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Saudi Arabia Plans Its Own Shale Revolution

Saudi Arabia Plans Its Own Shale Revolution

Saudi Oil

Saudi Arabia has big gas plans, with Aramco eyeing a twofold increase in its natural gas production over the next ten years as it seeks to switch local power plants to gas from oil, so it can export more crude. This gas, apparently, could come from shale deposits.

The World Energy Council estimates that Saudi Arabia has recoverable gas reserves of 7.49 billion tons of oil equivalent. Proved reserves stood at 8.489 trillion cu m as of 2014. These are just conventional gas figures, the WEC notes. According to Aramco’s head of unconventional resources, Khalid Al Abdulqader, the country’s shale gas resources are “huge.”

One of the top spots for shale gas drilling is the Jafurah basin, which is similar in size to Texas’ Eagle Ford, according to Al Abdulqader, but he declined to give any details regarding the reserves in place. Analysts that Bloomberg’s Wael Mahdi and Bruce Stanley spoke to believe that it is perfectly possible for the shale basins in the Kingdom to contain a lot of gas. The question is whether this gas is actually recoverable at a cost that is low enough to make production viable.

If historical data is any judge, this is doubtful. Mahdi and Stanley note the string of exits by international oil and gas companies after they failed to make any meaningful gas discoveries in the Kingdom. These included French Total, Italy’s Eni, and Spanish Repsol. Exxon and Chevron have operations in the country, but not in gas exploration. Lukoil was the latest to announce it was pulling out of its Saudi gas drilling venture last year after it failed to discover any reserves.

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