With initial results indicating that the Middle East-North Africa region holds significant unconventional resources and with rising local gas demand, operators have begun assessing the viability of tight gas and shale gas projects. However, production in these oil-rich but often gas-short countries faces challenges, among them high-pressure/high-temperature operations due to the depth of the resources and the enormous water requirements for such projects.
The following is a roundup of unconventional exploration and appraisal activities in several countries in the region.
Saudi Arabia: The Journey Has Begun
Despite its prolific oil output, Saudi Arabia faces challenges in meeting its economy’s voracious appetite for gas to fuel power, petrochemical, and desalination plants. The country has begun investigating its large unconventional deposits and their potential for fueling long-term growth for its booming population.
“Over 1.2 million sq km of frontier basins are being identified and deployed with the latest technologies to work with source rocks and tight reservoirs that are associated with the largest oil and gas fields in the world,” Saudi Aramco said in a statement released in August at the Unconventional Resources Technology Conference, which was sponsored by SPE, the American Association of Petroleum Geologists, and the Society of Exploration Geophysicists. “Leading scientists in Saudi Aramco’s Advanced Research Center and in collaboration with others are working on uniquely innovative unconventional projects.”
Saudi Aramco is currently exploring and appraising several prospects for unconventional gas: in the northwest, the south Ghawar field, and the Jafurah and Rub’al-Khali basins. “We are focusing on three major regions in the kingdom,” said Amin Nasser, senior vice president of upstream operations at Saudi Aramco. “In the northwest, the search is characterized by shale at shallow depth. In the east, excellent tight gas opportunities have been identified for appraisal and we could lower costs by leveraging our existing infrastructure. In the southeast, prospects are economically attractive given the existing petroleum system.”
Baker Hughes estimates Saudi Arabia’s shale gas reserves at 645 Tcf. “Saudi Arabia’s unconventional gas reserves resource base is large. The numbers are in the hundreds of Tcf, which are recoverable,” Khalid Al-Falih, president and chief executive officer of Saudi Aramco, said recently. “Until we do the exploration and pilots, we will not be able to bank on them, so to speak.”
Last March, Saudi Minister of Oil Ali al-Naimi signaled that his country would push ahead this year with exploratory drilling of shale and other unconventional gas reserves. “This year alone, we are going to test seven wells for shale,” he said. “We have rough estimates of 600 Tcf of unconventional shale gas. The potential is very huge and we plan to exploit it.”
Saudi Arabia has neither offered a forecast of how quickly it might achieve commercial production of shale gas or shale oil, nor described how it will supply the large amounts of water required in hydraulic fracturing.
Algeria: Taking the Lead
Algeria appears well placed to develop unconventional resources. Energy Minister Youcef Yousfi has said that the government hopes for commercial production of unconventional gas to begin within 5 years.
Analysts say that a number of conditions in Algeria support the development of shale gas. The western basins are already undergoing drilling and hydraulic fracturing as a result of the exploitation of several fields, such as Ahnet and Tinhert. In the eastern basins, the availability of infrastructure, surface facilities, and a pipeline network with significant capacity offer opportunities for developing shale gas cost effectively. Spanish firm Repsol has stated that the eastern basins have “excellent potential” for unconventional development, whereas the western basins have “middle potential.”
The requirement for large amounts of water also could be met. Research teams from the British Geological Survey and the University of London have confirmed the presence of significant volumes of water in aquifers extending from eastern Algeria to the western basin of Ahnet. The teams recently mapped aquifers and groundwater in north Africa and presented their findings in a technical paper, saying, “The largest groundwater volumes are found in the large sedimentary aquifers in the north African countries of Libya, Algeria, Egypt, and Sudan. For Algeria, aquifer liter per second production is very high.”
Abdelhamid Zerguine, chief executive officer of Algerian government-owned Sonatrach, said his company has launched four studies to evaluate the potential of shale gas and liquids in the country, in partnership with Eni, Talisman, Shell, and Anadarko. “We are in discussion with other companies for similar projects. All these studies will go through a pilot project either in partnership or with our proper efforts,” he said.
Sonatrach drilled its first shale gas well using its own resources, Zerguine said. “Using our own efforts, we have finished the drilling of the first shale gas in the central part of the Sahara. The initial interpretation of the data of these wells showed that the gas potential is similar to [known] basins around the world. The well drilling has been completed, and we also conducted a simulation test in 2012. A second drilling is currently under way,” he said.
Sonatrach recently signed a cooperation agreement with Eni for the development of unconventional gas in Algeria, with a focus on shale gas. It also signed a deal with Shell to explore for shale gas in the Mouydir basin. Within the next year, the two companies expect to complete a study that will include more details on resource estimates. Talks on shale gas exploration are also under way with ExxonMobil.
To encourage exploration, the Algerian government has introduced measures to make its fiscal system more attractive. It has also sought to explain to the Algerian public that steps will be taken to minimize shale exploration’s effect on the local environment.
Libya and Egypt: Early Starts
Libya has one of the highest estimates of technically recoverable shale oil and gas in the world, according to data from the US Energy Information Administration (Table 1A and Table 1B).
“Gas has never been a priority for us, but it is now. We may have some of the most important shale gas deposits in the world,” Nuri Berruien, chairman of National Oil Company, said during the recent North Africa Gas Summit. “Right now, we are evaluating the reserves and talking to our partners. The potential is definitely there.”
Because of the absence of data on unconventional gas resources in the country, Egypt has formed a committee composed of representatives from all government entities that can contribute to the exploration of shale gas. The committee is tasked with gathering relevant data, including assessing Egypt’s shale gas resources, and studying reports and research conducted in other countries on a regional level, and the work done by producing countries to reach an advanced stage of production.
The country is also collaborating with service companies to gather data related to shale gas. Local media reported that discussions over investments in unconventional resources are set to take place in early 2014. Authorities are also working on improving financial terms for shale exploration and production.
UAE: Assessing Potential
In the United Arab Emirates, Abu Dhabi National Oil Company (ADNOC) is currently assessing unconventional hydrocarbon potential in the country. With the development of long horizontal drain holes and multistage acid fracturing, the company said that the tight gas and shale gas potential of the Izhara, Hamlah, Marrat, and Gulailah formations could be attractive exploration targets.
Ahmed Taher, a senior geologist at ADNOC, said that these formations show much better permeability than the global average. “We have plans to drill test wells in 2013,” he said. “The north offshore region has the potential for several trillions of cubic feet of gas. The Lower Izhara and Minjur formations may contain considerable volumes of shale gas as indicated by sedimentary patterns, facies variations, and log responses. Hamlah mainly has potential for tight gas in the northern offshore structures.”
The shale intervals of the Minjur formation, especially in Well S, were found to be highly saturated with hydrocarbons. These intervals have a high-porosity value and may contain significant volumes of shale gas.
ADNOC is also evaluating the Diyab source rock that covers most of the central and western portion of Abu Dhabi, and is believed to hold significant hydrocarbon reserves. Musabbeh Al Kaabi, exploration division manager at ADNOC, said the source rock is analogous to source rock holding shale gas found in North America because it is rich in organic matter. “If successful, it would reflect significant additional reserves. We are at the proof of concept stage and all indications are this is a promising opportunity.”
Exploratory wells are planned over the next couple of years.
Oman: Tight Options
Oman is investigating exploration for tight and shale gas because a shortage of gas is holding back its industrial and petrochemical sectors. Meanwhile, BP is considering going ahead with a USD 20 billion project to produce tight gas reservoirs deep under the Khazzan and Makarem fields in the north central region. A planned full field development will produce 1 Bcf/D of natural gas.
Jordan: Tapping Oil Shale
While most countries in the Middle East-North Africa region are assessing their reserves of unconventional gas, Jordan is the exception. The country, which imports more than 98% of its hydrocarbon needs, is tapping oil shale rather than shale gas.
Oil shale deposits underlie more than 60% of Jordanian territory, with total resources estimated at 40 billion to 70 billion tonnes of oil shale. The most significant deposits are located in west-central Jordan.
Jordan’s government signed four memorandums of understanding (MOUs) between 2006 and 2007 for processing shale oil and one memorandum for in-situ conversion processing. The first was signed with Estonian energy company Eesti Energia, which was awarded the exclusive right to study one-third of the resources of the El Lajjun oil shale deposit. Later, this right was transferred to cover a block on the Attarat Umm Ghudran oil shale deposit.
After completing the initial studies, Eesti Energia presented a feasibility study to the government and established an oil shale plant with a capacity of 36,000 B/D operated by Jordan Oil Shale Energy. The oil shale plant will use Enefit’s processing technology, with construction set to begin by 2015.
Jordan also signed an MOU with Brazil’s Petrobras, awarding it the exclusive right to study a block at the Attarat Umm Ghudran deposit. The Saudi Arabian International Corporation for Oil Shale Investment also signed an MOU for the evaluation of the El Lajjun deposit and Attarat Umm Ghudran resources.
Shell signed an MOU to test its in-situ conversion processing in the Azraq and Al-Jafr blocks in central Jordan. In May, JOSCO, a wholly owned subsidiary of Shell, began the initial appraisal phase. During the appraisal phase, JOSCO will conduct further appraisal drilling, logging operations, and hydrology testing of the concession area. A geochemical analysis of drilled samples will be conducted to test Shell’s in-situ conversion process technology.