Saudi Aramco begins development of Saudi Arabia's largest natural gas field
Oil giant Saudi Aramco on Monday began exploiting the Al Jafurah field, the largest unconventional natural gas field found by Saudi Arabia. The Kingdom estimates reserves of around 200 billion cubic feet of crude oil and plans to extract 2 billion cubic feet a day, which would fulfil its environmental ambitions and boost its petrochemical industry. A new energy phase for the House of Saud.
Located in the country's eastern province, 400 kilometres from the capital Riyadh, the field was discovered earlier this year during fracking operations in the area. In this way, the Kingdom came across one of the world's largest shale gas deposits, which would operate as the world's third largest natural gas production site by 2030. The Al Jafurah basin is 170 kilometres long and 100 kilometres wide.
"We have managed to reduce drilling cost by 70% and stimulation cost by 90% since the 2014 cost benchmark, while increasing well productivity six-fold compared to the start of the programme," Nasser explained. The company has invested around $24bn to develop operations at the reservoir, which holds the largest shale gas reserves in the Middle East.
Saudi Aramco has awarded contracts worth $10 billion for subsurface, engineering and procurement, and expects to spend close to $70 billion over the first 10 years of construction. The Saudi state will provide at least $1.6 billion in funding, according to Energy Minister Prince Abdulaziz bin Salman.
Extraction operations will not begin until early 2024. Once exploitation of the field begins, it is expected to produce around 425 million cubic feet of ethane per day, and around 550,000 barrels per day of gas liquids and condensates, which is 40 per cent of current production. There are also estimates that would raise Saudi reserves to 600 billion cubic feet of shale gas, which would double conventional gas reserves.
Saudi Arabia has the largest natural gas reserves in the Arabian Peninsula after Qatar, which is one thousandth the size of the country, although it is the world's largest oil exporter. The Kingdom would compete with countries such as Russia and Australia, as well as its Qatari neighbour, which lead the global gas production race.
The House of Saud's long-term plans are to achieve zero greenhouse gas emissions by 2060. With this goal in mind, Saudi Arabia's crown prince and 'de facto' ruler, Mohammed bin Salman, designed the Vision 2030 Plan and earmarked funds worth $187 billion for, among other areas, the development of green energy.
This first investment package was earmarked for the areas of field exploration, with the first major discovery coming in the form of the Al Jafurah field. However, the oil company will not only maintain, but even expand its exploration strategy towards the north of the country and, above all, in the Rub al-Khali desert, known as the Empty Quarter due to the vast expanse of sand that prevents habitability in the area and which occupies a large part of the country's southern territory.
To this end, Aramco agreed with foreign companies such as Shell and Total on a series of natural gas exploration and drilling contracts in the Wahhabi kingdom, with little success. A success that seems to have come this week, despite the perception of experts, who estimate high cost overruns for Saudi Aramco when it comes to producing shale gas due to the scarcity of water in Saudi Arabia. The most optimistic point out that the technological breakthrough will reduce costs and improve efficiency, although only time will tell how profitable the Al Jafurah field will be.
