WorleyParsons Receives $150 Million Contract to Manage Abu Dhabi's Integrated Gas Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--Australian engineering and design company, WorleyParsons Limited (ASX:WOR) (North Sydney), has been awarded six project management consultancy contracts with a combined value of $150 million to manage the Integrated Gas Development (IGD) project in Abu Dhabi. The IGD is being promoted jointly by Abu Dhabi Gas Liquefaction Company Limited (ADGAS), Abu Dhabi Gas Industries Limited (GASCO) and Abu Dhabi Marine Operating Company (ADMA-OPCO).

As part of the agreement, WorleyParsons will undertake preparation of site details as well as utilities and process design for the Das Island project, construction of the Habshan-5 plant, the Habshan platform, the Ruwais-4 natural gas liquids (NGL) train, and the storage tanks in Ruwais. WorleyParsons, which will act on behalf of GASCO, ADMA-OPCO and ADGAS, will be responsible for end-to-end project management, from the pre-awarding stage of engineering, procurement and construction (EPC) contracts to the management of the six contractors selected for each of the construction projects and handing over commissioned facilities after performance testing.

The ADGAS, GASCO and ADMA-OPCO consortium is expected to award the six individual EPC contracts by August of this year. The front-end engineering and design (FEED) contract for the onshore phase of the IGD project was earlier awarded to KBR Associates and will now be awarded to KBR Incorporated (NYSE:KBR) (Houston, Texas).

The $7 billion IGD project is expected to produce natural gas that will be utilized as feed for industrial use and electricity generation in the Northern Emirates, including Abu Dhabi. The IGD project, expected to start operations by 2012, aims to increase Abu Dhabi's offshore natural gas production by 1 billion cubic feet per day.

The IGD project will consists of offshore and onshore phases. KBR's office in Leatherhead, England, will undertake FEED activities for the onshore phase, while the company's Houston office will carry out FEED activities for the offshore part of the IGD project. The offshore part of the project, developed by ADMA-OPCO, will include the development of a new offshore platform at Umm Sharif and a gas distribution pipeline network to Das Island. ADGAS will undertake the construction of facilities and processing units at Das Island. The onshore phase of the project, handled by GASCO, will consist of a natural gas train and liquefied petroleum gas (LPG) storage tanks at Ruwais, a gas processing unit and offsite facilities at Habshan.

The additional high-pressure natural gas from Umm Sharif and Umm Sharif Areaj reservoirs will be carried to Habshan through Das Island. Preliminary gas processing will be performed at the new Habshan platform before transportation of gas to the facilities at Das Island through a 46-inch-diameter gas pipeline. At Das Island, the gas will be conditioned, and the treated gas will be transported through a 30-inch-diameter pipeline to Habshan. Construction of the new pipeline is part of the proposed Offshore Associated Gas (OAG) project. At Habshan, the OAG facilities will process the gas, after which the lean gas will be delivered to the NGL train. Fractionation of NGL will then be carried out at the processing unit in Ruwais. The IGD project will also include a sulfur-recovery facility, which will take care of the acid that will flow to and from the natural gas trains. WorleyParsons will also oversee the construction and commissioning of this facility.

Recently, Czech Republic's energy utility CEZ AS (PRG:BAACEZ) (Prague) selected WorleyParsons to supervise the construction of its $1.13 billion, 880-megawatt gas-powered plant in Varna, Bulgaria. WorleyParsons will undertake the design, engineering, procurement and construction of the power plant, which is expected to replace three coal-fired plants. The coal-fired power plants will be shut down by 2012 in order to meet the European Union's environmental regulations. Construction of the new power plant will begin in 2011, and operations are scheduled to commence in 2014. WorleyParsons has also been selected to provide nuclear energy consulting and engineering services to help Egypt build its maiden nuclear power station. The value of the contract is estimated to be about $160 million.

According to the Statistical Review of World Energy 2009 published by BP plc (NYSE:BP) (London, United Kingdom), at the end of 2008, United Arab Emirates had proven gas reserves of approximately 6.43 trillion cubic meters. ADGAS, the country's primary natural gas producer, is planning to carry out a study to identify methods to use its gas reserves efficiently after 2020. ADGAS is considering three options: increasing production, continuing with current production levels, or using more natural gas for domestic use.

Japan's Tokyo Electric Power Company Incorporated (TYO:9501) (TEPCO) (Tokyo) is one of ADGAS' single largest natural gas buyers. ADGAS has signed an agreement with TEPCO, which expires in 2019. The forward-thinking strategy is aimed at identifying the future course of action after 2019. In 2020, with the current production levels, ADGAS has the option of generating continued revenues or increasing production of natural gas to generate additional revenues, which could be used for building new liquefaction units and export terminals. The demand for gas re-injection to revitalize gas fields is expected to grow at a rate of 8% annually until 2020. In 2008, ADGAS exported 5.2 million tons of LPG and 8.5 million tons of gas-related products, recording total sales of about $7.2 billion.

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