Arab News: Feasibility of KSA’s shale gas project

Shale gas exploration in Saudi Arabia is heralding a new era in the country’s energy sector. But, beneath this enormous reserve lie big challenges. Compared to the conventional natural gas, it does not seem feasible for the Kingdom to take initiatives in this area as the project involves huge production costs.

Pre-emptive measures for the gradual shift on unconventional energy sources are anyway considered to be a prudent idea in case of future crisis. And possibly for the first time, the shale gas will be used for the production of 1000MW power plant in Jazan by 2016.

In Saudi Arabia, natural gas and ethane are currently priced significantly lower than international prices at $0.75/a million BTU (British thermal units). This cheap natural gas mainly used as feedstock for the manufacture of basic petrochemicals in the twin industrial cities of Jubail and Yanbu aims to support local industries to have a competitive edge in the international markets.

Shale gas will not be a cheap resource to aid national industries. Production of this unconventional energy seems to be prohibitively expensive as a million BTU is expected to cost the country at least between $6 and $8 and in some remote areas it may exceed $10 a million BTU. The Kingdom has already discovered plenty of shale gas estimated at over 600 trillion cubic feet, more than double of the current proven conventional reserves of 285 tcf. The country will search for more finds and has subsequently planned to conduct a 3-year study for more possible exploration of shale gas in far flung areas including Empty Quarter, Jalamid in the northern desert region and South Ghawar in the Eastern Province. MORE

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