Saudi
Arabia to Drill for Shale Gas This Year
Saudi
Arabia signaled Monday that it intends to remain a world energy
powerhouse for the foreseeable future, partly by exploiting new
technology which has unlocked
vast quantities of oil and natural gas in North America.
18
March, 2013
Saudi
Arabia, the world's largest exporter of crude oil, will push ahead
this year with exploratory drilling of shale and other unconventional
gas reserves which could be twice the size of its conventional gas
reserves, which total 286 trillion cubic feet, Minister of Oil Ali
al-Naimi said.
Exploiting
unconventional and renewable energy will allow Saudi Arabia to meet
rising domestic demand while maintaining crude-oil exports, Mr.
al-Naimi said, adding that his country "will not stint" in
ensuring that its customers' oil needs are met.
"This
year alone we are going to test seven wells for shale. We have rough
estimates of 600 trillion cubic feet of unconventional shale gas. The
potential is very huge and we plan to exploit it," he said
during a Credit Suisse conference.
Mr.
al-Naimi didn't offer a forecast of how quickly Saudi Arabia might
achieve commercial production of shale gas or shale oil, or describe
how it will supply the large amounts of water used in hydraulic
fracturing, or "fracking," the process used to extract oil
and gas from shale.
In
separate comments to The Wall Street Journal, Mr. al-Naimi said he
anticipated that the country's shale-oil reserves could also be
exploited, but added that "we have to find them."
Saudi
Arabia has seen its lead over the U.S. in crude-oil production narrow
sharply in the past year, thanks to rising shale-oil output in the
U.S., where crude production in November and December topped 7
million barrels a day for the first time in 20 years. Saudi output
eased to 9.2 million barrels a day in December, from 9.6 million the
previous month.
The
U.S. Energy Information Administration recently forecast that U.S.
crude output will swell to 7.5 million barrels a day within six
months. The International Energy Agency, which represents key oil
consumers, has predicted the U.S. will overtake Saudi Arabia as the
world's largest oil producer by 2020.
Saudi
Arabia is known more for its massive crude-oil exports than its
modest gas output, and so far it hasn't managed to increase gas
production enough to replace oil as feedstock in planned
petrochemical or electricity-generating projects.
Natural
gas output from state giant Saudi Arabian Oil Co., or Aramco,
averaged 9.9 billion cubic feet per day in 2011, up from 9.4 billion
cubic feet per day in 2010.
Aramco
Chief Executive Khalid al-Falih said in December that the company
plans to drill seven natural gas exploration wells in deep and
shallow water in the Red Sea, off the coast of the northwestern city
of Tabuk.
On
Monday, Mr. al-Naimi said that prospects for global production of
shale gas and oil--including in China, Ukraine, Poland and Saudi
Arabia--were so promising that the kingdom might not need to continue
with its decades-long policy of maintaining an oil-output cushion for
use in case of global supply disruptions.
"It
is not a question whether Saudi Arabia has spare [oil] capacity. It
is a question of whether we need to spend billions maintaining it at
all," Mr. al-Naimi said.
"New
commercial reserves such as shale oil are good news for the global
economy" and "will ensure even greater stability of markets
and prices," he said.
Mr.
al-Naimi said that the hopes of "two or three" members of
the Organization of Petroleum Exporting Countries that the pricing of
crude oil in international trade will shift to a basket of currencies
or the euro would not be realized.
"I
don't think that is going to fly," he said.
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