Shell in the Middle East | Profiles

The South Rub Al Khali Company Limited (SRAK) was formed in December 2003 with three shareholders: Shell with 40 per cent and Saudi Aramco and Total, each with a 30 per cent shareholding. SRAK was established to explore and develop the natural gas and associated liquids in a 210,000 square kilometre concession in the Kingdom of Saudi Arabia's South Rub Al Khali (Empty Quarter) - an area five times the size of Holland, the same size as the UK or equivalent to 1,000 North Sea exploration blocks.

The concession was awarded to the joint venture following negotiations which have taken place over the last few years for what was known as the Saudi Arabian Natural Gas Initiative.

'Shell in the Middle East' meets Patrick Allman-Ward, Chief Executive Officer of SRAK, to find out how plans are being put in place to take on the challenges of the Rub Al Khali, and is then granted an interview with Khalid Al-Falih, Vice President of New Business Development at Saudi Aramco and Chairman of SRAK...

Patrick Allman-Ward, Chief Executive Officer of SRAK "The awarding of the concession comes after many years of hard work by members of the negotiating team who came from all three shareholder companies," says Patrick Allman-Ward, who has been seconded from Shell to become Chief Executive Officer of the South Rub Al Khali Company Limited (SRAK). SRAK is an incorporated joint venture and will operate the concession on behalf of the three shareholders.

"The shareholders will all be providing secondees who will be working in the joint venture in both technical and managerial positions. This will bring to the joint venture the combined technical expertise and knowledge of the three shareholders, all of which will be of enormous benefit to the joint venture in meeting the demands of this exciting project.

"SRAK has an agreement with the Government of the Kingdom of Saudi Arabia to explore, develop and produce non-associated gas, and condensate and Natural Gas Liquids, in Blocks 5-9 and 82-85 in the South Rub Al Khali Basin of Saudi Arabia. This means that if the joint venture discovers oil, the rights to develop and produce the oil remain with the Government of Saudi Arabia.

"The exploitation of dry gas reserves is very commercially challenging in view of the fixed and relatively low price currently being offered for the sale of this type of gas in the Kingdom. So, in order to ensure the commercial successful outcome of the joint venture, it will need to discover non-associated gas, rich in condensate, a commercially valuable product.

"Once hydrocarbons have been discovered, the joint venture will develop the necessary infrastructure such as production wells, gathering and processing stations and pipelines to deliver gas into Saudi Aramco's Master Gas System [MGS], as well as pipelines for the delivery of the liquids component.

"In such a vast area, which is currently equivalent to Shell's entire other global exploration acreage, the technical challenges will be enormous. The concession area is five times the size of Holland, the same size as the UK or equivalent to 1,000 North Sea exploration blocks.

"The South Rub Al Khali, in English known as 'The Empty Quarter', is also one of the world's largest and most hostile deserts. In terms of an operating environment, the weather can be extreme, with temperatures rising above 50 degrees centigrade. Access is difficult because the area is covered with enormous sand dunes, some as high as 200 metres.

"Given such a large area to explore, we need to focus our activities very quickly and in an intelligent way because the joint venture cannot afford the time nor the money to cover the entire area with an equal density of seismic data.

"The environment will put SRAK to the test when it comes to the acquisition of high quality seismic data. This means that SRAK will have to make use of more high-tech data gathering methods, such as the acquisition of airborne gravity and magnetic data and satellite imagery. This will allow us to focus the acquisition of land-based seismic data on the most promising areas."

Patrick then explains, "Historically there have been 26 wells drilled in the area but none with commercial discoveries. Many of these wells were drilled as stratigraphic tests for the purpose of determining the geology. Others only penetrated shallower horizons consisting of younger sediments, which will not be the primary focus of our exploration activities.

"The primary objective of SRAK's activities will be the pre-Khuff Palaeozoic Unayzah formation, which lies at a depth of some 12,000 feet, and the deeper Sarah and Saq sandstone formations.

"Of course, linked to the age and depth of burial of these sediments, the porosity and permeability characteristics form a further technical challenge in that it is much harder to obtain commercial rates of production of hydrocarbons from these 'tight' reservoirs.

"Another factor which we will face is that at these great depths, and with these reservoir characteristics, hydrocarbons do not show up directly on seismic data. So our evaluation processes will require the integration of good geological models to determine the distribution of the best reservoir development, seals and the modelling of the generation and migration of hydrocarbons through the system.

"This is where the three shareholder companies will be able to play an important role in bringing to bear their knowledge and expertise to address these many technical issues.

"To that effect, SRAK recently held a three-day workshop in Al Khobar, the headquarters of the joint venture, which is located on the coast in Saudi Arabia's Eastern Province. This was the first opportunity for the shareholders and SRAK company staff to come together to address the many issues which face us down the long road to the commercial production of hydrocarbons.

"Progress to date has revolved around recruiting staff and establishing a plan for the acquisition of data for the area. We have just recommended to the Board of SRAK the award of the first airborne gravity and magnetic survey of the area and we hope to start acquisition by the end of April.

"The contract for the acquisition of seismic data on land is currently being tendered and we hope to commence land-based seismic operations by mid-year. The intention is that we will have three seismic crews and the basic programme of seismic acquisition will be to acquire an infill grid of regional 2-D seismic lines. This will also allow us the opportunity to combine two of three seismic crews together to obtain sparse 3-D seismic data over the most promising structures should sufficiently attractive targets be identified from the airborne surveys.

"The contract for the Environmental Impact Assessment [EIA] has been awarded to an international contractor with links to the KFUPM [King Fahd University of Petroleum and Minerals], with the University executing over 50 per cent of the contract work.

"So," concludes Patrick, "there are very, very exciting times ahead for SRAK, especially as the contract is for an initial period of five years, but with extension opportunities. It will be something like running a marathon every day for the next five years but together with the support of our shareholders and the Ministry of Petroleum and Minerals we think we will be fit enough to achieve this."