Halliburton signs deal with Saudi Aramco
Houston oil services company contracted to tap the country’s natural gas resources
Saudi Arabia will partner with the Houston oil field services company Halliburton as the Middle Eastern nation hopes to unlock large natural gas supplies through hydraulic fracturing, or fracking.
The state oil company Saudi Aramco signed a three-year contract Sunday with Halliburton, which dominates the North American market in fracking and completing wells that are horizontally drilled in U.S. shale fields. The combination of fracking and horizontal drilling, which allows companies to tap several reservoirs, launched the shale boom more that a decade ago.
Saudi Arabia hopes to increase the use of domestic natural gas to generate electricity. While Saudi Arabia is best known as the world’s largest oil exporter, it has vast supplies of gas as well, although much of it is trapped in shale and sandstone formations, known as tight sand.
The Saudis’ goal is to adapt drilling and fracking technologies developed in Texas and the United States to tap those gas resources. The effort also is part of the “Vision 2030” modernization plans to open Saudi Arabia’s energy sector to foreign investors and diversify the economy. The plans include selling shares of Saudi Aramco on public stock markets and increasing investment in refining and petrochemicals around the world, particularly along the Texas Gulf Coast.
Government-controlled companies, for example, are investing billions of dollars to expand the Saudi-owned Motiva refinery in Port Arthur and build a petrochemical plant, in partnership with Exxon Mobil, near Corpus Christi.
The deal with Halliburton comes just a month after Crown Prince Mohammed bin Salman, the heir to the Saudi throne, capped a three-week U.S. tour in Houston, where he underscored the Kingdom’s long-standing energy ties to the region.
The contract makes Halliburton a big part of Saudi Arabia’s modernization plans, which include exploiting natural gas reserves not only for fuel to generate power but also as a feedstock for a domestic petrochemical industry, said Mohammed Qahtani, Saudi Aramco’s senior vice president of upstream. The abundance of natural gas from Texas shale fields has driven the Gulf Coast petrochemical boom, which has attracted some $50 billion in investment and created thousands of construction and factory jobs.
“We believe Halliburton will work best with Saudi Aramco to help in our pursuit of unconventional gas … to spur regional economic development,” Qahtani said.
The contract guarantees Halliburton two years of work with an option for a one-year extension. The companies declined to disclose dollar figures or additional details of the terms.
“This is a great opportunity to provide a tailored application of Halliburton technology, logistics management and operational excellence,” said Halliburton Chief Executive Jeff Miller, who traveled to Saudi Arabia for a signing ceremony.
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