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Frontier exploration
The search is also on for new gas resources that could ease the kingdom’s shortages going forward.
For some years, Aramco has been working with a series of international partners targeting gas in the remote Empty Quarter desert region.
Apart from some limited success with the Shell joint venture, the exercise has proved largely disappointing thus far, however.
Nonetheless, Aramco chief executive Khalid al-Falih said in a speech posted on Aramco's website in October that gas remains a high priority, which means securing and identifying new deposits.
“We are planning to increase our conventional and unconventional gas supplies by almost 250 per cent over the coming couple of decades,” he said.
Another prospective area being targeted where there are now early signs of success is the offshore Red Sea, on Saudi Arabia’s western flank.
Saudi officials announced a new offshore gas field discovery 26km northwest of the port of Daba in the Red Sea in October.
The gas well flowed at a rate of 10mn cubic feet per day at a depth of 17,700 feet, although work will continue at the site to evaluate the size of the field.
Saudi Arabia needs to find additional gas not only to replace oil as the fuel for the next tranche of planned electricity plants but also to guarantee cheap feedstock for new petrochemical facilities.
Iraq gas emerges
New production is also on the rise in other locations such as Iraq, where reserves have barely been touched.
There are massive infrastructure development plans which will depend critically on a stable energy source, which means Baghdad is keen to get the gas sector going.
Shell is managing the largest single project, to gather associated gas from a group of major oilfields in the south, although this scheme is at an early stage.
The gas will initially be put to domestic use but could potentially make Iraq an LNG exporter.
In fact, given the scale of the reserves at hand, just like the oil sector, the potential of Iraq’s gas sector is almost unlimited, though constrained by other factors, including funding, political and security risks, infrastructure constraints, and the lack of any commercial gas market history.
And there is progress in the Iraqi Kurdistan region too, where production from the Khor Mor field has reached 80,000 barrels of oil equivalent per day (boepd).
Joint operators Dana Gas, the first regional private sector natural gas company, and Crescent Petroleum, the oldest Middle East private oil and gas company, recently marked their fourth year of production at the site, which feeds local industries and power stations.
Cumulative investment at Khor Mor is worth some US$1bn.
Again, the potential in the Kurdish region is equally significant, and there has been early talk of feeding gas through to pipelines bound for Europe in the future.
As with the rest of Iraq, the hold-up is not the reserves, but almost everything else, including current wastage through flaring, a point identified by the International Energy Agency (IEA) in an October report on Iraq’s oil and gas potential.
“Natural gas can play a much more important role in Iraq’s future and a vital first step will be to reduce the amount of gas that is currently flared,” it said.
Once domestic needs are met, Iraq can then provide a cost-competitive source of gas supply to neighbouring countries, to European markets and to Asia, according to the report.
High demand sparks the search for new supplies across region
