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Page added on May 15, 2014
Saudi Gas Reserves Up as Aramco Taps New Shale Deposits
Saudi Arabia’s natural gas reserves rose last year as it explored for the fuel in the Red Sea and tapped shale gas to free more crude oil for export, according to the kingdom’s state-run oil company.
Saudi reserves increased to 288 trillion cubic feet of gas last year from 285 trillion in 2012, Saudi Arabian Oil Co. said today in its annual review. The company is ready to use shale gas to fuel a 1,000-megawatt plant that will feed electricity to a large phosphate mining project, the company known as Saudi Aramco said.
“Saudi Arabia will be among the first countries outside North America to use shale gas for domestic power generation,” the company said. “We are actively exploring for unconventional gas resources,” which may be large in scale, it said.
The shale gas drive will help the kingdom free more diesel and crude oil for export, the company said. Gas is needed because domestic demand for energy has increased to the point where oil volumes intended for export “may decline to unacceptably low levels in the coming two decades,” it said.
Aramco said it is looking for unconventional gas in the Northwest, the Empty Quarter desert, and near Ghawar, the world’s largest oil field. A “significant” gas field discovered in the Red Sea, called Shaur, is also “a potential game-changer in the future of the Kingdom’s energy mix,” the company said.
Saudi Aramco increased gas production last year to 11 billion cubic feet a day, compared with 10.72 billion in 2012, it said in the review.
16 Comments on "Saudi Gas Reserves Up as Aramco Taps New Shale Deposits"
Dsnthefuture on Thu, 15th May 2014 3:29 pm
I think they’re going to frack in Mexico too. Don’t they both have water shortages already?
rockman on Thu, 15th May 2014 4:15 pm
Amazing how much one can boost reserves without even drilling. Before one tarts counting those shale gas chickens they might want to hear what the Saudi experts who aren’t referenced in this piece has to say. From
http://www.bloomberg.com/news/2013-03-18/saudi-arabia-to-drill-seven-shale-gas-test-wells-al-naimi-says.html
“Finding the necessary amount of water in the regions where Aramco is exploring will be difficult, Nasser said. Shale gas is produced by a technique known as hydraulic fracturing, or fracking, in which massive amounts of water, chemicals and sand are blasted underground to free trapped hydrocarbons.
A lack of infrastructure in these areas presents a related challenge, said Sadad al-Husseini, founder of consultants Husseini Energy and a former executive vice president for production at Aramco.
“It would take at least five to six years to start seeing the development of shale gas on a commercial scale,” he said by phone from Dhahran in eastern Saudi Arabia. “The deposits are in remote areas far from contractor centers, and mobilizing the required manpower and equipment will take time.”
Domestic gas prices are also too low to make developing the deposits economically feasible, Khalid al-Falih, Aramco’s chief executive, said Jan. 14 in Dhahran, Saudi Arabia. The country sells the fuel locally at a subsidized price of 75 cents per million British thermal units.”
So in the words of KSA experts they lack the infrastructure, the water and a sufficient price to make extracting the shale gas economical. And given that I found reports of at most 7 shale wells total drilled to date in the entire country I think the statement that “The nation may hold as much as 645 trillion cubic feet of technically recoverable shale gas” is questionable beyond the fact that there’s no economic viability put to “technically recoverable” reserves.
Yes indeed: a big day to celebrate the big reserve addition. LOL.
Plantagenet on Thu, 15th May 2014 4:28 pm
R-man…KSA can afford to build any infrastructure they want or need. If they don’t have water they can use a water-free method to frack. AND KSA isn’t planning to sell their gas on the open market—they are planning to use to NG displace expensive oil that is currently used for generating domestic electricity—
NG will be win-win-win for KSA.
Mike999 on Thu, 15th May 2014 9:29 pm
You can spend $120 to make $100. But, that doesn’t mean they will.
eugeni on Fri, 16th May 2014 4:47 am
Hello, forgive my ignorance in advance, but it is not strange that KSA is exploring for or using unconventional oil resources of any kind? I mean, they have plenty of cheaper conventional oil resources, no?
rockman on Fri, 16th May 2014 8:03 am
Eugene – Yes…the KSA lifting costs are low. But do you realize that their oil sales income represent a huge portion of the monies they need to support their entire population? Every $million of oil they consume internally is a $million less they have to run the country.
The KSA cannot stop exploring for any viable oil/NG resources…those are their life blood. Without that revenue the country cannot support itself. What’s truly shocking is how much of their oil (not NG) they use to generate electricity. Electricity critical for desalinization so their populace doesn’t die of thirst.
Even assuming they have shale gas to develop the cost to do so will matter. The Persian Gulf produces the vast majority of LNG on the planet. If the KSA can acquire the LNG cheaper than developing their “huge” unproven and only technically (not economically) recoverable shale gas reserves then you won’t see a lot of frac’ng in the country anytime soon IMHO.
eugeni on Fri, 16th May 2014 8:29 am
Rockman; thanks. Someday somebody will not believe that we burned the (by then) sacred oil in the ways we burned it.
bobinget on Fri, 16th May 2014 10:40 am
Can’t KSA use treated seawater for fraccing as they already do for ‘water flooding or injection”
http://en.wikipedia.org/wiki/Water_injection_(oil_production)
California is looking at solar powered desalination for DRINKING water as well as irrigation.
“The production of desalinated water uses up to eight times more energy than using groundwater and accounts for up to 20 percent of the energy consumption in Saudi Arabia”
Davy, Hermann, MO on Fri, 16th May 2014 11:13 am
bob, KSA failed food independence initiative depleted the ground water. KSA is a classic example of what happens when you mine ground water.
bobinget on Fri, 16th May 2014 12:59 pm
Davy, I also read KSA is the biggest consumer of fresh water on earth.
Think about it. Buying the wife or mistress a swimming pool is one thing, buying a pool for each, another.
If it were me, I’de make them share… (and talk behind my back?…. Maybe not.)
Monarchy is only cute in places like Norway or Sweden where ribbons need cutting on new children’s hospitals or Mercedes dealerships.
Davey on Fri, 16th May 2014 1:44 pm
Bob, The ME, is probably the least sustainable place on earth . If something happens that destroys BAU and the oil industry with it those “CATS” in the ME are screwed. No water and no food and a cry baby population of welfare addicts driven with religious zeal in overshoot to carrying capacity. And we think the west is bad!
gwb on Fri, 16th May 2014 3:08 pm
rockman, I don’t think KSA’s lifting costs are that low any more. This June 2010 report notes that Saudi Aramco admits to reinjecting 13mbd of treated seawater into Ghawar (see p.33):
http://www.tullettprebon.com/Documents/strategyinsights/tp0510_TPSI_report_005_LR.pdf
It’s probably higher than that now. Must take a lot of energy to reinject that much water back into the reservoir…
rockman on Fri, 16th May 2014 4:04 pm
Gwb – You may well be correct. Difficult to estimate and I tend to not put much faith in the numbers they supply.
Some folks are trying to develop frac’ng systems that use salty water. But I think water will be the least of their problems. First, their shales may not be worth a crap in the first place. Despite the hype, in the US the vast majority of our shale formations have been proven to not be viable producers for the most part. Good to remember that the last time I saw the stats 80%+ of all our shale production is coming from two formations: the Bakken and Eagle Ford. There are many dozens of hydrocarbon bearing shakes in the US.
Then add the problem of drilling and frac’ng equipment. The great majority of it is in the US. For the KSA to come close to duplicating it would take years and many tens of $billions. The RESOURCE numbers, even if close to real, are meaningless. They don’t become reserves until they re drilled AND proven to be economical to develop. The KSA is years away from even scratching that threshold IMHO.
Northwest Resident on Fri, 16th May 2014 4:17 pm
“For the KSA to come close to duplicating it would take years and many tens of $billions.”
The fracking enthusiasts and investment promoters would like for us to believe that there are vast shale formations with billions if not trillions of gallons of oil and cubic yards of NG just waiting to be extracted in KSA, Britain, Ukraine and elsewhere.
But as rockman alludes to, all of the tech and rigs and equipment and know-how is right here in America working frantically to punch enough holes to keep those total “crude” oil numbers from falling. There is no way, NO WAY, that we can ship our experienced oil guys or their equipment overseas without dramatically impacting production here. And without the years and billion$ required, there is equally NO WAY that any other place on earth is going to be able to put together an even remotely successful fracking operation. It is all hype and spin guys, give it up. Fracking is a pipe dream. Don’t smoke that shit. Reality may be tough to deal with, but that “Fracking Revolution 90 proof” will give you a hangover that you might not survive.
MKohnen on Sat, 17th May 2014 3:46 am
I just watched the documentary “The Future of Food.” Quite interesting. At a certain point they make the supposition that the rest of the world is watching the US to see what happens to people who eat great quantities of GMO food. It makes me wonder if much of the world is watching the US to see what happens when you frac on a large scale?
Davy, Hermann, MO on Sat, 17th May 2014 6:10 am
MK, I am not so worried about the eating of the food. We are eating a whole host of toxicities. This thinking can apply to Asia where the Chinese are starting to glow with toxicity from their normal diet. My worries with GM is a freak species in the natural system and or the disruption on a great species like wild Salmon from cross breeding.