Saudi Aramco to Pump ’Tight’ Natural Gas at Equal Cost to U.S.

Saudi Arabian Oil Co. plans to reduce the cost of producing natural gas from so-called tight rock formations, putting it on equal footing to gas from the best plays in the U.S., according to a company official.

The state-owned producer, known as Saudi Aramco, is now targeting a cost of $2 to $3 per thousand cubic feet of tight gas, Adnan Kanaan, manager of the company’s Gas Reservoir Managing department said in a report published today by the Society of Petroleum Engineers.

Saudi Aramco is drilling in tight sands reservoirs where permeability and porosity is greater than that of shale formations but below that of conventional oil and gas bearing sands. “We do have shale, but shale will take a little bit more time because we need to go with the low-risk, high-rewards projects to get our revenue,” Kanaan said.

The Kingdom needs to develop its shale and tight gas deposits to reduce the use of crude oil and other liquid fuels at power plants and free more oil for exports. Its shale plans, however, slowed down as the country lacks enough fresh water resources to use hydraulic fracturing, or fracking, to break the rocks and extract natural gas.

Saudi deserts may hold as much as 645 trillion cubic feet of technically recoverable shale gas, the world’s fifth-largest deposits, behind China, the U.S., Argentina and Mexico, according to estimates by Baker Hughes Inc. (BHI) That’s more than double its conventional gas reserves that stand at 288 trillion cubic feet, according to Aramco’s 2013 annual review.

To contact the reporter on this story: Wael Mahdi in Manama at wmahdi@bloomberg.net

To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net David Marino, Stephen Cunningham

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.