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Saudi Arabia forges ahead with shale gas play in unconventional push to cut oil use

Highlights

Jafurah field could yield up to 2 Bcf/d of gas at peak

Output will also support chemicals, hydrogen production

Aramco says shale gas will reduce oil used for electricity

Saudi Aramco expects its Jafurah shale play to yield up to 2 Bcf/d of gas, 418 MMcf/d of ethane and 630,000 boe/d of gas liquids and condensates by 2030, as the company ramps up its development of unconventional resources.

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Awarding engineering and construction contracts worth $10 billion for work at the field on Nov. 29, Saudi Aramco said the projects will expand its gas production, while also providing feedstock to support growth in its chemicals and hydrogen sectors.

Jafurah is located in Saudi Arabia's Eastern Province and is the kingdom's largest discovered non-associated gas reservoir with some 200 Tcf of resource, Aramco CEO Amin Nasser said at the contracts' signing ceremony.

"Today, we celebrate the commercialization of the kingdom's vast unconventional resources and an even bigger and stronger gas business for Saudi Aramco," Nasser said. "It is a breakthrough that...has positive implications for energy security, economic development and climate protection."

Aramco averaged 9.03 Bcf/d of gas production in 2020, according to its most recent annual report. The bulk of the output comes from associated gas pumped, along with Saudi Arabia's massive crude oil production.

Aramco announced ambitious plans for the Jafurah basin in 2020, with many observers questioning the cost-effectiveness of developing the field, compared to its relatively low-cost conventional reserves. Fracking, the process needed to access the shale gas reserves, requires major volumes of water, a resource Saudi Arabia lacks in abundance.

Saudi officials, however, said developing Jafurah was central to the kingdom's goal of achieving net zero emissions by 2060. Saudi Aramco has an even tighter target of net zero by 2050.

Nasser said the gas produced from Jafurah would displace more than 300,000 b/d of crude that would otherwise be used for domestic power production.

"Gas has a critical role to play in the energy transition and it will help significantly reduce emissions in the domestic energy sector, while providing a feedstock for low-carbon hydrogen and ammonia," he said. "It will also allow Aramco to tap into high-value feedstocks for use in the expanding downstream petrochemicals industry and our aim is to significantly increase our gas production capacity over the next decade to meet demand growth."