Sri Lankan cricketer Tillakaratne Dilshan invented the scoop shot, hitting the ball behind him and over the wicket-keeper – high risk but high return – popularising it in 2009. Around the same time, the revolution in shale oil and gas production was taking off in the US. Now, all top international batters play the scoop. And Gulf countries are enthusiastically following the champion in adopting unconventional hydrocarbon techniques.
Oman was the first, when BP began production from the giant Khazzan gas accumulation in the north-centre of the country in 2017. This turned around a period when the sultanate’s gas sector had been on the back foot, allowing it to keep gas flowing to new industries and considering expanding liquefied natural gas (LNG) exports.
The Khazzan reservoirs are tight – with low permeability, requiring hydraulic fracturing to allow gas to flow into wells at commercial rates. One of the rocks, the Amin sandstone formation, resembles solid high-performance concrete – holding a hefty chunk in your hand, it’s hard to imagine any fluid moving through it. And yet Khazzan produces 1.5 billion cubic feet of gas daily, a third of national output.
Oman, with much smaller oil and gas resources than its Gulf neighbours, needed to move early on projects such as Khazzan. But the UAE and Saudi Arabia are now catching up. Saudi Arabia began production from the massive Jafurah accumulation in December, and national oil company Aramco recently reported that output had reached 450 million cubic feet of gas daily.
The Jurassic-aged Jafurah resembles the well-known tight carbonate Eagle Ford Formation of South Texas, with high yields of valuable petroleum liquids along with the gas. Jafurah is supposed to yield 2 billion cubic feet of gas per day by 2030, an essential part of weaning the kingdom’s power generation sector off oil. Ethane and natural gas liquids will be crucial inputs to the petrochemical industry.
The Gulf’s interest in unconventional oil may seem more surprising. So far, it is primarily a UAE story, with some output in Kuwait
Intriguing news also comes from Abu Dhabi – and here an international shale specialist operates alongside Adnoc. EOG, the oil and gas production arm of disgraced energy trader Enron, was spun off in August 1999 with a market capitalisation of $2 billion. Now valued at about $75 billion, almost as much as BP, it has been one of the most successful players in the US shale revolution.
In May last year, EOG entered Abu Dhabi’s Unconventional Onshore Block 3. In September, chief executive Ezra Yacob met his opposite number at Adnoc, Dr Sultan Al Jaber, in the US to discuss progress.
In EOG’s second-quarter earnings release on August 5, it disclosed that its first two lateral wells had each averaged more than 800 barrels per day of oil production over their initial month. The mile-long horizontal wells are much shorter than typical Eagle Ford wells today, which are up to two miles long. Nevertheless, the excellent production results so far compare to the best US tight oil plays.
The Diyab Formation onshore Abu Dhabi – like Jafurah, of Jurassic age – is being developed by Adnoc along with France’s TotalEnergies, with a production target of 1 billion cubic feet per day by 2030. A final investment decision is expected by the end of this year. Adnoc estimates it has more than 220 billion barrels of unconventional oil resources, of which about 22 billion barrels could be recovered, and 460 trillion cubic feet of unconventional gas.
EOG surfaces also in Bahrain, where it has a joint venture to develop deep, tight gas resources in the country’s onshore Awali field. An early foray into unconventional oil in Oman ended unsuccessfully in 2022.
And the US shale specialist is also talking to Kuwait, perennially short of gas. Kuwait Oil Company is working on the challenging tight carbonate Najmah and Sargelu formations. The odd one out in the Gulf is Qatar, whose vast conventional gas reserves in the North Field mean it has had no need yet to go unconventional.
All this activity may be somewhat counterintuitive for the holders of the world’s largest traditional hydrocarbon reserves.
The gas side is easier to understand: apart from Qatar, the GCC countries’ reserves of non-associated gas – gas that is not produced along with oil – are somewhat limited compared with their ambitions. Even new conventional fields, such as Abu Dhabi’s Shah and the giant offshore Ghasha, may have high contents of toxic, corrosive hydrogen sulphide, making development expensive.
Associated gas is cheap to produce, but tied to oil and the vagaries of Opec policy and Hormuz export routes, making it unsatisfactory to underpin LNG exports or major industries.
The Gulf’s interest in unconventional oil may seem more surprising. So far, it is primarily a UAE story, with some output in Kuwait. Since the UAE left Opec in April, its already ambitious production goals have been unleashed – or at least, may be when unhindered Gulf exports can resume.
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With nearly 5 million barrels per day (bpd) of production capacity already, versus a national Opec quota around 3.4 million bpd, Adnoc is assessing a boost to 6 million bpd by 2031. Unconventional petroleum could be an important part of that.
Production costs for the tight oil are likely to be higher than for the legacy fields. Still, with high-quality rocks, standardised drilling and the application of the best US expertise, it may still be commercially appealing. It would fit with Abu Dhabi’s general strategy to accelerate and maximise the monetisation of hydrocarbon resources, converting them into more diverse and durable long-term wealth in technology, infrastructure and sovereign holdings.
What was once unconventional quickly becomes conventional. Only a few countries outside the US – mostly, Canada, China and Argentina – have achieved significant success in tight oil and gas. The excellence of the Gulf’s geology gives it every chance to top its rivals’ totals.
Robin M. Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis