbon resources limited, the Emirate will need to look hard at developing new sources of energy in order for it to not overly rely on imports. The UAE’s second-largest Emirate is, however, taking advantage of the situation to promote its green credentials and the use of renewable technologies.