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Saudi quest for gas driven by a sense of urgency.

SAUDI Arabia is embarking on a major effort to increase its gas production to meet soaring domestic consumption -- an effort comparable in some ways to its expenditure of about $60 billion in recent years to raise its crude output capacity.

A roughly similar amount will be spent over the next five years to boost gas output by 50 per cent, eventually doubling production by the end of the decade, according to state-owned Saudi Aramco. Failure to secure increased gas supplies in the coming years could have serious consequences for Saudi Arabia's economy if energy shortages hit the high expectations of its fast-growing population.

Furthermore, if Saudi Arabia has to rely on a greater use of oil to produce energy and does not carry out efficiencies, its ability to supply world crude markets could, in another two decades, be almost one-third less than it otherwise might have been, Aramco figures show.

Saudi Arabia is floating on oceans of crude and not inconsiderable reserves of gas, but the trouble is that most of the gas composition ranges from sour to very sour. This makes exploitation difficult and costly, in some cases pushing operations into the danger zone.

In the case of the Saudis, they are heavily dependent on associated gas -- and the reduced crude output of recent years, designed to support oil prices at their existing level, has meant that Saudi gas supplies have also fallen.

Official Aramco figures show that even now, nearly one-half of gas production comes from producing oilfields.

Non-associated gas production is to increase by about 50 per cent in the next five years, but its proportional use will hardly change.

As things stand, Aramco's chief executive Khalid Al Falih says that raw gas output will be expanded to 15.5 billion cubic feet per day (bcfd) in 2015 from 10.2 billion bcfd now. This increase will be coming mainly from three big projects that are under way.

The biggest of these is the Karan offshore gas field, where work is well on its way. Raw gas output from the field will be 1.8 bcfd in stages over two years starting next year. Because of the sourness of the gas, only about two-thirds of the output can be used.

However, Karan can be expanded in a second phase that could also see the tie-in of nearby satellites.

The comparable Khursaniyah field will be contributing 1 bcfd as of this year, while the Wasit gas plant will provide 2.5 bcfd, Al Falih says.

Saudi Arabia had been counting on striking it big on the gas front in the unexplored Empty Quarter, but a prolonged search produced nothing of significance.

It is a measure of the sense of urgency felt by Aramco that it is now evaluating the practicalities of bringing on stream small gas fields that have so far been ignored, if they happen to be near small population centres that are remote from the national electricity and gas distribution networks.

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Publication:Oil & Gas News
Date:Sep 21, 2010
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