Economic appraisal of an unconventional condensate play based on public pilot data prior to field development: Jafurah Basin case study (Saudi Arabia)

Abstract

This study uses a stochastic approach to provide a holistic economic evaluation of the Jafurah field development project, the largest unconventional natural gas field in Saudi Arabia, projected to start first production in 2024. The assessment considers deterministic and probabilistic inputs based on data published in the literature, analogy with Eagle Ford reservoir parameters, and engineering-based assumptions. The uncertainty of discounted net cash flow, internal rate of return, and other target metrics for the Jafurah project is quantified (P90, P50, and P10). The results show the most likely (P50) net present value of 47.21 billion US dollars (at 10% discount rate) and a corresponding internal rate of return of 46.8%. Sensitivity analysis highlights the relative importance of the most critical probabilistic inputs (initial production rate, natural gas price, capital and operational expenses). Based on the current economic ranges and uncertainty analysis, it can be concluded that the Jafurah Field can be profitable in the long term. However, frequent reappraisals are recommended to help direct future decisions on capital expenditure programs for the drilling and completion of new wells, especially when new field performance data becomes available after the earlier wells start first production in 2024. Although hundreds of field delineation and production wells have already been drilled and completed over the past decade, major investment and time were needed to construct new regional pipelines (for gathering natural gas and liquids from each well pad), new chemical plants (for processing of the natural gas liquids), and new underground natural gas storage facilities (to buffer seasonal changes in the production supply and demand of natural gas), which is why first production is planned for 2024.