Saudi Arabia eyes shale tests this year

20 March 2013, News Wires – Opec giant Saudi Arabia will start testing some of its extensive shale-gas reserves this year, the country’s oil minister said on Monday.

“This year alone we are going to test seven wells for shale,” oil minister Ali al-Naimi told a conference in Hong Kong, according to Dow Jones. “We have rough estimates of over 600 trillion cubic feet of unconventional and shale gas, so the potential is very huge and we plan to exploit it.”

“We know where the areas are,” he added.

State-owned Saudi Aramco is currently exploring for shale gas in the north-west of the country, as well as unconventional oil resources in the east and in the Empty Quarter deserts, Bloomberg reported, citing Aramco’s senior vice president of upstream Amin Nasser.

Saudi Arabia, the world’s biggest exporter of oil, is trying to develop more gas resources as global demand increases. Aramco averaged 9.9 billion cubic feet per day of gas production in 2011, up from 9.4 Bcfpd in 2010.

The nation may hold as much as 645 trillion cubic feet of technically recoverable shale gas, according to estimates by services giant Baker Hughes. That would rank Saudi Arabia fifth in the world behind China, the US, Argentina and Mexico. That is in addition to about 282.6 trillion cubic feet of proven conventional gas reserves.

But many challenges are in store for Saudi Arabia’s shale prospects, including a lack of existing infrastructure.

“It would take at least five to six years to start seeing the development of shale gas on a commercial scale,” Sadad al-Husseini, founder of consultants Husseini Energy and a former executive vice president for production at Aramco, told Bloomberg. “The deposits are in remote areas far from contractor centres, and mobilising the required manpower and equipment will take time.”

Shale wells also require high volumes of water for hydraulic fracturing, and the water constraints in the vast Saudi desert could delay full development of the shale plays by at least a decade, Nasser told a conference earlier this month.

“The infrastructure cost will go down with time,” he said at a 10 March conference. “But water is going to remain a challenge.”

Al-Naimi said separately the country will likely try to tap its shale-oil reserves but “we have to find them”, the Wall Street Journal reported.

Saudi Arabia’s lead as the top global crude exporter has narrowed amid surging US production. Saudi output fell to 9.2 million barrels a day in December, down from 9.6 million the previous month, as US output surged in November and December above 7 million bpd for the first time in 20 years.

The International Energy Agency has said the US will overtake Saudi Arabia as the world’s largest oil producer by 2020.


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