Saudi Arabia to search for shale gas

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BIZMOLOGY — Saudi Arabia, the world’s largest exporter of crude oil, is not going to coast its way to an uncertain future as its oil reserves inevitably decline.

On the contrary, its Minister of Oil Ali al-Naimi has signaled that the kingdom will seek to boost its hydrocarbon reserves by engaging in exploratory drilling of shale and other unconventional gas reserves in the kingdom. The potential amount of new gas finds could be double the current size of its conventional gas reserves, which total some 286 trillion cubic feet.

The secret to Saudi Arabia’s new optimism is the new technology (including hydraulic fracturing, or fracking) that has unlocked vast quantities of natural gas and oil in North America in the past decade.

Exploiting unconventional and renewable energy will allow Saudi Arabia to meet rising domestic demand (increased demand on the power grid has meant that the government has been forced to burn higher volumes of crude oil in its generating stations to keep the grid powered up) while maintaining its crude-oil exports.

In 2013 Saudi Aramco is going to test seven shale wells for gas and oil.

While new commercial reserves of shale gas and oil in Saudi Arabia (and elsewhere) will help to ensure the stability of oil markets and prices, the question of how the Saudis will supply all the water it needs for the water-intensive fracking process is yet to be addressed.

The water issue for the first seven natural gas exploration wells is not so big a deal, however, as they are in deep and shallow water in the Red Sea, off the coast of the northwestern city of Tabuk.

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Photo by edward musiak (zbigphotography), used under a Creative Commons license.

Stuart Hampton

British editorial veteran Stuart Hampton has been covering oil and gas companies for Hoover's since the Neogene-Quaternary period. Well, actually, since the early 1990s. For the best overview of the oil industry and its history he recommends Daniel Yergin's "The Prize." You can also follow Stuart on Twitter.

Read more articles by Stuart Hampton.

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