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Saudi Arabia to test shale gas viability in Empty Quarter

Saudi Aramco at FEED for three shale gas projects

Saudi Aramco is preparing to award front end engineering and design (FEED) contracts to develop shale gas reserves as pilot projects in three different basins of Saudi Arabia.

Despite all the challenges to implement the hydraulic fracturing techniques in Saudi Arabia, the Kingdom is keen to try it a real scale in order to boost its natural gas production.

As OPEC largest producer of crude oil, Saudi Arabia is taking its leading role to regulate the global market prices for a barrel.

Saudi-Arabia_Empty_Quarter_Shale_Gas_Central_Processing_Facilities_MapIn a context where number of producing countries have hard to meet their goals, no less than Brazil, Mexico, Libya, Syria or Nigeria, the regulating role of Saudi Arabia becomes more critical to meet the global demand.

Meanwhile, the US shale gas has significantly modified the business model of the petrochemical industry using equally naphtha or ethane as feedstock.

Because of the current situation on the oil global market and its domestic strategy to boost competitive downstream industries, Saudi Arabia is struggling to convert each drop of crude oil consumed internally into gas.

Therefore Saudi Aramco received the mandate to explorer all solutions such as to:

 – Monetize the associated gas

 – Explore deep offshore gas in Red Sea

 – Develop unconventional gas.

Considering that the hydraulic fracturing techniques require electrical power and water to produce steam, the development of shale gas resources in Saudi Arabia is not a given.

Saudi Aramco shale gas to power Maaden Phosphate

Saudi Aramco identified three basins holding supposedly significant reserves of shale gas:

 – Empty Quarter in the south

 – South Ghawar in Eastern Province

 – Al-Jalamid in the north

With these newly identified reserves, Saudi Arabia could increase its declared gas reserves from 285 trillion cubic feet (tcf) in 2012 to 288 tcf in 2013.

Maaden_Phosphate_City_ProjectIn addition to power and water challenges, it seems that shale gas reserves are lying up to 4,000 meters depth increasing drilling costs and reducing production performances.

With new technologies, such as steam production directly out of sun power successfully tested by Petroleum Development Oman (PDO) in the neighboring Sultanate, Saudi Aramco is moving on front end engineering and design (FEED) to develop three pilot projects.

Among these projects, Saudi Aramco is planning to use the shale gas produced out of the Al-Jalamid basin to feed a gas-fired 1,000 MW power generation facility planned for the giant Ma’aden Phosphate project.

If the FEED work is successful, Saudi Aramco will convert it into engineering, procurement and construction (EPC) contract.

To be sanctioned in a similar format as the Maintain Production Program (MPP) contract used for oil and gas offshore operations, the shale gas engineering services contract should be signed for a period of three-plus-two years.

In awarding the Saudi Arabia first shale gas contract in 2014, Saudi Aramco is targeting the first production of shale gas from Empty Quarter, South Ghawar and Al-Jalamid by 2018.

For more information and data about oil and gas and petrochemical projects go to Project Smart Explorer

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