Just a couple of days ago, Reuters published a short article stating that Saudi Arabia’s energy minister announced the discovery of seven oil and gas accumulations in the country. As is often the case with press releases of this kind, it is hard to make sense of what was really discovered, and how much.
The statement says: “Two unconventional oil fields, a reservoir of light Arabian oil, two natural gas fields, and two natural gas reservoirs” have been discovered.
The first question is, what is the difference between a natural gas field and a natural gas reservoir? Could it be that the two natural gas fields indicate a find close to existing fields? Using the word “field” implies that production is already ongoing. A natural gas reservoir, in contrast, alludes to something a bit more “frontier”. Saying that, when I spoke to a person with knowledge on the matter earlier this year, he said that frontier exploration does not really exist anymore in Saudi Arabia; wells have been drilled all over the country and therefore it is slightly misleading to use frontier.
Another indication why using frontier exploration for drilling activity in Saudi Arabia may not be the most fitting term anymore is the fact that Aramco seems to target unconventional reservoirs – two unconventional oil discoveries are part of the announcement made. Combined with already known unconventional developments in the country, such as the production of tight gas from below the Ghawar oil field and the development of the Jafurah unconventional gas field, it is a clear sign that exploration is now targeting the more challenging reservoirs rather than focusing on frontier areas.
The discoveries were made in two areas of Saudi Arabia; the Eastern Province and the Empty Quarter – see map. The Eastern Province is clearly the hotspot of oil and gas production in the country, with lots of existing fields. It is therefore likely that the two unconventional oil finds and the “reservoir” reported from this area are close to existing fields. There are not as many fields in the Empty Quarter, so the gas discoveries announced here may be more standalone.
The impact of these finds in terms of Saudi Arabia’s ability to continue exporting oil – and maybe gas in the not-too-distant future – is unclear. Volumes were not mentioned in the press release. It may also be difficult to state volumes as well, given that it is a lot harder to come up with unconventional gas or oil volumes than when it is conventional hydrocarbons. It is more the unconventional nature of the discoveries that is confirming the way Aramco is going – targeting the more challenging reservoirs.
