Tuesday, September 14, 2010

Saudi Arabia to be the ... Saudi Arabia of Shale Gas?

Well, not quite.  Saudi Arabia's state-owned oil company, Saudi Aramco, announced that the country might have a significant resource of shale gas (article from ft.com, which requires registration).  Interestingly, the Kingdom looks at natural gas as a way of unlocking greater oil exports.  This summer set a record for electricity consumption in Saudi Arabia, driven by high cooling demand.  (An aside: can you imagine a hotter than usual summer in Saudi Arabia?)  To meet this demand, the country burns crude oil to power electric plants, up to 750,000 barrels per day.  If Saudi Arabia can use natural gas for electricity, it leaves more crude oil available to export.  That's a serious win-win for the House of Saud.

Right now, it doesn't look like the techniques that have made North American shale gas a sensation, notably hydraulic fracturing, will work with the same efficacy in the deserts of Saudi Arabia.  The Kingdom is looking for technological help from its international oil company (IOC/supermajor) friends, or more precisely, the IOCs that have been shut out of Saudi Arabia for decades that desperately want in.

Suddenly, I'm wondering if all that deal activity with multinational energy companies striking joint venture agreements in North American shale fields might open up shale gas production in Saudi Arabia instead of Eastern Europe.  Most of the supermajors are represented in "learning" joint ventures in the Marcellus, Haynesville, Eagle Ford and Barnett Shales.  Where exactly is all that newfound knowledge going?

1 comment:

Anonymous said...

Potential development of shale gas resources is getting pretty topical.

Add Saudi Arabia to the list which includes Tunisia, South Africa and a bunch of other countries invited to the Global Shale Gas Initiative by the State Department.

The highest level of interest at the moment (outside of North America) is in Europe. Lane Energy Poland is drilling in partnership with ConocoPhillips. A discovery (or not) will have huge implications on European energy security. There are many related articles at www.shalegasforeurope.com