Saudi Arabia is already the number one supplier of oil to the world. And as of Monday, plans have been announced to move in on the development of its shale gas resources to supplement a growing domestic demand for energy.
In doing so, the nation would maintain supremacy as a crude-oil exporter, but it would also ensure that domestic needs are met on all fronts; something it currently lacks as unconventional and renewable energy demand grows.
If the worldwide leader in oil is to remain at the top, it has to be willing to jump at new opportunity. And that new opportunity started with North America and its recent oil boom.
The oil industry was on an even playing field until recent technological breakthroughs were made by U.S. operations that saw drilling for oil become a whole new beast. It’s a technique called hydraulic fracturing, or fracking, when enormous amounts of water, sand, and chemicals are blasted through a layer of rock, releasing shale gas.
Source: MidEast Posts
According to Bloomberg Businessweek, Saudi Arabia may hold up to 645 trillion cubic feet of recoverable shale gas, which would make it the fifth-largest shale deposit in the world behind China, the U.S., Argentina and Mexico. Then, there’s still the estimated 282.6 trillion cubic feet of conventional gas reserves that have gone untapped.
This year, Saudi Arabia will officially enter into exploring and drilling its unconventional gas reserves, an undertaking that could reveal double the amount it sees for its conventional reserves – a huge upside that would solidify its position of power well into the future.
The Saudis are prolifically known for their crude oil, but right now the nation is only able to produce a modest amount of gas and can’t support its petrochemical or electricity projects with enough feedstock oil. This problem is debilitating and leaves forward progress at a standstill.
Natural gas production has seen some increase; Saudi Arabian Oil Co., or Aramco, produced on average 9.9 billion cubic feet per day in 2011, up from 9.4 billion cubic feet per day in 2010, according to RigZone.
The real potential may be unlocked when the nation drills 7 test wells for shale gas this year.
According to Bloomberg Businessweek, the Oil Minister Ali Al-Naimi said, “We know where the areas are.” But he also noted that the difficulty will be finding the water to drill the wells.
So maybe the Saudi’s haven’t quite pinpointed how to go about drilling for their shale gas, but they’re going to spend the year finding out – it’s just a matter of time.
Fracking requires millions of gallons of water, but finding a source in the middle of a desert can be quite challenging.
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The search for shale gas will spread through the northwest region and sweep east into the Empty Quarter deserts.
And when they find it, it has some other problems to worry about. Some believe that it’s going to take time to get the ball rolling.
Saudi Aramco’s former Executive Vice President for Production, Sadad al-Husseini said, “It would take at least five to six years to start seeing the development of shale gas on a commercial scale. The deposits are in remote areas far from contractor centers and mobilizing the required manpower and equipment will take time,” according to UPI.com.
One other problem: the U.S. is becoming an ever-constant threat to Saudi Arabia’s crude-oil dominance. Saudi output was at 9.6 million barrels a day in November and slowed to 9.2 million in December, RigZone reports, while the U.S. had its largest days of production (7 million barrels a day – a number that hadn’t been reached in 20 years) in that same period.
The U.S. should reach 7.5 million barrels a day by the middle of the year, and it is predicted that the U.S. will dethrone Saudi Arabia as the world’s biggest oil producer by 2020.
All this added production can drive down crude prices, which would have an adverse effect on the development of Saudi’s shale gas exploration.
At the time of the announcement, no forecast was provided as to a timeline of the development of Saudi Arabia’s exploration efforts.
What was known is that there is a whole heck of a lot of shale gas just waiting to be exploited, and something is going to be done about it.
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