Sheikh Mohamed bin Khalifa Al Khalifa, CEO, Banagas: Interview

Interview: Sheikh Mohamed bin Khalifa Al Khalifa

What are the most pressing global factors affecting the local gas market?

SHEIKH MOHAMED BIN KHALIFA AL KHALIFA: Globally speaking, gas supply is increasing. The US has been building up its shale gas production, and more liquefied natural gas (LNG) and liquefied petroleum gas (LPG) infrastructure continues to be constructed around the world. This has given rise to a new, globalised dynamic in the industry. The effects of globalisation can be clearly seen in Bahrain. We have just commissioned a major LNG terminal to meet our gas needs for both local industrial use and power supply.

While globalisation opens up challenges in terms of competition, it also greatly expands the market that we can tap into for export. Strengthening our industrial base with companies like the Gulf Petrochemical Industries Company and Aluminium Bahrain, supported by LNG, also opens up new opportunities for downstream industries and potential future consumers of other natural gas liquids.

How do the oil and gas discoveries announced in April 2018 affect Bahrain’s gas potential?

SHEIKH MOHAMED: The new oil discovery is a unique resource. It features tight geology in a marine environment and thus constitutes quite an exciting opportunity, as Bahrain will have to use innovative techniques to access the oil. Wells for testing are already being drilled and we are awaiting the results of a feasibility study on the new field. The find of 22trn standard cu feet (scf) of deep natural gas announced on the same day has progressed further in terms of development. An accurate size estimate has been obtained and we have had confirmation that we will be able to go into commercial development. This means that Tatweer Petroleum should be able to start producing natural gas in a shorter timeframe. This gas will be used for Tatweer’s own operations, as well as to support local industries.

For Banagas, the more exciting of the two is actually the oil find, as we only process associated gas, which is the gas that is found mixed in with, or in a layer above, the oil. This is a very lean gas that is best processed in combination with refinery off-gas, such as that generated as a by-product at Bahrain Petroleum Company’s oil refinery. This richer combination is mixed with the associated gas to create consistency, which helps our equipment to function more smoothly. However, it is likely to be five or more years before production can get started at the new oil field, and of course the associated gas will not begin to be generated until that point.

What led Bahrain to invest in the Banagas expansion project, and how has it equipped Bahrain to capitalise further on its natural resources?

SHEIKH MOHAMED: This expansion was necessary because, after Tatweer was created to increase output from the Bahrain Field, associated gas production began to increase and eventually surpassed the capacity that we were able to process. Since then, Tatweer had been re-injecting this gas into the field to avoid flaring as far as possible, so the gas was ready and waiting to be processed until we had sufficient capacity to take on the new production.

At the beginning of November 2018 we completed a $355m expansion project, which included the notable addition of a new train that has a capacity of 350m scf. This almost doubled our previous capacity of 285m scf, which represented approximately 25% of Bahrain’s total gas consumption.

To support this, we have also installed new field pipelines and a new 21-km pipeline to our expanded storage facilities at Sitra Refinery. These have been augmented by a 100,000-barrel tank for butane and a 200,000-barrel tank for propane, along with a new refrigeration unit for LPG. We have also expanded our workforce to a total of 600 employees.