Russia’s Lukoil has announced that it will drill deep for unconventional gas in Saudi Arabia’s challenging ‘Empty Quarter’ desert region early 2015
According to industry sources, the kingdom had invited international oil companies (IOCs) such as Lukoil, Shell and Sinopec to find and pump gas in its southeast Empty Quarter, known as Rub al Khali, more than 10 years ago.
Saudi Arabia reportedly wants natural gas to help it cover subsidised domestic power demand so it can save oil for more lucrative exports.
The IOCs, which formed joint ventures with state oil firm Saudi Aramco, have failed to find commercially viable deposits till date.
Lukoil now plans, with Saudi Aramco, to drill two, very deep evaluation wells at depths of up to 5,791 metres in the Mushaib tight gas field in the Empty Quarter, two company sources said. A Lukoil official added the joint venture will drill the first well in Q1 2015 and the second during the last six months.
Tight gas is found in reservoirs formed by rocks of low permeability and low porosity typically at depths ranging between 2,438 metres to 3,048 metres and, thus, needs to be fracked. Another and more commonly known type of unconventional gas is shale, which is trapped within sedimentary rock.
Sadad al-Husseini, former executive at Saudi Aramco, said, “Drilling two wells shows that they are serious and positive about the region — and most importantly, that Lukoil is more committed than the other IOCs who already left. But they will have to find some natural gas liquids and condensate to increase their profits and spread their costs.”
Khalid al-Falih, CEO of Saudi Aramco, said that Riyadh will spend US$3bn on shale gas development in the kingdom, but has given no details on the investment.
In its 2013 annual review released recently, Saudi Aramco has said that it was developing new hydraulic fracturing technologies to increase recovery rates and improve cost efficiency. It cited CO2-based fracturing fluid as one of the techniques that may meet the water supply challenge in the region.
“Saudi Aramco is in the evaluation phase of shale gas and it’s an evaluation that requires large capital spending. Further development will happen based on results,” Husseini added.
According to the state-owned firm, currently the most concrete initiative by Saudi Aramco is a plan to produce 5.6mn cubic metres per day of unconventional natural gas by 2018 to supply a new phosphate project and power plant in the north of the country. Saudi Aramco is also drilling offshore in the Red Sea.
According to Reuters, oilfield service companies such as Baker Hughes, Schlumberger, Weatherford and Halliburton have all set up operations and bases in Saudi Arabia to help Saudi Aramco develop technology for unconventional gas.
“Aramco knows its reservoirs very well ... in Saudi it (shale gas) will be more expensive than the US,” Mario Ruscev, chief technology officer at Baker Hughes, said. “It will be much more data driven and people will spend much more time in understanding exactly what they do before they spend a lot of money,” Ruscev added.
