GCC Country
Implications for chemical companies
Unconventional resources
Development status
Outlook
Preliminary estimates for possible unconventional gas exist, but figures not yet confirmed
Very early exploratory stage Specific shale or other unconventional gas deposits not yet identified
Bahrain is seeking alterna No projects yet announced tives to meet the increasing domestic consumption Further exploration activities likely
Initial studies indicated commercially viable resources both onshore and offshore in the east Unconventional resources include presumably heavy oil, tight gas, shale gas and shale oil
Kuwait is investigating a KOC is expected to plan to extract shale gas develop shale extraction in from its northern fields the foreseeable future Production of 150–200 mcf/ day estimated to be possible
Kuwait Oil Company (KOC) Technical cooperation contract signed with Shell
Khazzan-Makarem field in Block 61 has estimated 100 –150 tcf of tight gas in place Block 65 has significant potential to contain unconventionals, especially LTO
Drilling in Block 61 started in 2008 and in 2011 BP first delivered tight gas to the gas plant at Saih Rawl Two wells drilled by PDO’s exploration department in the south and north of Block 6 have yielded encouraging results
Estimated 1.2 bcf/day of gas being produced by 2017 in Block 61 with total possible yield of up to 30 tcf of tight gas Efforts in Block 6 now focusing on testing commercial viability Exploration/development investments in Block 60
Petroleum Development Oman (PDO) Oman Oil Company Exploration & Production LLC (OOCEP), subsidiary of Oman Oil Company (OOC) Commercial agreement with BP for Block 61 Occidental Petroleum and Shell involved
Not assessed
No activities
Due to abundant and cheap None conventional gas, exploration and production of uncon ventional gas is not planned
Unconventional gas estimates commonly exceed 600 tcf Deposits in the north-west part of Saudi Arabia near the border with Iraq and Jordan are expected to be shallow The largest identified deposit of shale gas/tight gas is located in Rub al Khali close to the giant Ghawar oil field
Around seven shale gas test wells drilled by Saudi Aramco by 2013 Halliburton and Schlum berger investigating the desert zone in the north-west Saudi Aramco rescheduled its shale gas development programme to seven years ahead of the previous plan, US oil field companies man dated to work on feasibility studies for first production
Due to a severe gas short age in Saudi Arabia and the large shale resources, exploration activities will intensify Problems of water supply for fracking and fixed gas price have to be solved to enable large-scale shale gas production
Halliburton, Baker Hughes and Schlumberger are establishing research centres in Saudi Arabia working on new extracting technologies for unconven tionals
Diyab is an extensive United formation with a substan Arab tial, but so far unquantified, Emirates amount of tight gas
First well tests with fracking by ADNOC were encourag ing with respect to technological feasibility Simulation studies of Diyab formation suggest that commercial production is possible
ADNOC is considering a three- to six-well pilot study specifically targeting Diyab tight gas Commercial production from Diyab is supported, but ulti mately depends on further exploration and test results
Abu Dhabi National Oil Company (ADNOC) Abu Dhabi Company for Onshore Operations (60% owned by ADNOC) Cooperations with BP, ExxonMobil, Royal Dutch Shell, Total, Partex
Bahrain
GCC countries, and most notably Qatar and Saudi Arabia, are differently affected by the gas and oil risk factors described above. These risks have the capability of accelerating the regional ethane shortage, which might lead to or worsen underutilisation of production assets. This may lead to a tendency in the GCC (except Qatar) that for the foreseeable future new crackers may be based also on naphtha. In the light of cheap ethane in the US as well as more naphtha-based ethylene in GCC countries, the cost advantage of these countries’ derivatives will shrink significantly compared to the US. US shale developments have triggered new technology developments (e.g. on-pur pose dehydrogenation of propane) as well as investments in additives and co-monomers capaci ties, which further strengthen the US ethylene downstream position compared to GCC countries. As of today, GCC downstream players hardly felt any serious effects from the shale boom, while Europe has started to bear the heavy burden and will continue to do so; a closure of approximately 10% of total European ethylene capacity is forecasted by industry experts. In the longer term, GCC countries will most likely keep their position as the lowest cost producer – despite a new shale-age market equilibrium, albeit with much less margin differential to the US. One must not forget that in the foreseeable future, GCC downstream players will still have favourable raw material conditions and will most likely be able to manoeuvre their businesses reasonably around shale gas-induced market changes in the US and elsewhere. However, the times of abundant low-hanging fruits and extraordinarily high margins in GCC countries is set to end.
Kuwait
Oman
Qatar Overview of unconventional resources and related exploration and production activities in GCC countries Sources: Arabian Oil & Gas, Arab Times, Bloomberg, BP, Citi Research, EIA, E&P magazine, Gulf Oil & Gas, ICIS, IEA, IEEJ, Index Mundi, Oil Price, Oman Daily Observer, Qatargas, Reuters, Saudi Gazette, Schlumberger, World Bank, World Economic Forum and shale gas-related conferences in China, Europe, GCC countries, USA.
Abbreviations Bbl. = Barrels Btu = British thermal unit GCC = Gulf Cooperation Council LNG = Liquefied natural gas MM = 1 million NGL = Natural-gas liquid tcf = trillion cubic feet NOTE LTO = Light Tight Oil mcf = million cubic feet bcf = billion cubic feet tcf = trillion cubic feet
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Saudi Arabia
Engaged companies in unconventionals