After decades of traditional oil extraction, many oil companies are switching to unconventional methods to increase production from oil found in geological formations that make it more challenging to extract. Whether oil is classified as conventional or unconventional depends on the method of extraction, mainly depending on geology.
While conventional oil, which is a liquid at atmospheric temperature and pressure, is extracted from both land-based and offshore underground reservoirs using traditional drilling and pumping methods, the extraction of unconventional oil requires advanced extraction techniques such as oil sands mining, in situ development, horizontal drilling and hydraulic fracturing or “fracking” which are used to recover this heavier oil that does not flow on its own.
Over the past year, unconventional producers need to increasingly operate seamlessly between the digital and physical worlds for oil and gas. According to Deloitte, the exploration segment of the oil and gas industry, in general, is digitally ahead of development and production. Today, digital transformation is made possible due to the utilisation of operational data with predictive analytics, machine learning and artificial intelligence. However, although these new solutions can bring new and valuable insights, the focus must first be on managing vast quantities of data and using the data to its full capacity.
In unconventional oil extraction, directional drilling technologies are being fully integrated with advanced software platforms, helping to drill the wells more efficiently, predictably and consistently. Technology-based digital solutions can intelligently and precisely monitor and analyse what is occurring in all aspects of the well operation, both above and below ground.
The benefits of unconventional oil resources have long been recognised in the United States.and growing exports in both oil and gas (LNG) have resulted in energy independence, economic gains and advances in geopolitical positioning in the global energy landscape. Today, these benefits have not gone unnoticed in other geographies, including the Middle East – a region that is home to 64.5% of OPEC’s total oil reserves.
The Middle East, and particularly the Gulf Cooperation Countries (GCC), has a lot of potential to harness the region’s unconventional oil resources. What makes the region attractive to foreign investors is the potential to leverage the privileged position of local NOCs in the market to expedite the development and provide an overarching vision and direction, and access to abundant capital.
In Saudi Arabia, there are a number of recent developments in the Kingdom’s unconventional oil and gas exercises. In February 2020, Riyadh sanctioned a $118 billion long-term capital expenditure budget for the Kingdom’s NOC, Saudi Aramco to exploit gas from the Jafurah basin. Aramco’s unconventional exercise also took a leap forward in April 2020, when the firm formally awarded engineering, procurement and construction (EPC) deals for an estimated $2 billion project to extract gas from the South Ghawar area.
Saudi Aramco is also a front-runner in the utilisation of unconventional oil extraction technology with the use of geosteering and horizontal drilling to optimise operations. According to Mohammad H. Sarraj, senior geologist at Saudi Aramco’s Reservoir Characterisation Department, adopting horizontal drilling combined with geosteering has led to the company’s technological and operational advantage through real-time reservoir modelling.
Meanwhile, the United Arab Emirates plans to achieve gas self-sufficiency by 2030, with ADNOC upscaling unconventional gas operations by unlocking additional resources and strengthening the commercial viability of unconventionals in the UAE. In November 2020, ADNOC announced the discovery of 22 billion stock tank barrels (STB) of onshore unconventional oil reserves. This is in addition to the discovery of 160 trillion cubic feet of unconventional gas announced in November 2019.
In order to maximise gas recovery, ADNOC is leveraging advanced technologies to enhance drilling efficiencies and unlock $2 billion in cost savings over the past five years. ADNOC’s Real Time Data Monitoring Center, which uses big data and oversees up to 120 well sites simultaneously, has helped reduce well duration by 30%. In addition, in a strategic partnership with Baker Hughes, ADNOC Drilling now has the capability to deliver the entire drilling value chain using hydraulic fracturing technology.
Qatar currently has an LNG production capacity of some 77 million mt/year but has plans to boost it to 110 million mt/year by 2025 with the addition of four more trains and to 126 million mt/year by 2027 with the addition of two further trains. Meanwhile, Kuwait has a large area called the Jurassic basin with hydrocarbons locked in reservoirs spread across several fields. Kuwait Oil Company (KOC) has built three production facilities at the Jurassic zone (JPFs), with the third unit commissioned in January 2020. In addition, the NOC is currently engaged in an estimated $900 million project to build JPFs 4 and 5. When JPFs 4 and 5 are commissioned, it will increase KOC’s production from the Jurassic zone by 50,000 b/d of treated sweet crude and 150 million cf/d of sweet and dehydrated rich gas.
In April 2018, Bahrain announced the discoveries of the Pre-Unayzah and Khalij al-Bahrain fields situated off Bahrain’s west coast and estimated to contain at least 80 billion barrels of tight (shale) oil. As of May 2020, Bahrain was still seeking investors for the shale oil project; however, drilling for the first production wells in the new offshore shale oil discovery is expected to start at the end of 2022, the country’s oil minister said in remarks made to parliament in March 2021.