Estimates place unconventional natural gas reserves in the Kingdom of Saudi Arabia at over 600 trillion cubic feet, more than double its proven conventional gas reserves. Domestic consumption fuels the economy as well as social spending, and the leadership is heavily invested in global research and development centers to become leading innovators in the industry. There is evidence of current commitment to develop natural gas projects in 3 offshore fields and construction of a 1, 000 MW gas-fired power plant. Despite political will for resource diversification in Saudi Arabia, there are hurdles in the form of processing capacity, logistics, water supplies and desert terrain, which could adversely affect project economics. Lifecycle economic analysis indicates that under current market conditions, development of unconventional gas projects could be challenging.

A breakeven economic analysis of the country's gas supply sources tests this supposition by assessing unconventional field development lifecycle costs and off-take pipeline infrastructure costs. Our analysis reveals that a breakeven price for domestic unconventional gas in Saudi Arabia ranges from roughly $5/Mcf to $8/Mcf depending on a range of pipeline scenarios. The study further explores several gas supply scenarios incorporating the commercialization of Saudi Arabia's unconventional resource assets, LNG imports, and pipeline imports from Qatar. In lieu of short-term unconventional gas supply, overall findings suggest pipeline gas from Qatar offers the lowest cost option, although LNG from Yemen or Nigeria ranks as a competitive resource alternative for additional near-term supply.

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