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Saudi Aramco to complete first phase expansion of natural gas network by year end

Saudi Aramco plans to complete the first phase of expansion of its master gas system that supports industry and utilities, lifting its capacity to 9.6 Bcf/d, by the end of the year, the state oil giant told S&P Global Platts Sunday.

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Aramco built the original master gas system in the 1970s, with gas-gathering and processing facilities as the backbone of the kingdom's industry, allowing Aramco to use or market nearly all the produced gas associated with oil production.

As gas demand continues to rise, Aramco has launched a two-phase initiative to expand gathering and processing capacity, adding two booster gas compressor stations in the Red Sea region, the first facilities of their kind in the kingdom, which will help supply natural gas to the Saudi Electric Company Rabigh-2 power plant and the new King Abdullah Economic City.

The new facilities will also support future utilities and industrial sectors, primarily in the Rabigh area.



The first booster gas compressor is now at the pre-commissioning stage, Aramco said, after it accelerated the first phase to meet the scheduled date of operations at Rabigh-2 power plant so it can avoid burning liquid fuel.

A second phase of expansion will increase capacity to 12.5 Bcf/d by 2020, along with the installation of nearly 1,000 km of 56-inch diameter pipelines linking the eastern and western coasts.

"This is a strategic transformation project that targets substituting oil with gas," said Saleh al-Wadei, the acting project manager. "It will save the crude oil that would have been burned to generate power."


NEW GAS PROCESSING CAPACITY


Aramco processed an all all-time high of 12 Bcf/d of raw gas in 2016, producing 8.3 Bcf/d of sales gas, the company said in its 2016 annual review, published in June. That was up from around 8 Bcf/d of sales gas in 2015.

It has already reached its full 2.5 Bcf/d capacity at the Wasit gas plant, which is fed by non-associated gas from the offshore Arabiyah and Hasbah fields in the Persian Gulf. Aramco is also nearing the completion of its Midyan gas plant in the northwest of the country.

When complete, Midyan will supply 75 MMcf/d of non-associated gas and 4,500 b/d of condensate to the Saudi Electricity Company's new power plant in Duba.

Last July, Aramco signed four major contracts for the construction of its giant planned Fadhili gas processing plant in the Eastern province, which will allow it to boost Saudi gas processing capacity to more than 17 Bcf/d by the end of the decade.

The 2.5 Bcf/d project is set for completion by the end of 2019. The plant will process non-associated gas, including 2 Bcf/d of gas from the offshore Hasbah field and 500 MMcf/d from the Khursaniyah onshore sour-gas field.

Together with the Wasit and Midyan gas plants, the Fadhili plant will contribute more than 5 Bcf/d of gas processing capacity, and forms a key component of the kingdom's master gas system.

If all goes as planned, this will increase gas supplies to more than 17 Bcf/d by 2020 and reduce the kingdom's dependence on burning crude oil and fuel oil for power generation and water desalination.

Providing more gas for power generation has become a key priority for Aramco since the kingdom burned nearly 900,000 b/d of crude in its power stations during the peak summer demand period last June.

Liquid fuels account for half of Saudi Arabia's current energy mix. Aramco hope to increase the share of gas used to 70% over the next 10 years.

Domestic oil consumption totaled 3.121 million b/d in May, data published last week by Riyadh-based Joint Organizations Data Initiative showed.

This includes 604,000 b/d of crude burned for power generation, down 8% year on year, amid increasing use of gas as feedstock after new gas processing plants were brought on stream last June.

Crude oil used for direct burning hit its all-time monthly high in July 2014, at 899,000 b/d.

--Adal Mirza, adal.mirza@spglobal.com
--Edited by Wendy Wells, wendy.wells@spglobal.com