The Opportunity Cost of Exploration for Unconventional Gas in Saudi Arabia
- Meaghan Casey (Baker Hughes) | Surya Rajan (Baker Hughes) | Adebola Adejumo (Halliburton) | Imre Kugler (IHS)
- Document ID
- Society of Petroleum Engineers
- SPE Middle East Unconventional Resources Conference and Exhibition, 26-28 January, Muscat, Oman
- Publication Date
- Document Type
- Conference Paper
- 2015. Society of Petroleum Engineers
- 7.1.9 Project Economic Analysis, 4.6.2 Liquified Natural Gas (LNG), 4.2 Pipelines, Flowlines and Risers
- frac design, economics, Opportunity Cost
- 0 in the last 30 days
- 292 since 2007
- Show more detail
- View rights & permissions
|SPE Member Price:||USD 9.50|
|SPE Non-Member Price:||USD 28.00|
Estimates place unconventional natural gas reserves in the Kingdom of Saudi Arabia at over 600 trillion cubic feet, more than double its proven conventional gas reserves. Domestic consumption fuels the economy as well as social spending, and the leadership is heavily invested in global research and development centers to become leading innovators in the industry. There is evidence of current commitment to develop natural gas projects in 3 offshore fields and construction of a 1, 000 MW gas-fired power plant. Despite political will for resource diversification in Saudi Arabia, there are hurdles in the form of processing capacity, logistics, water supplies and desert terrain, which could adversely affect project economics. Lifecycle economic analysis indicates that under current market conditions, development of unconventional gas projects could be challenging.
A breakeven economic analysis of the country's gas supply sources tests this supposition by assessing unconventional field development lifecycle costs and off-take pipeline infrastructure costs. Our analysis reveals that a breakeven price for domestic unconventional gas in Saudi Arabia ranges from roughly $5/Mcf to $8/Mcf depending on a range of pipeline scenarios. The study further explores several gas supply scenarios incorporating the commercialization of Saudi Arabia's unconventional resource assets, LNG imports, and pipeline imports from Qatar. In lieu of short-term unconventional gas supply, overall findings suggest pipeline gas from Qatar offers the lowest cost option, although LNG from Yemen or Nigeria ranks as a competitive resource alternative for additional near-term supply.
|File Size||1014 KB||Number of Pages||9|
Al Duhailan, M. A., Al Mahmoud, M. J., & Al Otaibi, M. G. (2014, August 28). Potential for Basin-Centered Gas in Saudi Arabia: Southwest Ghawar Basin - A Case Study. Society of Petroleum Engineers. http://dx.doi.org/10.15530/urtec-2014-1922271.
Bartko, K. M., Adebiyi, I. A., Faraj, O., Alexeyenko, A. V., & Campo, C. (1 January 2012). First Shale Gas Experience in Saudi Arabia: Lessons Learned. Society of Petroleum Engineers. http://dx.doi.org/10.2118/163320-MS.
Bloomberg. 2014. Saudi Aramco To Pump ‘Tight’ Natural Gas At Equal Cost to US. Hart Energy Unconventional Oil & Gas Center, 8 July 2014, http://www.ugcenter.com/print/saudi-aramco-pump-tight-natural-gas-equal-cost-us-624901 (accessed 27 October 2014).
Bloomberg. 2014. Saudi Gas Reserves Up As Aramco Taps Shale Deposits to Free Oil. Hart Energy Unconventional Oil & Gas Center, 16 May 2014, http://www.ugcenter.com/print/saudi-gas-reserves-aramco-taps-shale-deposits-free-oil-623856 (accessed 27 October 2014).
Hart Energy Research Group. Global Shale Gas Study. Hart Energy, February 2011, http://www.hartenergy.com/Upstream/Research-And-Consulting/Global-Shale-Gas-Study/ (accessed 8 August 2014).
Hayton, S., Heine, C., & Gratto, B. E. (1 January 2010). Tight Gas Exploration in Saudi Arabia. Society of Petroleum Engineers. http://dx.doi.org/10.2118/131065-MS.
Rajan, S., & Vikas, S. (2008, January 1). Simplified Country Risk Assessments for Global Petroleum Investments. Society of Petroleum Engineers. http://dx.doi.org/10.2118/112932-MS.
Rajan, S. (2008, January 1). Global Petroleum Market Entry Risk Assessment and Opportunity Mining Through Comparison Matrix Approach. International Petroleum Technology Conference. http://dx.doi.org/10.2523/11850-MS.
Sahin, A. (10 March 2013). Unconventional Natural Gas Potential in Saudi Arabia. Society of Petroleum Engineers. http://dx.doi.org/10.2118/164364-MS.
U.S. Energy Information Administration (EIA). Country Analysis Brief: Saudi Arabia. EIA, 10 September 2014, http://www.eia.gov/countries/cab.cfm?fips=sa (accessed 9 October 2014).