WorleyParsons frontrunners for Aramco shale gas contract

06 May 2014

Australian consultancy favourite for engineering services deal in Saudi Arabia

Australia’s WorleyParsons is the frontrunner to be awarded a long-term contract by Saudi Aramco, which is aimed at carrying out engineering services for the oil major’s unconventional gas reserves across the kingdom.

MEED reported in January that bids had been submitted for the contract which will last three years with the option of a two-year expansion. The number of man-hours involved is at least 200,000.

If WorleyParsons are successful they will be providing front-end engineering and design (feed) and detail design for the kingdom’s shale gas sector. The contract will be similar, but on a smaller scale, to Aramco’s maintain potential programme which offers a similar service for offshore oil and gas operations.

The contract will concentrate on providing engineering services for three geographical locations. These are:

  • The Empty Quarter
  • South Ghawar in the Eastern Province
  • Jalamid in the northern desert region.

The contract adds credence to the recent report by MEED stating that shale gas production is still some years away for Saudi Aramco. However, the contract confirms that Aramco does view shale gas as a long-term viable option.

“Gas sales contracts are measured in years and not months so a steady flow of gas must be quantified in order for the [shale gas] to become viable,” says an executive from a Saudi Arabia-based oil and gas company.  “This takes time and will require a lot of engineering work to be carried out as well as  more exploration.”

The two main stumbling blocks for shale gas is the cost of production and providing enough water for the hydraulic fracturing, or “fracking”.  

Conservative estimates for gas prices in the remoter regions are $15 a million BTUs, while South Ghawar is between $8-$10 a million BTUs.

Most wells are drilled to about 6,000-7,000 feet. By contrast, some wells in the Empty Quarter in Saudi Arabia are expected to be drilled to depths of 12,000 feet.  Well costs in the kingdom are expected to exceed $10m.

Due to the massive energy infrastructure already in operation in the Eastern Province, the most likely area for initial production would be South Ghawar. However, experts predict that costs are still prohibitively high even for this location.

Aramco is committed to non-conventional gas and has formed a specialist unit that will concentrate solely on the resource. 

Saudi Aramco declined to comment when contacted by MEED.

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