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Saudi Arabia’s $100bn plan to become largest shale gas producer outside of the US



Saudi Aramco’s award of $10 billion worth of contracts on its giant Jafurah project has finally fired the starting gun to develop what is thought to be the world’s biggest shale gas field outside of the US.

Having battled with America’s shale oil producers for market share over the last decade, the Kingdom is now adopting the advanced low-cost techniques of its fracking rivals and is set to spend up to $100 billion on Jafurah to rapidly increase its domestic gas production.

The Kingdom is estimated to be sitting on the fifth largest shale gas reserves in the world.

Saudi Energy Minister Prince Abdulaziz bin Salman earlier said the Jafurah gas field will place the Kingdom third in the world in natural gas production by 2030.

But does Saudi Arabia really have the potential to replicate the soaring success of US shale gas development?

Saudi Aramco Chief Executive Amin Nasser certainly thinks so. Announcing the contracts this week, he said: “It is a breakthrough that few outside the Kingdom thought was possible and which has positive implications for energy security, economic development and climate protection.”

Production is scheduled to begin within the next three years. The field will supply cleaner natural gas for domestic use in the Kingdom, along with feedstock for both petrochemical production, and crucially, low carbon hydrogen power.

Jafurah is expected to contribute to Saudi Arabia’s goal of producing half of its electricity from gas and half from renewables as it pursues its 2060 net-zero target. Indeed, Jafurah alone is forecast to replace up to 500,000 barrels of oil a day that would otherwise be used for domestic consumption.

All this serves the goals of the Kingdom’s Vision 2030 program to diversify the economy from crude oil and sharply reduce its carbon footprint, even if the scheme will enable the Kingdom to increase its crude exports.

But it was thought that fracking in Saudi Arabia will be more expensive than it is in the US, not least because the Kingdom is not renowned with an abundance of natural water, a critical component in the fracking process.

The fracking process requires pumping water, sand and chemicals into the fields at high pressure which fractures the shale rock and allows the hydrocarbons to escape.

“We managed to reduce drilling cost by 70 percent and stimulation cost by 90 percent since the 2014 cost benchmark, while increasing well productivity six-fold compared with the start of the program,” Nasser said on Monday.

Aramco plans to use seawater for fracking at Jafurah. Earlier this year, the company also invited bids for a water desalination plant at the field. Desalinated water is used in gas processing plants. An earlier bidding process was abruptly canceled last year and the current tender process has reduced the capacity of the desalination plant by around 20 percent.

However, former Aramco Executive VP Sadad Husseini insists the “water issue” is a red herring.

He told Arab News: “The water issue was resolved years ago. We have aquifers that hold saline water and the Saudi oil industry has a long history of using this water for drilling.”

Husseini also dismissed cost comparisons with the US shale industry.

He said: “The cost of fracking depends on the depth of the reservoir. In the US, they work with shallower reservoirs, around 3,000 to 4,000 feet deep, which makes fracking less costly. In Saudi Arabia, the reservoirs will be 9,000 to 10,000 feet deep. It’s technically more challenging, but unlike the US, those deep wells are not just producing gas, they’re also producing a lot of condensates, most notably ethane, along with gas, and that is profitable and makes the economics of this field work. Ethane feeds the petrochemical industry.”

He added: “It’s a challenging development but it wouldn’t have advanced if the issues hadn’t been resolved.

Developing shale gas reserves outside the US has not been particularly successful, partly due to environmental concerns – particularly in large population centers in Europe, a lack of infrastructure, and difficulties accessing and disposing of water used in the process.

However, Jafurah is close to the Gulf coast with relatively easy access to seawater, and is also adjacent to the world’s largest oilfield, Ghawar, and its substantial energy infrastructure.

Production at Jafurah is expected to commence in 2024 and is forecast to reach up to 2 billion cubic feet per day of sales gas, 418 million cubic feet per day of ethane and about 630,000 barrels per day of gas liquids and condensates by 2030. Investment over that period will amount to $68 billion, but is expected to total more than $100 billion overall.

Domestic employment, another key plank of the Kingdom’s Vision 2030, is also central to the scheme. It is understood that along with fields under development in North Arabia and South Ghawar, the Jufarah project will create more than 200,000 direct and indirect jobs in the Kingdom.

The scheme will also incorporate new technology, most notably using industrial internet of things and video analytics.

The Jafurah project will not only aid the Kingdom’s environmental ambitions but will also support its petrochemicals industry. “Its ethane and liquified natural gas are highly valuable feedstocks for the Kingdom’s petrochemical’s industry,” the Aramco chief said.


World’s first hydrogen tanker to ship test cargo to Japan from Australia




A Japanese-Australian venture producing hydrogen from brown coal is set to start loading its maiden cargo on the world’s first liquid hydrogen carrier on Friday, in a test delayed by nearly a year because of the COVID-19 pandemic.

The Suiso Frontier, built by Japan’s Kawasaki Heavy Industries (KHI), arrived Australia this week from Kobe, following a longer trip than the expected 16 days as the ship dodged bad weather and rough seas, said a spokesperson for the Hydrogen Energy Supply Chain (HESC) venture. The ship is scheduled to head back to Japan in about a week.

Led by KHI, HESC is a A$500 million ($360 million) coal-to-hydrogen project backed by Japan and Australia as a way to switch to cleaner energy and cut carbon emissions.

Hydrogen, seen as a path to decarbonizing industries that rely on coal, gas and oil, is key to Japan’s goal to achieving net-zero emissions by 2050. Australia aims to become a major exporter of the fuel.

The Australian government on Friday committed a further A$7.5 million for HESC’s A$184 million pre-commercialization phase, and A$20 million for testing a capture and storage project for carbon dioxide released in the coal-to-hydrogen process to create a carbon neutral product.

Last year, HESC started extracting 70 kg of hydrogen a day from brown coal in the Latrobe Valley, about 135 km (84 miles) east of Melbourne, where brown coal mines have long fueled some of Australia’s most polluting power stations.

The hydrogen is produced by reacting coal with oxygen and steam under high heat and pressure. It is then trucked to a port site where it is cooled to minus 253 degrees Celsius (minus 423 Fahrenheit), liquefying it for export.
The partners are looking to produce up to 225,000 tons of hydrogen a year.

They will need to make a final investment decision by 2025, with Australia racing against countries in the Middle East and elsewhere to produce carbon neutral hydrogen, said Jeremy Stone, a director of J-Power, one of the HESC partners.

Partners in the project include Japan’s Electric Power Development Co, Iwatani Corp, Marubeni Corp., Sumitomo Corp. and Australia’s AGL Energy Ltd., whose mine is supplying the brown coal.

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Singapore suspends crypto ATMs despite investor appetite: Crypto Moves




Bitcoin, the leading cryptocurrency internationally, traded lower on Wednesday, falling by 0.46 percent to $41,515 at 12:07 p.m. Riyadh time.

Ether, the second most traded cryptocurrency, was priced at $3,074, down by 2.60 percent, according to data from Coindesk.

To curb Singapore’s growing appetite for digital tokens, crypto ATMs are shutting down, as the city-state moves to significantly reduce consumer marketing of cryptocurrencies.

Daenerys & Co, the largest machine operator in Singapore has suspended its services to comply with the Monetary Authority of Singapore’s request, the company said on Tuesday.

Another company, Deodi Pte, shut down its sole machine on Tuesday, the company said on its website.

“The Monetary Authority of Singapore’s new guidelines regarding ATMs were an unexpected surprise,” Daenerys said in a reply to questions from Bloomberg.

The machines, which are mostly located in malls across Singapore, provide people with a convenient way to buy cryptocurrencies such as Bitcoin and Ether using fiat currencies, Bloomberg reported.

However, the notion of a fast and easy way into crypto trading for retail investors didn’t sit well with regulators, who explicitly mentioned the ATMs in guidelines released Monday.

Such offerings could encourage people to trade on impulse, the MAS said.

Meanwhile, said it has suspended all deposits and withdrawals while it investigates unauthorized activity on some accounts, according to Bloomberg.

The crypto wallet provider and trading platform said in a Twitter post that the measure was temporary to allow it to improve security and it would resume activity once the update was complete. The company added that all funds are safe.

Several users on social media have reported that their cryptocurrencies, sometimes worth tens of thousands of dollars, had disappeared from their accounts in recent days.

Technical issues on crypto trading platforms have become commonplace as the hype surrounding digital assets grows.

Providers such as Coinbase, Binance and Kraken have all suffered widespread outages at times of peak demand in the last year, causing trouble for investors who were prevented from making withdrawals or liquidating their positions amid volatile trading periods.

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TikTok owner ByteDance dissolves its investment arm




TikTok owner ByteDance has disbanded its investment department, a company spokesperson told CNBC on Wednesday.

Following an assessment at the beginning of the year, ByteDance decided to “strengthen the focus of the business, reduce investments with low connection (to the main business) and disperse employees from the strategic investment department to various lines of business,” the spokesperson said in a Chinese-language statement translated by CNBC.

The move “strengthens the coordination between strategic research and the business,” the company said.

The news comes as ByteDance is undergoing restructuring since its founder Zhang Yiming stepped down as chairman in the fall.

ByteDance is the world’s largest start-up valued at $140 billion, according to CB Insights.

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