Adnoc makes research and development push via new Petroleum Institute centre

Abu Dhabi is set to embark on a major oilfield research and development push that could help to add as much as US$500 billion of value to oil reservoirs.

Abu Dhabi National Oil Company is making a strategic push into R&D through a large investment in a new centre at its Petroleum Institute in the capital.

The expansion reflects a major departure in R&D for both Adnoc and the Petroleum Institute, which includes a specific mandate for the institute to come up with ways to add 5 per cent – or about $500bn of value – to Abu Dhabi’s oil reservoir recovery rates, according to the Petroleum Institute president Thomas Hochstettler.

It includes a new $90 million Petroleum Institute research building, which is due to open by the end of the year. It will house hundreds of new staff, including dedicated researchers in its 32 laboratories, and have an initial annual operating budget of about $33m.

A second facility of about half the size is slated to come onstream at a later, unspecified date.

The expansion reflects a determination to get more value for money, said Marc Michel Durandeau, a former long-serving Total executive who has been appointed to run the new centre.

“The new strategy is to ensure that PI can contribute to and benefit from projects,” Mr Durandeau said. “Before the contribution to projects we were funding maybe 5 per cent — just someone travelling once a year to see some people in a university. For me this money was not well spent. It was more like a donation.”

The approach has not made commercial sense for Adnoc either. As Mr Durandeau explained, the state oil company has largely relied on its private sector partners – including Total, as well as BP, Shell and Exxon – for advanced field development technology that they have developed elsewhere in the world where conditions may not be applicable.

“Adnoc has the same problem we have,” Mr Durandeau said. “If you don’t do your own research you have to rely on that which is produced outside.

“Big companies are coming here to get concessions and to get them they offer new technologies. But if you don’t have good knowledge of the capabilities and suitability of the technology how can you make the business case? If you don’t have your own in-house knowledge it is difficult to assess what you need.”

The new centre will be central to Adnoc’s new system, whereby each of its operating companies will have R&D units focused on deploying R&D in field conditions.

The initiative also marks a new level of academic maturity for the 15-year old Petroleum Institute.

The institute has applied to the Abu Dhabi educational authority to introduce a PhD programme next year.

“The heart of the PhD programme is the ability to set up and direct a programme on an original topic of research,” said Murray Gray, provost and head of academics at the institute.

The first intake of PhDs, assuming approval is successful next spring, aims to hire up to 20 new researchers in the year starting next September, Mr Gray said.

The large expansion is a natural progression of the institute’s mission to educate Emiratis to work in the UAE’s most important industry, said Mr Hochstettler, who worked in several US universities before heading up PI last year.

“I don’t know of any university anywhere on Earth that has the kind of focused, intentional approach as the PI,” he said. “Unlike many students elsewhere who are maybe experiencing a little angst about what they want to do with their lives, our students know exactly what they want to be – they want to be engineers, and a specific type of engineer.”

The undergraduate intake is almost entirely Emirati and they are all funded by Adnoc.

Adnoc’s strategic partners will also be part of the process with BP, Shell, Total and Jodco helping to fund the research centre.

Follow The National’s Business section on Twitter

Share This Post