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Abu Dhabi’s Shah Gas Field Poised for 2014 Completion, CEO Says

Abu Dhabi’s $10 billion Shah natural gas project, a joint venture between Abu Dhabi National Oil Co. and Occidental Petroleum Corp., is on track for completion by late 2014, the venture’s chief executive officer said.

Facilities and pipelines are more than 60 percent complete, and four of the 20 wells needed to process 1 billion cubic feet a day of high-sulfur, or sour, gas have been drilled, Al Hosn Gas Co.’s Saif al-Ghafli said in Abu Dhabi today. The company won’t need any more than the three drilling rigs it is using, he said.

Collaboration with Occidental “is going very well,” al-Ghafli told reporters. “We are going according to the budget.”

Occidental won a contract to develop Shah last year after ConocoPhillips, the original foreign partner, withdrew from the project in 2010. Shah, 210 kilometers (130 miles) southwest of the city of Abu Dhabi, poses a technical challenge because it contains gas that is mostly sour, or high in hazardous hydrogen sulfide, which must be removed before the fuel can be used.

Occidental, based in Los Angeles, raised its estimate for capital spending this year to $9.2 billion, an increase of $900 million. Of this increase, $600 million will go to Shah, according to a transcript of its second-quarter earnings call on July 28. Development capital remained in line with previous estimates, Chief Executive Officer Stephen Chazen said on the call.

Al Hosn will drill additional phases after the project starts, to maintain production levels and discover more gas. Increases in output are “possible,” Ghafli said.

The company is not bidding for other sour gas projects in Abu Dhabi, such as the Bab and Hail field tenders, he said.

Abu Dhabi National holds 60 percent of the project, and Occidental the remaining stake.

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