SAUDI ARABIA - Development Of Recent Finds - The Gas Opening.

Saudi Aramco in early 2001 began a programme to develop oil and gas fields which it had discovered in the past several years. It will spend on this more than $13 bn, or over $3 bn per annum. In 2000, Saudi Aramco launched a 25-year programme, budgeted at $45 bn, to build one big gas processing plant every five years.

Under the five-year programme from early 2001, Saudi Arabia's oil production capacity is to be raised by 2m b/d, to about 12.85m b/d, by 2006. Production of natural gas and the capacity of the Master Gas System (MGS) will be expanded from 3,700 MCF/ day to 7,800 MCF/day by 2006. Saudi Aramco's recently released data show that proven gas reserve at end-2000 reached 219 TCF (from 213.3 TCF at end-1999), with non-associated gas accounting for 86 TCF.

From 1994, Saudi Aramco has put emphasis on non-associated gas in its exploration. Oil Minister Ali Naimi told a gas conference in Yanbu' in October 1997 that the aim was to add 5 TCF to the proven reserves every year. But Saudi Aramco has exceeded this target, having discovered 30 TCF of recoverable non-associated gas since 1995. In 1998 alone, Saudi Aramco discovered over 7.9 TCF of recoverable gas.

In 1998 Saudi Arabia was the only country to have found more gas than it produced, with the world discoveries of 40.5 TCF having replaced only 67% of gas produced in that year. Exploration for more gas reserves is now focused on the South Ghawar, Berri and Qatif fields in the Eastern Province.

Gas plays a key role in Saudi Arabia's industrialisation, thanks to Saudi Aramco's MGS which was completed in 1981. To encourage Saudi Aramco's exploration for and development of non-associated gas fields, the price of gas to local industries, power plants and refineries was raised from $0.50 to $0.75/m BTU on Jan. 1, 1998.

Now, in view of the gas opening, with international oil companies (IOCs) being offered huge gas fields to explore and develop as part of integrated mega-projects, the government is considering a proposal to raise the price of feedstock gas to a range of US$1-1.50/ million BTU.

Saudi Aramco's marketed gas production now is averaging 46.5 BCM/year, compared to 46.2 BCM in 1999, 46.82 BCM in 1998 reached about 46 BCM, and about 45.34 BCM in 1997. There was a big jump in 1997, as marketed production in 1996 was 41.3 BCM, compared to 30.5 BCM in 1990 and 25.2 BCM in 1986. Naimi says: "If gas demand grows even at the conservative rate of 8% a year, we will require about 7 BCF/day (7,000 MCF/day) by 2007".

Saudi Aramco's exploration is targeting gas in low-risk, high-volume prospects mainly in the Khuff reservoir deep beneath the Ghawar region. Smaller gas fields, such as Midyan and Barqan, also figure prominently and will be developed by an ExxonMobil-led consortium for use in nearby markets. Naimi says development of "pocket fields in scattered areas will bring gas - and new economic opportunities - to customers not yet served". Saudi Aramco has also been exploring for oil and gas in the north-west, mainly between Turaif and Jalamid.

In the Ghawar area, Saudi Aramco has discovered several gas/condensate fields since late 1994. A total of 25 rigs have been active for exploration and development of non-associated gas in Ghawar's deep Khuff reservoir. It has contracted drilling companies such as Pool Arabia, Santa Fe, ADC and Egyptian Drilling. There is also emphasis on the Jawf gas field, on the flanks of Ghawar, where the gas is richer than that of Khuff and has a higher yield of ethane and methane.

Independent sources believe non-associated gas reserves discovered so far in the Najd fields could exceed 14 TCF. The first major gas discovery there was made in October 1989 at Dilam, 75 km south of Riyadh, as a drill stem test at a depth of 7,900 feet yielded 50 MCF/day of sweet gas with over 90% hydrocarbons and no trace of hydrogen sulfide. The field also tested 65 deg. API condensates.

Nearly all the discoveries made by Saudi Aramco in recent years have been natural gas/condensate fields. In early December 1999, Saudi Aramco announced the discovery of two gas/ condensate fields, Niban and Shaden, in the Eastern Province. They were the sixth and seventh gas/condensate finds, following the discovery of the Haradh gas giant, Tinat, Al Waar, Shamah and Al Widaihi, all near the Ghawar area.

Saudi Aramco said it had found Shaden, 60 km south-west of Ghawar, in July 1999. Niban, 90 km south-east of Ghazar, was found on Nov. 29, 1999. It said further exploration at Niban might lead to a breakthrough at two other fields with significant petroleum potential. In December of that year, a statement from Petroleum and Mineral Resources Minister Ali Naimi said the discoveries indicated new potential reserves of 4 TCF of natural gas and 6,000 million barrels of condensates.

The eighth discovery, Al Manjoura, 30 km west of Haradh and 55 km north-east of Al Widaihi in the south Ghawar area, was announced in May 2000, with drilling begun in January that year. Minister Naimi said the field contained sweet gas and was "another strong indication of the possibility of large quantities of gas in the region". More work was to be done to fully define the field. Al Manjoura-1 well tested 7 MCF/day of gas and about 200 b/d of condensates.

Discovery No. 9, Al Ghazal, was made in July 2000 and Saudi Aramco said Ghazal-1 well, 100 km west of Haradh, tested 17 MCF/day of gas and about 2,500 b/d of condensates from layers at depths of between 13,400 (4,084 metres) and 13,660 feet (4,164m). In the following month, on Aug. 23, Saudi Aramco said it tested 40 MCF/day of gas and 5,400 b/d of condensate from deeper sections of the field. The second round of tests were taken at depths of 13,790-13,850 feet (4,202-4,221m).

Discovery No. 10, Mazalij-24 well, was announced in December 2000 by Saudi Aramco. It said the field was part of the Unaizah reservoir, 85 km west of Haradh and 130 km east of Riyadh. The field tested sweet gas and condensate. Saudi Aramco said further delineation drilling was to be done in 2001.