Saudi Aramco Is Speeding Up Work On Projects To Boost Supply Of Ethane Feed.

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With a new set of petrochemical projects to be on stream in Jubail by 2008, Saudi Aramco is speeding up work on a number of gas projects to increase the supply of ethane feedstock by 650 million cubic feet per day (MCF/d). New plants involved will also be producing NGLs and sales natural gas in the east of Saudi Arabia.

The first of the main projects is the $1,700m Hawiyah NGL Recovery Programme. This has been tendered in two packages with each to be awarded as a lump-sum turnkey (LSTK) contract: (1) two gas treatment trains, and (2) three NGL recovery units. Contractor having until Jan. 31 to bid include Bechtel and Fluor Daniel of the US, and JGC Corp. and Chiyoda Corp. of Japan.

The plant, atop the sprawling Ghawar oil reservoir in the Eastern Province, will treat 3,800 MCF/d of sales gas and produce dry gas and 310m b/d of oil equivalent (boe/d) of ethane and NGL. The sales gas will come from the nearby Hawiyah and Haradh gas plants. Residue gas will be pumped back into Saudi Aramco's Master Gas System (MGS).

Saudi Aramco expects to award the two contracts in March 2005. The preliminary engineering, conducted by Jacobs Canada, has identified cost savings of more than $200m. A related package calling for the site preparation of two million square metres of land for the NGL plant is being tendered separately. Under the programme, there will be five pipeline packages to be tendered in the first quarter of 2005.

An 800 MCF/d expansion of the 1,600 MCF/d Hawiyah gas plant is another project intended to compensate for the sales gas which will be diverted to the new NGL plant rather than being fed into the MGS. The $200m LSTK contract for this calls for installation of inlet gas and liquid handling facilities, gas sweetening, sulphur recovery, gas dehydration, hydrocarbon dew point control - with a propane refrigeration system and sales gas compression - and support facilities.

Of parallel interest is Saudi Aramco's project creation to maximise Saudi employment in the engineering, construction and subsequent operation of the plants. Planners have included Saudi employment requirements in the project specifications and are encouraging bidders to include Saudi-based engineering firms in the design phase.

In the LSTK approach there is emphasis on teamwork. Through regular meetings with international contractors, Saudi Aramco hopes to improve the construction process and anticipates cost savings and logistical improvements. New ideas and observations are being exchanged between Saudi Aramco employees and contractors working on the projects.

A related project is an expansion of the Juaymah fractionation plant. This will consist of a fourth train to fractionate 270,000 boe/d of ethane and NGL and 100,000 b/d of propane and NGL. The new units will have a de-ethaniser, de-propaniser and de-butaniser columns, associated vessels and heat exchangers, de-ethaniser refrigeration facilities and other equipment. The LSTK contract is worth $200m. Contractors have until Dec. 31 to bid for the job. They include Snamprogetti and Techint of Italy, Technip of France and Tecnicas Reunidas of Spain.

Luksar Begins Gas Exploration Work In Saudi Empty Quarter: Work to explore for natural gas in Saudi Arabia's Contract Area A, in the northern Rub' Al-Khali (Empty Quarter), is expected to start by Nov. 25. Luksar Energy, a joint venture of OAO Lukoil Overseas Holding Ltd (80%) and Saudi Aramco (20%) has signed a contract for this with the Houston-based WesternGeco, a division of Schlumberger, to conduct 2D and 3D seismic surveys. Area A, 29,900 sq km, lies south of the Ghawa axis of giant oilfields. The 2D seismic world is to cover 8,750 km.

WesternGeco's work is expected to continue through 2005. Exploration drilling is anticipated by early 2006. The exploration period covers five years. During this period, Luksar Energy will conduct seismic surveys and drill at least nine exploration wells. Lukoil Overseas obtained a 40-year contract early this year to explore for and produce non-associated natural gas in Contract Area A.

Luksar is to spend $215m on the five-year exploration programme. It has secured financing from Saudi Hollandi Bank, an affiliate of ABN Amro.

Saudi Aramco in March signed similar gas E&P agreements with China Petroleum and Chemical Corp. (Sinopec) and a consortium of Spain's Repsol YPF and Italy's ENI for areas in a vast Rub Al Khali desert. The contracts with the three companies cover a total area of 120,000 sq km in the northern part of the Rub' Al-Khali, or Empty Quarter, were signed in Riyadh in March this year. In November 2003, a Shell-Total consortium signed the first gas E&P agreement with Saudi Aramco for an area in the south of Rub' Al-Khali which covers the Shaybah super-giant fields and nearby non-associated gas fields.

The gas exploration work alone would require an investment of around SR3 billion, Minister of Petroleum and Mineral Resources Ali Al-Naimi had then told the press. The deals were expected to attract still higher levels of investment in the downstream sector.

Saudi Arabia is currently producing and consuming 7,000 MCF/d and expects domestic demand to hit 14,000 MCF/d by 2025. Saudi Arabia has proven natural gas reserves of 235 TCF, the fourth largest in the world.