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Fossil Fuels Saudi Aramco Saudi Arabia

Published on July 8th, 2014 | by Tina Casey

25

Saudi Aramco Pulls Rug Out From Under US Gas Industry

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July 8th, 2014 by
 
File this one under E for ewps, at least as far as the export market for US fracked natural gas goes. The US natural gas industry has been leaning thishard on the Obama Administration to approve more overseas sales, but international fossil fuel giant Saudi Aramco has just announced big plans to go mano a mano with the US in the global natural gas market.

The Saudi Aramco news was reported just yesterday by Bloomberg. Combined with two new studies that cast yet another harsh light on the risks of natural gas fracking in the US, it’s been a helluva week for an industry that has been touting itself as the best thing since sliced bread.

Saudi Aramco Saudi Arabia

Saudi Arabia via Wikimedia.

US Natural Gas And The Export Market

For those of you new to the topic, the US natural gas industry has been growing in leaps and bounds over the past few years thanks to an unconventional (though now very common) drilling method called hydrofracturing.

Fracking, as it has been dubbed for short, has enabled drillers to tap formerly inaccessible reserves of natural gas in shale formations. The technique consists of pumping a proprietary chemical brine underground at high pressure.

Fracking has also benefited from a gaping hole that suddenly appeared in the federal environmental regulations during the Bush/Cheney Administration, which is kind of what happens when you hire two guys with deep seated interests in the fossil fuel industry to run your democracy.

In any case, the recent gold rush on fracked natural gas has led to a glut in the US, pushing prices down. That’s why the industry is now desperate to increase its export market.

The Obama Administration has been slowly but steadily approving new export terminals, despite concerns from environmental organizations, local communities, and sympathetic legislators. At least in that regard, everything has been going along swimmingly for the US natural gas industry…until yesterday.

Big News From Saudi Aramco

You could practically hear the brakes squealing on the US natural gas export market when Bloomberg reported the news out of Saudi Aramco (that’s short for the state-owned Saudi Arabian Oil Company btw).

To clarify, although there are substantial shale gas formations in Saudi Arabia, the Saudi Aramco announcement did not deal with shale gas fracking. It dealt with another type of unconventional gas formation.

Here’s a nugget from that Bloomberg report, filed by reporter Wael Mahdi yesterday:

Saudi Aramco is drilling in tight sands reservoirs where permeability and porosity is greater than that of shale formations but below that of conventional oil and gas bearing sands. “We do have shale, but shale will take a little bit more time because we need to go with the low-risk, high-rewards projects to get our revenue,” Kanaan said.

The bottom line as reported by Mahdi: Saudi Aramco has come up with cost-effective ways to get at its tight gas and is now targeting a competitive price of $2.00 to $3.00 per thousand cubic feet.

US oil exports are going to feel a ripple effect, too. The big picture for Saudi Aramco is to use some of the newly recoverable gas reserves domestically, freeing up more oil for export.

US Natural Gas Fracking Under The Gun

Saudi Aramco is sitting on the world’s fifth-largest shale gas reserves but can’t go after them, according to Mahdi, because the Saudi Kingdom lacks the massive water resources required for modern fracking operations.

That should send some red flags up for the US industry, since water scarcity and water competition issues are also beginning to dog shale gas in parts of the US.

That’s on top of growing evidence of serious water pollution risks, but water resources are just part of fracking’s problems in the US, which brings us to the two aforementioned studies.

First up is “Assessment and risk analysis of casing and cement impairment in oil and gas wells in Pennsylvania, 2000–2012,” published online at the Proceedings of the National Academy of Sciences (h/t AP).

 

The study finds that methane leakage from fracking operations has been much greater than in conventional drilling among the 41,000 wells surveyed. That adds to a mounting pile of evidence regarding methane leaks all along the natural gas supply chain, undercutting the industry’s claims of a cleaner fuel compared to oil and coal.

The other study is “Sharp increase in central Oklahoma seismicity since 2008 induced by massive wastewater injection,” published online at Science.

That one adds to the knowledge base regarding the impacts of disposing fracking wastewater into wells: among other things, it causes earthquakes.

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About the Author

Tina Casey specializes in military and corporate sustainability, advanced technology, emerging materials, biofuels, and water and wastewater issues. Tina’s articles are reposted frequently on Reuters, Scientific American, and many other sites. Views expressed are her own. Follow her on Twitter @TinaMCasey and Google+.



  • sault

    Dang, I miss the good ol’ days when peak fossil fuels was going to play a major role in saving us from climate change. While fossil fuels are still going to run out, it looks like we have way more than enough to kick us into a totally new climate state before then. Especially if we get lulled into a false sense of security with unconventional plays and then get sucked into REAL climate nightmares like oil shale and methane hydrates. We need a global deal on CO2 emissions ASAP.

  • Al Tinfoil

    GlobalResearch.org ran a report by Dylan Murphy and Jo Murphy on April
    29, 2014 entitled “Selling Hydraulic Fracking: The Myth of Energy
    Independence Used to Hoodwink The American People”. The report says
    shale gas production peaked in 2011. It now provides 40% of US
    consumption, 2/3 of which comes from only 3 plays, which are the richest.
    But Shale wells drop in production by 85% to 90% in 36 months, so each
    field must replace 30% to 50% of its wells each year. The capital cost
    for drilling was $42 Billion to produce gas that sold for only $32 Billion in
    2012. Costs per unit of gas production will increase as lower-quality
    fields are exploited. No wonder fracking companies want to export gas to
    external markets where prices are higher.

    Initial estimates of recoverable shale gas put it at 100 years of supply.
    Recently, the EIA (Energy Information Administration) lowered that to 24
    years, and others say only 11 years’ supply of recoverable shale gas exists.
    US companies are now selling off their leases or speculating in leases
    rather than drilling. See Platts: “BP takes $520 million writedown after
    ditching plan to develop Utica Shale”. At the same time, the cold
    winter of 2013-2014 has drawn down gas storage, and reserves in storage will
    not be replenished this year. See Alan Neuhauser in US News and World Report:
    “Frigid Winter Reduces Natural Gas Supplies to 11-year Low.”
    Thus it seems very unlikely that there will be much shale gas available for export
    from the US.

    See also: Houston Chronicle, May 4, 2014 “Cicio: Obama plan to export
    natural gas to Europe won’t work.”

  • http://www.michaeljberndtson.com/ Michael Berndtson

    If Saudi Arabia, the other Middle Eastern countries, Africa, Russia and everybody else simply collected gas at the wellhead instead of flaring – there would be – well, a lot of gas available. And even more if efficiency and use reduction were taken seriously. Russia is the worlds greatest gas flarer. Flaring statistics are sometimes not all that accurate, at times. Flaring success in terms of mineralizing light petroleum hydrocarbons to carbon dioxide and water via open flame combustion is sort of a guessing game.

    http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:21032487~menuPK:34480~pagePK:64257043~piPK:437376~theSitePK:4607,00.html

    “Approximately 140 billion cubic meters (bcm) of natural gas is flared each year, about 30 percent of the European Union’s annual gas consumption. During oil production, the associated natural gas is flared when barriers to the development of gas markets and gas infrastructure prevent it from being used. Gas flaring wastes a valuable and comparatively low-carbon energy resource and results in emissions of about 350 million tons of CO2 a year.”

    In American Units: that’s about 5 trillion cubic feet per year. The US produces and burns through about 25 trillion cubic feet per year.

    Of course we can stir up the Middle East and spend our way into oblivion to protect oil and gas interests here and there – but to add gas collection technology at the wellhead – no way, we’re told. It’s too expensive.

    • GroveWanderer

      “If Saudi Arabia, the other Middle Eastern countries, Africa, Russia and everybody else simply collected gas at the wellhead instead of flaring – there would be – well, a lot of gas available.”

      Saudi Arabia started to eliminate associated gas flaring as a matter of policy in the 1970′s. Nowadays only minimal amounts of mostly purge gases get flared there.

      • http://www.michaeljberndtson.com/ Michael Berndtson

        True. Saudis (the government/family) purchased another 25 percent of Saudi Aramco during the 70s – pushing US and Brits further down the ownership ladder, which probably spurred interest in turning a waste product into revenue. Saudis still seem to flare more than the occasional upset belch at about 3.7 bcm as of 2011. That’s about 106 billion cubic feet per year. Russia vents/flares ten times more.

        Put it this way – the Marcellus shale field in Appalachia is producing about 5 trillion cubic feet per year. Saudi levels of flaring would be equal to venting/flaring all wells for 7 days. Russia’s flaring would be about 70 days of just venting/flaring Marcellus wells. The worlds flaring would be about 250 days of venting/flaring Marcellus wells. That’s a lot of gas just wasted.

        http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTOGMC/EXTGGFR/0,,contentMDK:22137498~pagePK:64168445~piPK:64168309~theSitePK:578069,00.html

        Volumes in bcm 2007 2008 2009 2010 2011 Change from 2010 to 2011

        Russia 52.3 42.0 46.6 35.6 37.4 1.8

        Nigeria 16.3 15.5 14.9 15.0 14.6 -0.3

        Iran 10.7 10.8 10.9 11.3 11.4 0.0

        Iraq 6.7 7.1 8.1 9.0 9.4 0.3

        USA 1 2.2 2.4 3.3 4.6 7.1 2.5

        Algeria 5.6 6.2 4.9 5.3 5.0 -0.3

        Kazakhstan 2 5.5 5.4 5.0 3.8 4.7 0.9

        Angola 3.5 3.5 3.4 4.1 4.1 0.0

        Saudi Arabia 3 3.9 3.9 3.6 3.6 3.7 0.1

        Venezuela 2.2 2.7 2.8 2.8 3.5 0.7

        China 2.6 2.5 2.4 2.5 2.6 0.1

        Canada 2.0 1.9 1.8 2.5 2.4 -0.1

        Libya 3.8 4.0 3.5 3.8 2.2 -1.6

        Indonesia 2.6 2.5 2.9 2.2 2.2 0.0

        Mexico 4 2.7 3.6 3.0 2.8 2.1 -0.7

        Qatar 2.4 2.3 2.2 1.8 1.7 -0.1

        Uzbekistan 2.1 2.7 1.7 1.9 1.7 -0.2

        Malaysia 1.8 1.9 1.9 1.5 1.6 0.2

        Oman 2.0 2.0 1.9 1.6 1.6 0.0

        Egypt 1.5 1.6 1.8 1.6 1.6 0.0

        Total top 20 132 124 127 118 121 3.1

        Rest of the world 22 22 20 20 19 (1.1)

        Global flaring level 154 146 147 138 140 1.9

        Source: NOAA Satellite data

  • Ronald Brakels

    Saudi arabia already pumps vasts amounts of seawater and injects it into the ground. On one hand it’s nice of them to slightly offset the sea level rise that burning oil results in, but unfortunately they are just doing it so that more oil can be extracted and burned. Actually, since they also pump out fresh water from fossil aquifiers I wonder if salt water in equals fresh water out? If fresh water out is greater then they are contributing to sea level rise through more than just global warming. Anyway, Saudi Arabia has demonstrated it can get sea water to where it wants if there is money to be made from doing so. They can even power the pumps with solar PV. So it’s up to us to make sure the demand isn’t there.

    • http://sadbutmadlad.com/ SadButMadLad

      #GreeniesAreStupid if they think the amount of water Saudi uses could affect global sea levels. Even all the oil from Saudi can’t affect sea levels either. Its the burning of oil and coal in China and the US that is adding to the already very tiny levels of CO2 in the atmosphere. CO2 in the atmosphere is 400ppm, or to put it in less scary numbers that’s 0.04%. A tiny tiny tiny tiny amount. #GreeniesAreStupid when they concentrate on the little things.

      • CsabaU

        Nice photo, I suppose it is a recent one.

      • JamesWimberley

        No reason to worry about that Ebola virus then, a thing that weighs 10^−19 kg can’t possibly hurt you.

        • http://sadbutmadlad.com/ SadButMadLad

          Nice strawman.

          Ebola is dangerous but is it affecting the whole world? Nope.

          • Bob_Wallace

            Nice attempted dodge, but the blow landed solidly. You’re argument went down on the canvas.

      • Ronald Brakels

        Not a big believer in maths, huh? Go find an estimate of the amount of water removed and not replaced from the Olgallala, Sana’a, North Arabian and other aquifiers. It adds up to a small but appreciable rise in sea level as very little of said water has been shot into space in rockets.

        • Offgridmanpolktn

          Back again trying to deny the reality of what is going on with the world climate problems and start fights with what you must realize by now the majority here understand. Surprised that you haven’t started with the nukes will save the world and create a perfect economy line yet.
          It would seem that you are intelligent enough to know repeatedly starting disagreements with the same people over the same issues is the sign of a personality disorder because you fail to recognize that the situation isn’t going to be resolved any differently.
          Please get yourself some help so that you can quit aggravating yourself and others.

          • Bob_Wallace

            Huh?

            You post this in the wrong place?

        • http://sadbutmadlad.com/ SadButMadLad

          At a guesstimate it’ll be a few 100 million gallons of water won’t it? And how many millions of gallons of water in the oceans? 100 times more? 1000? or 100,000? The oceans are 352,670,000,000,000,000,000 gallons so more like 1,000,000,000,000 times more. #GreeniesAreStupid when they worry about such small things. I suppose you are right a small rise in sea level – about 0.00001mm.

          • Ronald Brakels

            Guesstimating is fine when one has some reason to think the numbers one are using are roughly correct but pulling numbers out of the air is not so helpful. Over 300 square kilometers of water or about 100 trilliion gallons have been extracted from the Ogallala basin in the United States alone. And it’s not the volume of the oceans that are important for determining rises in sea level, it’s their surface area which is about 400 million square kilometers. So roughly speaking the water from the Ogallala basin has been enough to raise sea levels one millionth of a kilometer, or one milimeter. Add in fossil water from other basins and it adds up.

          • http://sadbutmadlad.com/ SadButMadLad

            Who’s pulling numbers out of the air? And you think surface area makes the sea level rise? #GreeniesAreStupid. 100,000,000,000 gallons. Big numbers. But that’s still a tiny tiny tiny tiny tiny tiny proportion of all the water in the oceans. More like rise sea levels by a millionth of a millimetre.

          • Bob_Wallace

            Pointing at you and laughing.

          • http://sadbutmadlad.com/ SadButMadLad

            Pointing at you and laughing.

            Glad that its causing us some enjoyment.

          • Bob_Wallace

            You might want to do a little thinking about rising sea levels.
            Imagine you had a bowl of frozen water – ice. And you poured a cup of water into the bowl. Nothing below the level of the ice surface changes, the extra water spreads out to the edges of the bowl and the overall H2O (ice plus water) level rises.

            It doesn’t matter if the bowl is 2″ deep or 6′ deep. The amount of water/ice in the bowl has nothing to do with how much the level rises. That is determined by the amount of water added and how far it can spread.

            The surface area.

          • Ronald Brakels

            SadLad, you asked, “Who’s pulling numbers out of the air?” When you wrote, “At a guesstimate it’ll be a few 100 million gallons of water won’t it?” you were pulling a number out of the air. If you had made the effort to actually investigate the amount you wouldn’t have been off by three orders of magnitude. If I was teaching English and the students wanted to know what the phrase, “pulling a number out of the air” meant, what you wrote would be an excellent example to give them.

          • http://sadbutmadlad.com/ SadButMadLad

            Do you know what 3 orders of magnitude means. Not x3 but 1,000,000,000,000,000 times. Am I that far out that more water in all the oceans of the world is used in the Ogallala basin and the other places you mention?

            The total amount of water in the oceans is 352,670,000,000,000,000,000 gallons. That of the aquifers in all the world, not just a few, that is not being replenished, is around 9,900,000,000,000 gallons give or take a few billion gallons. I know all those zeros will probably confuse you, but at the current rate of extraction it will still take a long time for the sea level to rise appreciably assuming that the water extracted only went into the oceans.

            So how much would it rise? The oceans are ~361,000,000 sq km so to raise by 1mm would require 360,000,000,000,000 litres of water which is ~95,000,000,000,000 gallons.

            So I was wrong, its not a millionth, just a tenth of a millimetre rise, assuming that all the water from the aquifers goes straight into the oceans and not back into the ground, into lakes, in the air, in plants or in animals and also assuming that extraction rates do not change.

            Keep showing your stupidity. Oh, and the sky isn’t falling down chicken little.

      • Bob_Wallace

        You’re a bit slow on the uptake, Mr. Lad. See if you can obtain a snark module.

        And when it comes to CO2 and climate change, you’re just ignorant.

    • anderlan

      Yes. Use solar for pumps and desalination.

      We burn 16 cubic kilometers of fuel per year. We’re losing (net) land ice at a rate of more than 500 cubic kilometers per year. Using water for fuel recovery can’t influence sea levels.

    • Jim Young

      You said, “They can even power the pumps with solar PV.”

      They are already using wind power and geothermal, and would be using small Nuclear reactors in oil fields if they had been able to get them approved (to try to keep the much higher cost of extracting the tight, short lived well site resources somewhat profitable). A Shell brochure from 2007 suggested they would use 32 to 64 times the number of wells (seems the average is 40 times as many) to get similar amounts of resources out over the longer term. Shell described putting the drilling rigs on skids to drag them between sites without too much dis-assembly and re-assembly, too. Besides “safely” getting rid of methane (and irreplaceable Helium) by flaring (uneconomical to add pipelines or other means of recovery), it seems they are hiding much more of the gaseous release by venting it off unburned (if the LIDAR images used to detect leaks are what they seem). If what seems evident from the LIDAR images is real, this is very far from accidental releases and seems more like hiding the true amounts released in a more dangerous form (to me) through stacks designed to function, than if it was flared off.

      Altogether, it seems far more Methane (and Helium where it comes up with the Methane) is released than the public has any idea of.

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