In 2010, Saudi Aramco launched its Accelerated Transformation Plan, which aims to extend the company’s E&P and downstream activities into new frontiers, and promote the production of unconventional natural gas resources in tight sands and shale formations. Currently, Saudi Arabia has over 600 trillion cubic feet of unconventional gas resources, half of which are technically recoverable. It holds the world’s sixth-largest estimated proven gas reserves, and the world’s ninth-largest marketable gas production.
In February 2020, Saudi Aramco announced the development of the Jafurah Basin as a resource of unconventional natural gas. It is Saudi Arabia’s largest unconventional natural gas field to date, and is located east of the giant Ghawar oil field, with 200 trillion cubic feet of wet gas resources. It will be developed in stages, and by 2036, production is expected to reach 2.2 billion cubic feet per day of natural gas.
The development of unconventional gas basins has emerged as a strategy to strengthen Saudi Arabia’s energy security and offers many opportunities for the country’s energy markets. For example, most of the Kingdom’s gas production was historically associated with oil, which means that the natural gas was initially dissolved in oil and was later separated after extraction. However, Saudi Aramco managed to increase the share of non-associated gas to nearly 60% of all gas production as of 2019.
Moreover, providing more quantities of natural gas for domestic consumption means that the Kingdom can use it to reduce the heavy reliance on less efficient and more carbon-intensive liquid fuels. These dynamics led Saudi analysts to predict that domestic natural gas demand will continue to grow at a compound annual growth rate of 3.7% for the next 10 years.
Nevertheless, a project of such magnitude will face many challenges, including drilling and completion costs, technical know-how, and water access. For instance, from the drilling and completion perspective and accounting point of view, Saudi Aramco’s approach to developing the Jafurah Basin gas field is similar to that of its other megaprojects, with a significant capital investment of $110 billion, as Saudi Aramco plans to deploy an array of advanced technologies in developing Jafurah, including horizontal multi-stage fracturing, and underbalanced coiled tubing drilling. This is due to the fact that unconventional wells usually have lower rates of productivity and rapid decline rates, thus requiring more wells to be drilled and placed into production simultaneously than conventional wells.
On the other hand, water availability will play a significant role here, as the extraction process for Jafurah will require substantial volumes of water, which contradicts the company’s priority of reducing groundwater use during fracturing treatments. Therefore, Saudi Aramco is exploring using seawater for fracturing applications, and is piloting the use of local sand in its gas fracking treatments rather than imported sand.
To manage and overcome all of these challenges, Saudi Aramco has established an unconventional gas department, and hired a large number of unconventional development specialists to bridge the knowledge gap, and outsourced fracking to leading oil service companies.
On the national level, the gas produced from Jafurah will be primarily reserved for domestic use and meet future energy demands for power generation, water desalination, and petrochemical production.
In conclusion, there are many significant benefits to developing domestic natural gas. Unconventional gas developments are major industrial projects that can enable the growth of local small and medium enterprises, foster job creation, and increase technical know-how in the Kingdom. This fits very well with the Saudi Vision 2030 goals of developing local industries and increasing local content, which would provide added value to the Kingdom’s economy.
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