Saudis Splurging on American Natural Gas Fields

1 hour ago, ronwagn said:

https://oilprice.com/Latest-Energy-News/World-News/Saudi-Aramco-Plans-Shale-US-Shale-Gas-Move.html

May invest up to 250 Billion over ten years. 

 

Saudi Aramco Plans Shale U.S. Shale Gas Move

By Tsvetana Paraskova - May 08, 2019, 4:00 PM CDT

Shale rig Marcellus

I stated that in one of my posts on another topic, that KSA will invest in the US shale and petchems

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1 hour ago, ceo_energemsier said:

I stated that in one of my posts on another topic, that KSA will invest in the US shale and petchems

I don't think the Saudis have the coin to go on some US buying spree.  With all the deadwood on the home front to support, and the price of their oil remaining consistently below $80, they are bleeding cash out of the Royal Treasury.  SO:  where is that $350 billion going to come from?

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6 minutes ago, Jan van Eck said:

I don't think the Saudis have the coin to go on some US buying spree.  With all the deadwood on the home front to support, and the price of their oil remaining consistently below $80, they are bleeding cash out of the Royal Treasury.  SO:  where is that $350 billion going to come from?

I will give you a breakdown of some of the ways, methods and already paid for investments (cash in hand) they are going to do and have done.

 

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10 hours ago, Jan van Eck said:

I don't think the Saudis have the coin to go on some US buying spree.  With all the deadwood on the home front to support, and the price of their oil remaining consistently below $80, they are bleeding cash out of the Royal Treasury.  SO:  where is that $350 billion going to come from?

I am sure the Saudi Princes have the private  coin thieved from the public purse.

When Saudi Barbaria finally goes up in flames the Princes will fly out of KSA to retire in luxury in their US homes funded by dividends from their investments in the US and other western countries.

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Saudi Arabia Searches for Shale-Oil Deal

 

By Sarah McFarlane and Summer Said

Saudi Arabia is hunting for an energy deal in American shale country, as it scopes out its first international oil and gas production investments ahead of its state oil company’s IPO.

Saudi Arabian Oil Co., known as Aramco, has had initial conversations about either taking a stake in Tellurian Inc., a Houston-based liquefied natural gas developer, or agreeing to buy some of its fuel in the future, people familiar with the matter said. Separately, it has also inquired about acquiring assets in two giant U.S. oil and gas basins, the Permian and Eagle Ford, the people said.

The talks haven’t reached an advanced stage, and the Saudis have talked to other, undisclosed U.S. companies about natural gas export deals, the people said.

A spokesperson for Tellurian said: “We cannot comment on commercial dealings.” Aramco declined to comment.

Any effort to acquire American oil-and-gas production assets would mark a watershed moment for Saudi Arabia. It has been the world’s top exporter of crude oil for decades, but booming U.S. production has shaken the kingdom, depressing prices and compelling the government to rethink its dependence on revenue from its massive petroleum reserves.

The talks come as Saudi-U. S. relations have improved as President Donald Trump touts Saudi Arabia as a key ally in containing Iran. U.S. Energy Secretary Rick Perry said he spoke with Saudi Crown Prince Mohammed bin Salman about U.S. LNG exports during a recent visit to the kingdom.

The U.S. is now the largest producer of and gas combined and starting to export its energy abundance. Aramco owns refineries around the world, including the U.S., but doesn’t produce any oil and gas outside Saudi Arabia’s borders. The kingdom doesn’t import any natural gas or crude oil.

Producing and exporting American gas would diversify Aramco, which could be attractive to investors ahead of the company’s planned initial public offering in 2018–expected to be the world’s most valuable listing. Saudi officials have said Aramco would make international investments in producing assets after the IPO.

Saudi energy minister Khalid al-Falih told reporters earlier this month that Aramco was more interested in importing natural gas from areas closer to the kingdom, like the Mediterranean Sea and East Africa. Russian President Vladimir Putin has also pressed Saudi officials to invest in Russian gas.

But the people familiar with the matter said Saudi officials have held wide-ranging talks with oil-and-gas producers in the U.S. shale patch this year.

By investing in shale production, Saudi Arabia could gain a better understanding of the U.S. oil-and-gas industry, which has upended the traditional model of energy production. Shale companies don’t invest in long-term projects that produce for decades like Saudi Arabia does, but rather pump in quick spurts that can be ratcheted down when prices fall or ramped up when they rise.

Other Middle Eastern petrostates are trying to learn more about shale. Earlier this year Abu Dhabi’s sovereign fund Mubadala made a small investment with private equity in U.S. shale.

“The objective is to understand the dynamics of this business, the technical side and the financial side–in particular the cost,” said Musabbeh Al Kaabi, chief executive of Mubadala’s petroleum and petrochemicals business.

The Saudis have also been engaged in a global search for natural gas partners as the kingdom’s energy officials push to make the fuel a larger part of their mix for producing electricity, some of which is currently generated by burning crude oil.

Tellurian is known for its plans to export American liquefied natural gas via a terminal in Louisiana, expected to be finished by 2022. LNG is a super-chilled fuel that can be shipped around the world like crude oil.

Tellurian was co-founded by former BG Group executive Martin Houston and Charif Souki, former chief executive of Cheniere Energy Inc., the first U.S. company to build a sizable LNG export project. The company also has natural gas production and undeveloped shale acreage.

Saudi Arabia’s gas reserves are hard to extract and high in sulfur content which increases processing costs. So even though it has almost as much gas as the U.S. under the ground–about 4.5% of the world’s reserves, according to BP–it isn’t a major gas producer.

Importing LNG so far hasn’t made economic sense for Saudi Arabia. The kingdom subsidizes electricity costs for consumers, so the costs of infrastructure and shipping LNG add to its price and make it less attractive than just burning its large reserves of oil.

The calculation has begun to change as the kingdom prepares the Aramco IPO. In the long term, the increased revenue from additional oil exports could outweigh the initial costs involved in adding LNG to its energy mix.

“It’s very attractive to Saudi because in many cases you are freeing up oil” for export by importing natural gas, Mr. Houston told The Wall Street Journal on the sidelines of an LNG conference last month.

Saudi Arabia could import up to 12 million tonnes of LNG a year, making it the largest importer in the Middle East, if it switched away from oil for electricity generation, Poten & Partners says.

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https://www.bloombergquint.com/business/burned-out-broker-gets-rich-helping-millennials-trade-for-free

 

 

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https://www.forbes.com/sites/judeclemente/2019/01/22/saudi-arabia-ventures-into-u-s-natural-gas/#52f4728950a1

 

 

 

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Saudi Arabia’s SABIC to expand US shale gas investments through JVs

By DEEMA ALMASHABI
Bloomberg

Saudi Basic Industries Corp., the world’s second-biggest chemicals manufacturer, plans to expand investment in US shale gas projects through joint ventures, according to acting CEO Yousef al Benyan.

SABIC, as the company is known, signed an agreement with Houston-based Enterprise Products to get shale gas, al-Benyan said in an interview in Riyadh. The company may use the feedstock in the US or export it to other countries such as the UK, he said.

SABIC has converted crackers at UK plants to use shale gas as feedstock to produce olefins and their derivatives more competitively.

“The main areas in the US we are looking to invest in are the northeast and the south as they fit our overall expectations including government support, labor laws and unions,” al-Benyan said. “At this point we are not looking to acquire any US companies.”

SABIC, which in 2007 bought General Electric's (GE) plastics unit for $11.6 billion, said in April it plans to expand in China and the US because it’s difficult for the company to grow in Saudi Arabia due to a shortage of gas.

The Marcellus shale formation spread across Pennsylvania, West Virginia and Ohio is America’s biggest natural gas producer, with output rising more than 14-fold since January 2007.

SABIC won’t be directly involved in Saudi Arabia’s shale production, he said. The discovery of shale gas in the country will “open up some opportunities for indirect investments for SABIC,” al-Benyan said.

BASF is the largest chemicals manufacturer, based on market capitalization.

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Shale Revolution 3.0: Saudi Arabia Edges Toward Buying Into Booming U.S. Shale LNG Sector

  • Date: 10/01/19
  •  
  • The Wall Street Journal

Saudi Arabia is nearing a deal to invest in U.S. liquefied natural gas, a landmark decision for the kingdom, which in the past had been a huge supplier of energy to America. America’s shale revolution has broken years of dependence on Middle Eastern oil, to the extent that the International Energy Agency expects the U.S. to become a net energy exporter by 2023.

Screenshot-2019-01-10-15.16.47.png

Saudi Arabian Oil Co., known as Aramco, has narrowed its focus to a shortlist of at least four U.S. LNG projects and intends to announce a deal in the first half of this year, people familiar with the matter said.

Companies with projects being considered include Tellurian Inc., a Houston-based LNG developer known for its intention to ship gas from its planned Driftwood terminal in Louisiana, the people said. In addition, San Diego-based Sempra Energy, which is developing five LNG projects between the U.S. and Mexico, has had discussions with Aramco concerning its Port Arthur project in Texas, the people said. Aramco is considering equity stakes in the projects, the people added. It wasn’t clear what the value of the potential investments was.

 

Striking a Balance

How three policy alternatives for Saudi Arabia could impact economic growth, public revenue and oil exports

Screenshot-2019-01-10-15.17.54.png

Aramco didn’t immediately respond to requests for comment. A representative for Tellurian said the company doesn’t comment on commercial dealings. A representative for Sempra Energy said, “We’ve had strong interest in Port Arthur LNG from global LNG buyers and investors but can’t comment on any commercial discussions.”

Any such investment would mark a sea change in the energy flows between the U.S. and Saudi Arabia. America’s shale revolution has broken years of dependence on Middle Eastern oil, to the extent that the International Energy Agency expects the U.S. to become a net energy exporter by 2023.

For Saudi Arabia, the interest in U.S. LNG is twofold, said Jason Feer, head of business intelligence at New York-based consulting firm Poten & Partners.

“One reason is the geopolitical aspect of how to keep the U.S. close and maintain the strategic relationship, and secondly they see LNG as diversifying, investing in a fuel that would have perhaps more of a lifespan than a straight crude oil play.”

 

https://www.wsj.com/articles/saudi-arabia-edges-toward-bet-on-booming-u-s-energy-sector-11546959911

 

 

The Next Entrant in the Shale Revolution? OPEC's Saudi Arabia

by  Bloomberg
|
Wael Mahdi & Bruce Stanley
|

Wednesday, March 07, 2018

 

(Bloomberg) -- Saudi Aramco, the world’s largest oil exporter, is set to join the shale revolution with plans to start producing unconventional natural gas this month and exploit a deposit that could rival the Eagle Ford formation in Texas.

Saudi Arabia’s gas resources from shale and other alternative supplies are “huge,” Khalid Al Abdulqader, general manager of unconventional resources at Aramco, said Wednesday in Manama, Bahrain. Production at the kingdom’s North Arabia basin will start by the end of March and reach its target by the end of this year, he said, without giving details.

Aramco is also drilling for unconventional gas in the South Ghawar and Jafurah basins, he said. Jafurah in eastern Saudi Arabia is similar in size to Eagle Ford, the second-biggest U.S. shale play for gas, Al Abdulqader said, without giving an estimate of the gas contained at Jafurah.

“It’s completely believable,” Robin Mills, chief executive officer of Dubai-based consultant Qamar Energy, said of the comparison. “Can they make a commercial proposition of it? That’s the question.”

Freeing Up Crude

State-run Aramco, formally known as Saudi Arabian Oil Co., plans to spend $300 billion on projects over the next 10 years to maintain its spare production capacity for oil and boost exploration for and output of conventional and unconventional gas, Chief Executive Officer Amin Nasser said in July. Any increase in supplies of gas drilled from shale and other hard-to-access rocks would free up crude that Saudi Arabia uses in its power plants, enabling the country to export the oil for a bigger profit.

Eagle Ford in Texas had 22.7 trillion cubic feet of natural gas reserves from shale in 2016, according to a U.S. Energy Information Administration report in February. Aramco plans to double its production of gas resources to 23 billion cubic feet a day over the coming decade, Nasser said. Saudi Arabia is also the biggest producer in the Organization of Petroleum Exporting Countries.

Jafurah is located between Ghawar, the world’s largest oil field, and the Persian Gulf, near the hub of the Saudi energy industry. Pipeline networks and other facilities needed for Aramco to produce unconventional gas at Jafurah are nearby, and this existing infrastructure should help expedite the basin’s development, Mills said.

Dry Holes

Aramco plans to develop the entire basin, using improved technology to reduce fracking costs, Al Abdulqader said. The company will focus on cutting costs at Jafurah before proceeding with plans to produce gas there, he said.

Saudi Arabia, traditionally pumped gas only as a byproduct of crude. The nation began its hunt for gas in the early 2000s after oil sank below $10 a barrel and unemployment worsened. It invited Exxon Mobil Corp., Chevron Corp. and others in the hope of attracting $100 billion of investment. Many pulled out following years of talks, and dry holes forced Total SA, Eni SpA and Repsol SA to exit ventures with Aramco.

Lukoil PJSC, one of Aramco’s last remaining partners in a gas exploration venture, planned to leave the project in the kingdom’s Empty Quarter desert after finding no commercially viable deposits of the fuel, Gati Al-Jebouri, Lukoil’s head of upstream for the Middle East, said in January 2017 in Dubai.

 

 

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ANY country, I do not care which country, who allows another country or people from another country buy their very BASIC natural resources, will not be a country much longer or will be a subjugated slave.  Far as I am concerned no country should  allow a foreign company etc buy up natural minerals or agriculture/forestry lands.  Homes in a city?  Uh, ok.  Bring in foreign managers, workers.  Ok. 

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Aramco may also view this as a way to buy the expertise. Their challenge is more listening to the expat expertise and service companies they hire, but I could easily see this viewed as a way to solve their unconventional exploration challenges. 

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12 minutes ago, John Foote said:

Aramco may also view this as a way to buy the expertise. Their challenge is more listening to the expat expertise and service companies they hire, but I could easily see this viewed as a way to solve their unconventional exploration challenges. 

1) They pay, they get the expertise to haul back and apply to their vast subsurface formations

2) They use up the shale gas over here, saving some of theirs in the process

3) They can control regional strategic supplies

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On 5/10/2019 at 6:23 AM, Wastral said:

ANY country, I do not care which country, who allows another country or people from another country buy their very BASIC natural resources, will not be a country much longer or will be a subjugated slave.  Far as I am concerned no country should  allow a foreign company etc buy up natural minerals or agriculture/forestry lands.  Homes in a city?  Uh, ok.  Bring in foreign managers, workers.  Ok. 

So maybe the world is already up the smelly creek (no paddle) with China being on a buying spree for over a decade. I don't know about the USA but the rest of the world may be in dire straights.

 

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10 hours ago, ceo_energemsier said:

1) They pay, they get the expertise to haul back and apply to their vast subsurface formations

2) They use up the shale gas over here, saving some of theirs in the process

3) They can control regional strategic supplies

My understanding of the Middle East was there was very little in the way of shale oil & gas basins. Has that position changed?

I know they have a lot of Sour Gas but the challenge there has been cost rather than technical.

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20 hours ago, ceo_energemsier said:

1) They pay, they get the expertise to haul back and apply to their vast subsurface formations

2) They use up the shale gas over here, saving some of theirs in the process

3) They can control regional strategic supplies

It's a mistake to apply a classic western thought process to why they do what they do. This is the country spending billions and billions to buy SABIC, so they are buying it from itself, and SABIC a cash eating machine which needs a cash infusion. But the sale makes sense if propping up their stock market and spreading the dole is a major objective.

If the KSA wanted cheap gas, all they have to do is play nice with Qatar. Buying LNG from the USA has political capital, but it's economic folly. Qatar isn't an enemy, and or a harbinger of funding evil, but Al Jazeera and the idea of some representation in a government is intolerable. The fact Qatar has more money per person, by a lot, probably drives them nuts too. There was an internal White Paper at Aramco suggesting buying Qatar gas years ago, but that's the kind of advice that ends expat careers. No Saudi would dare suggest such a thing. That a neighbor does something better is beyond unacceptable.

Having access to expertise, and hiring expertise and service companies is not the same thing as implementation. Upsetting the internal power structures and decision making processes at Aramco is the show stopper for their Unconventional adventures. The approval processes in Aramco are almost undefinable. No shortage of good ideas, or good people, but resistance to change or empowerment of any sort is off the charts.

KSA has some of the most expensive wells in the world. Time to completion is 3X normal. Why? It's not the geology. The folks doing the work know what they are doing.  And yes, overpaying and buying the same parts and services over and over helps pad the bill, but it's more than that. The decision making processes, and risk aversion, drive the oddest of behaviors. 

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On 5/15/2019 at 3:24 PM, John Foote said:

It's a mistake to apply a classic western thought process to why they do what they do. This is the country spending billions and billions to buy SABIC, so they are buying it from itself, and SABIC a cash eating machine which needs a cash infusion. But the sale makes sense if propping up their stock market and spreading the dole is a major objective.

If the KSA wanted cheap gas, all they have to do is play nice with Qatar. Buying LNG from the USA has political capital, but it's economic folly. Qatar isn't an enemy, and or a harbinger of funding evil, but Al Jazeera and the idea of some representation in a government is intolerable. The fact Qatar has more money per person, by a lot, probably drives them nuts too. There was an internal White Paper at Aramco suggesting buying Qatar gas years ago, but that's the kind of advice that ends expat careers. No Saudi would dare suggest such a thing. That a neighbor does something better is beyond unacceptable.

Having access to expertise, and hiring expertise and service companies is not the same thing as implementation. Upsetting the internal power structures and decision making processes at Aramco is the show stopper for their Unconventional adventures. The approval processes in Aramco are almost undefinable. No shortage of good ideas, or good people, but resistance to change or empowerment of any sort is off the charts.

KSA has some of the most expensive wells in the world. Time to completion is 3X normal. Why? It's not the geology. The folks doing the work know what they are doing.  And yes, overpaying and buying the same parts and services over and over helps pad the bill, but it's more than that. The decision making processes, and risk aversion, drive the oddest of behaviors. 

They have extensive shale plays yet to be explored under their sands in the South, East, some out West as well as in the North and Central provinces. Their shale will be very different in properties , the Russians came they failed. That is why they want US expertise and technical prowess to be able to identify the right shale plays and go on to experiment with their shales. It will be a brand new start over there but the knowledge and expertise gained by the US companies will be able to unlock their shale secrets and profits fairly fast.

At the CERAWeek they were busy trying to make deals for shale and other tech.

Lot of things transpired, hopefully good for all the companies involved ;)

To MBS, new shale plays will add more power to him, add to the reserves and bring a new fresh boom and loads of activities and jobs just like he is trying to do in the petchem sector.

They are not going to play with Qatar for their gas, they could have formed numerous JVs but they didnt, they want to outperform Qatar's gas and give them a run for their gas. KSA is developing their oil and gas resources offshore in the Red Sea as well.

Their buying SABIC is not only for optics but also to enhance (in their or rather MBS's mind) the petchem sector which will bring them more $$$, global influence in higher value products just to name a few and therefore more cash in their hands to carry forward their namesake House.

 

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