In a sign that the American shale gas revolution is spreading to the Middle East, Saudi Aramco reached a deal with Halliburton over the weekend to lift its production program in three Saudi Arabian shale fields.
The companies did not reveal many details of their three-year contract, but it represented an expansion of Saudi Aramco’s efforts to produce more natural gas to support its growing chemical industry. Aramco, the Saudi national oil company, also hopes to reduce the practice of burning oil for domestic power to increase its crude exports.
Over the last year, Saudi Aramco has awarded $4.5 billion in contracts to international oil service companies to increase its gas production. But a number of European companies have failed in their efforts to recover gas at an economical price.
Halliburton probably has more experience in drilling and completing oil and gas shale wells than any other company, having been a central player in the past decade’s shale drilling frenzy across Texas, North Dakota, Oklahoma and Louisiana.
The company has since expanded its efforts to shale fields in Argentina, Canada, Mexico and Poland. Now, its executives say it can play a major role in Saudi Arabia’s efforts to diversify its oil-based economy.
“This is a great opportunity to provide a tailored application of Halliburton technology, logistics management and operational excellence to maximize Saudi Arabia’s asset value,” Jeff Miller, Halliburton’s chief executive, said in a statement at Sunday’s signing ceremony in Saudi Arabia.
“We welcome their expertise,” said Amin H. Nasser, Saudi Aramco’s chief executive, speaking of Halliburton.
Under the leadership of Crown Prince Mohammed bin Salman, Saudi Arabia is trying to spur economic modernization and foreign investment under its Vision 2030 economic plan, which has as its cornerstone the initial public offering of Saudi Aramco.
The public offering has made slow and uncertain progress, but the company is trying to increase its value by investing heavily in refineries and chemical plants in Saudi Arabia and around the world. Greater production of shale gas neatly fits that model, because gas is a vital feedstock for refineries and chemical production.
Shale drilling has roughly doubled American oil and gas production, and made the country a major hydrocarbon exporter for the first time in decades, but the shale revolution has been slow to spread beyond a handful of countries.
The practice of hydraulic fracturing — blasting through hard shale rock with high pressure mixtures of water, sand and chemicals — has proved to be highly controversial in many countries, especially in Europe. Shale formations in China appear to be more complex to drill than in the United States. Western sanctions have limited shale exploration and production in Russia.
But interest in shale exploration and production is growing in the Middle East and North Africa. Last month, Bahrain announced that it had found a major shale oil and gas field in waters off its coast. Halliburton is drilling appraisal wells to evaluate how much oil can be recovered.
A senior executive at Algeria’s state oil company Sonatrach said last week that the company was seeking cooperation with Exxon Mobil to develop the country’s shale gas.