Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on October 27, 2012
Major natural gas find by Saudis. A shift ahead?
Saudi Arabia has announced that they made a major new find in natural gas in the Red Sea.
The Saudis are already ranked 5th in the world for their reserves of natural gas, but they are only ranked 9th in terms of production of the commodity. They account for about 3 percent of world natural gas production. Compared with their oil production (13 percent of world production), there is clear room for growth.
A couple of weeks ago, a Citigroup report said that Saudi Arabia could become a net importer of oil, if current trends continued. That was because of the booming use of oil for electricity production in the kingdom.
The Saudis aren’t expected to allow their main source of about 80 percent of their export revenue to be eaten away by domestic electricity production; they will eventually substitute other sources of energy for the oil they currently use to produce electricity.
If this natural gas find is a sign that Saudi Aramco has begun efforts to explore and exploit its gas reserves, this could mark a signal that the country is accelerating its efforts to switch its electricity fuel from valuable oil to the more economically friendly natural gas. Given Saudi Arabia’s vast reserves of oil, the geological fact that oil and gas often exist in close proximity, and their close proximity to Qatar‘s giant North Dome field, we could quickly see Saudi Arabia move up world rankings in terms of proved reserves and production.
This would be a big switch for Saudi Arabia. Gas in that country has been seen as solely a byproduct of oil production: it was flared as waste for decades, though Aramco claims to have reduced this practice over the past 10 years. If Saudi Arabia ramps up its production of natural gas, it would add to the “Golden Age of Gas” as predicted by the International Energy Agency. With significant production growth and a move to export, it could even undercut the potential export market that American firms have been eyeing over the past year.
Although it is early for speculation of such a scale, further developments like these in Saudi Arabia bear watching.
7 Comments on "Major natural gas find by Saudis. A shift ahead?"
Gale Whitaker on Sat, 27th Oct 2012 6:02 pm
I think the use of gas for Saudi Arabia is a great idea. I think a better idea is for the Saudis to start breeding camels in huge numbers. They can start knitting sweaters out of camel hair and exporting frozen camel meat to western countries. That way they can practice the new/old paradigm that will be forced upon them when their oil is too expensive to be of any interest to the rest of the world. Since the total none gas GDP of the entire mideast is less than Finland it seems like they are going to be in a world of hurt. Maybe the royal family will have enough money in Swiss bank accounts to feed the citizens in perpetuity. I have an idea fire the modesty police and put them to work rounding up camels?
GregT on Sat, 27th Oct 2012 6:30 pm
When Saudi oil is too expensive to be of any interest to the rest of the world, the rest of the world will not be able to afford exported frozen camel meat.
BillT on Sun, 28th Oct 2012 1:58 am
The Saud family is between a rock and a hard place and they know it. A few more years will see the end of their rule and the country will be just plain Arabia again. Nothing will prevent the people from revolt and taking over the country.
The king has been bleeding the country for decades and is on his death bed. The rest of the family are too many and too divided to rule. Any disruption of oil sales will be the match on the fuse. Wait and see. $10 gasoline in the US?
Kenz300 on Sun, 28th Oct 2012 3:10 pm
Even Saudi Arabia knows burning its oil for power generation is a waste of energy and money. They are in the desert. It is time to ramp up solar power generation.
Sharpie on Sun, 28th Oct 2012 8:28 pm
Once again this begs the question: From where will Saudi Arabia import its oil?
Welch on Sun, 28th Oct 2012 9:48 pm
The Saudis will be exporting oil for many years to come. And will make oodles of money doing it. It is unlikely they have much to worry about–besides where to stash the huge sums of money they are going to make–for at least twenty years. As much as y’all would like to see it, the world is not going to fall apart nect year, in ten years, or likely for many years after. We will adapt, ass usual.
Natgas on Mon, 29th Oct 2012 11:37 pm
They are moving their power generation from oil to gas. Currently the share of gas is 50% and its set to increase while the Oil will go down.