The rigs will be deployed on artificial islands at the offshore Zakum field. (Image source: Adobe Stock)

ADNOC Drilling has been awarded a contract worth around US$733mn by ADNOC Offshore, for three next-generation island drilling rigs to be used in the drilling and completion of wells on artificial islands at the offshore Zakum field

The rigs, which are due tol be delivered in 2026, will be constructed by Honghua Group (HH), and will incorporate industry-leading technology and automation, harnessing AI, digitisation, and advanced technology in their design and operation. They will leverage real-time condition, performance and utilisation data to create actionable insights, enhancing rig performance and leading to improvements in safety and well delivery times.

The rigs will be built to deliver extended reach drilling (ERD) as well as having the capability of walking between wells, so not needing to be dismantled to be moved, and thereby improving efficiency and safety while reducing costs and emissions.

Advanced rigs

Abdulrahman Abdulla Al Seiari, chief executive officer of ADNOC Drilling, said, “These new island rigs will be the most advanced in the world, embracing artificial intelligence, the most tranformative technology of our generation. Our partnership with HH will amplify the creativity and ingenuity of our industry as we design and build these rigs of the future that drive efficiency and safety and deliver exceptional value for our customer ADNOC Offshore.”

Tayba Abdul Rahim Al Hashemi, chief executive officer of ADNOC Offshore, said, “This award will strengthen our partnership in the future as we work together to harness AI and innovation to maximise energy, minimise emissions and unlock significant value for stakeholders.”

Since the fourth quarter of 2021, ADNOC Drilling has invested more than US$2.2bn in building one of the largest integrated drilling fleets in the world, which is now expected to total at least 148 by 2026, including the three new rigs.

Synergy Consulting discusses the advantages and challenges of e-fuels, and how a favourable environment can be created for their growth

E-fuels, or electro fuels, are synthetic fuels produced using electrolytic hydrogen. They are considered low-emission fuels when both their hydrogen and carbon inputs are derived using methods that result in minimal life-cycle greenhouse gas emissions. The production of e-fuels involves combining hydrogen with other elements to create different types of fuel products, each with specific applications and infrastructure requirements. Various different fuel types can be produced along this basic route.

Different fuel products can be further categorised by their ease of use. Drop-in e-fuels such as e-kerosene, e-diesel and e-gasoline are compatible with existing refuelling infrastructure and can be blended with limited constraints with petroleum-derived counterparts. By contrast, alternative e-fuels such as e-ammonia and e-methanol require investments in distribution infrastructure and end-use equipment to enable their use in the transport sector.

These types of fuels present yet another avenue in our quest towards a cleaner future by reducing greenhouse gas emissions in the energy and transportation sectors given that they utilise renewable electricity for their production. Drop-in e-fuels offer an easier transition due to their compatibility with existing infrastructure, whereas alternative e-fuels, despite their potential, require significant upfront investments.

E-fuels offer significant advantages in terms of reducing greenhouse gas emissions and utilising existing infrastructure, but they also face substantial challenges, particularly related to production costs, energy efficiency, and the need for substantial investments in new infrastructure. Balancing these factors is essential for the successful development and deployment of e-fuels.

• Reduction in greenhouse gas emissions: E-fuels can significantly lower life-cycle greenhouse gas emissions when produced using renewable energy sources and sustainable carbon capture methods
• Compatibility with existing infrastructure: e-fuels like e-diesel, e-gasoline, and e-kerosene can be used with existing refueling and distribution infrastructure, reducing the need for significant changes or new investments
• Energy storage and transport: can store energy from intermittent renewable sources (like wind and solar) in a stable, transportable form, addressing the challenge of renewable energy storage
• Energy security: By producing these fuels domestically, countries can reduce their dependence on imported fossil fuels, enhancing energy security

However, there still exist significant challenges in a greater adoption of such fuels. The current cost of producing e-fuels is relatively high compared to conventional fossil fuels due to the energy-intensive nature of the processes involved and the need for advanced technologies.

The overall energy efficiency of e-fuel production can be low, as significant energy is required for electrolysis and subsequent synthesis processes, leading to higher overall energy consumption.

In addition, alternative e-fuels such as e-ammonia and e-methanol require new investments in distribution and refuelling infrastructure, as well as modifications to end-use equipment, posing a financial challenge. Many technologies related to e-fuel production are still in the development or early commercialisation stages, requiring further research, development, and scaling up to become viable.

Given these challenges, accelerated deployment of e-fuels thus requires a comprehensive approach that includes policy support, infrastructure investment, cost reduction of key technologies, R&D promotion, and exploitation of synergies with other sustainable technologies.

Integrating e-fuels with biofuels and carbon capture utilisation and storage (CCUS) can lead to maximising benefits.

By addressing these areas, host countries and governments can create a favourable environment for the growth of the e-fuel industry, driving down costs and making e-fuels a viable alternative to conventional fossil fuels.

This article is authored by Synergy Consulting IFA

The Aramco/Sempra signing ceremony. (Image source: Aramco)

Aramco has further strengthened its position in the LNG global market by signing a non-binding Heads of Agreement (HoA) with Sempra for a 20-year sale and purchase agreement (SPA) relating to LNG offtake of 5.0 million tonnes per annum (Mtpa) from the Port Arthur LNG Phase 2 expansion project

Aramco’s will also potentially have a 25% participation in the project-level equity of Phase 2.

Nasir K. Al-Naimi, Aramco Upstream president, said, “We are excited to take this next step into the LNG sector. As a potential strategic partner in the Port Arthur LNG Phase 2 project, Aramco is well placed to grow its gas portfolio with the aim of meeting the world’s growing need for lower-carbon sources of energy. This agreement is a major step in Aramco’s strategy to become a leading global LNG player.”

Port Arthur LNG is a natural gas liquefaction and export terminal in Southeast Texas with direct access to the Gulf of Mexico. The Port Arthur LNG Phase 1 project is currently under construction and consists of trains 1 and 2, as well as two LNG storage tanks and associated facilities. The Port Arthur LNG Phase 2 project will expand the site to include the addition of up to two trains capable of producing up to 13 Mtpa. Port Arthur LNG has potential to expand to a total of eight trains, which would make it one of the world’s most significant LNG export facilities.

LNG trade grew by 2.3% in 2023. (Image source: Adobe Stock)

The IGU's 15^th annual World LNG Report highlights the evolving role of LNG and its crucial role for the energy transition and energy security

LNG has become a critical component of the global energy mix, with its role as a flexible, highly efficient, and reliable resource continuing to grow. Several proposed projects are undertaking innovative emissions-reducing measures to decarbonise the LNG value chain by integrating renewable electricity, carbon capture and storage, partnering to develop e-methane, and grow bio-LNG, or liquefied biomethane, which is produced from capturing and upgrading biogas that would have otherwise been emitted from landfills, agricultural waste, or other feedstock.

Global LNG trade grew by 2.1% in 2023, according to the report, to more than 401 million tonnes (MT), After two years of severe instability, the LNG market reached a fragile equilibrium, given lack of spare supply in the near-term.

Supply constrained

Supply remained constrained, with just 0.8% YOY growth from Indonesia's 3.8 MTPA addition at Tangguh LNG. However, global liquefaction capacity is likely to grow to over 700 MTPA by 2030, driven by new FIDs and the start-up of projects currently under construction to support growing demand, particularly in the growing Asian markets, where environmental considerations have led to a focus on coal to gas switching.

The USA became the largest producer and exporter (84.53 MT in 2023 vs 75.63 MT in 2022), followed by Australia (79.56 MT), Qatar (78.22 MT), and Russia (31.36). 

China was the largest LNG importer at 71.19 MT, followed by Japan, Korea and India, with more demand responding to the lower spot price. Europe remained the second-largest importing region at 121.29 MT in 2023. With LNG supplying almost half of Europe's gas, the competition between Asian and European markets remains a key market dynamic.

The global LNG market continues to rapidly evolve as it responds to growing gas demand in emerging markets, the increasing number and diversification of market participants, and the acceleration of technology development and innovation.

However, several major uncertainties may have an impact on the market, such as the Biden Administration non-FTA LNG project approvals pause, which could delay over 70 MTPA of new capacity; sanctions on Russian LNG, which impact almost 20 MTPA of expected capacity; the possibility that Ukraine may not extend the Russian gas transit deal at the end of 2024; shipyard bottlenecks; the ongoing security risk in the Middle East; as well as some declining gas field supply. More than 120 MTPA of currently operational liquefaction capacity is over 20 years old, and some of these facilities are being mothballed due to insufficient upstream gas production, creating supply side risk.

IGU president, Li Yalan commented, “The LNG industry has demonstrated incredible agility and innovation through some of the toughest tests over the recent years, and this is an industry that continues to play a pivotal role to navigate through an energy crisis that has not yet been fully resolved and an energy transition that has been challenged.

“As the world moves toward a low emissions future, nations are seeking ways to achieve their climate commitments while keeping energy affordable, available, and secure. LNG is a tool that will be critical to providing greater resiliency for rapidly changing energy systems around the world, and it will have an essential role mitigating the inherent risk of uncertainty through that process.”