Kingdom of Energy

[:en]Clean hydrogen is estimated to become a trillion-dollar commodity market over the next three decades. It may be the most cost-effective means for Saudi Arabia’s energy transition.

 

Dr. Amro Elshurafa speaks to Dr. Jan Frederik Braun, who sheds light on the hydrogen economy’s opportunities and challenges in Saudi Arabia as well as the overarching roles of hydrogen. [:ar]تسعى المملكة إلى تنويع اقتصادها غير النفطي، وإلى أن تكون قوة عالمية في مجال الطاقة المتجددة وإنتاج الهيدروجين النظيف.

يتحدث الدكتور عمرو الشرفاء إلى الدكتور جان فريدريك براون عن الفرص والتحديات التي تواجه اقتصاد الهيدروجين في المملكة،

إضافة إلى الدور المهم الذي سيلعبه هذا النوع من الطاقة في العقود الثلاثة القادمة.[:]

[:en]Severe weather is a frequent cause of large-scale blackouts. In this episode, Dr. Amro Elshurafa, a research fellow at KAPSARC, has an in-depth discussion with Dr. Frank Felder about what happened in Texas and its relation to renewables, and even market liberalization. They also discuss the notion of lessening the frequency and severity of such wide-scale blackouts.[:ar]يعد الطقس القاسي أحد الأسباب المتكررة لحدوث حالات انقطاع التيار الكهربائي على نطاق واسع. تتناول هذه الحلقة نقاشًا ثريًا بين الدكتورين عمرو الشرفاء وفرانك فيلدر عن ما حدث في ولاية تيكساس مؤخرًا، وكيفية تقليل احتمالية انقطاع التيار الكهربائي إلى مستوياتها الدنيا بطريقة فعالة من حيث التكلفة.[:]

The COVID-19 pandemic has led many countries to implement strict restrictions that have not been seen since the Second World War. This caused an interruption of economic and social activities at an accelerating pace, as many governments imposed a ban on international and domestic flights, partial or full movement restriction, suspended some services, and closed schools, factories, and shops.

 

In these dire circumstances, the Kingdom of Saudi Arabia was no exception. This prompted the Saudi government to respond with a wide range of policy initiatives to mitigate economic impacts. The government was very active in communicating with the public through media awareness campaigns, increased the readiness of its healthcare system, enacted social distancing measures, and supported its economy with several measures that include financial, social, health, and labor support, which will undoubtedly have wide-ranging benefits for the economy’s future prospects.

 

Amidst these circumstances and changes, politicians urgently need real-time data about levels of GDP and demand in order to make sound decisions. However, this type of data usually takes extended periods of time to become available. In order to solve this, researchers at the King Abdullah Center for Petroleum Studies and Research (KAPSARC) studied all of the interfering factors in an effort to fill this gap, and published their findings in recent research entitled “Estimating the Impact of the COVID-19 Pandemic on Saudi Gross Domestic Product (GDP).”

 

The researchers utilized two different approaches to assess the amount of GDP’s deviation from the baseline scenario. The first estimation was carried out using the Saudi Vision 2030 Input-Output table, which is an analytical tool designed by KAPSARC to study the effects of Vision 2030’s transformation policies on 50 sectors of the Saudi economy, including retail, entertainment, road and air transportation, oil and gas, and others. Meanwhile, the second estimation was conducted by analyzing nighttime light satellite images to infer the changes in the overall domestic economic activity, based on the latest available information. To make the first estimation approach more comprehensive and accurate, the researchers designed three alternative scenarios to calculate the economic effects of the pandemic within the input-output framework, which are medium, moderate, and severe impact. This division depends on the severity of the overall initial shock on demand, its distribution among economic sectors, and the time needed for economic activities to recover.

 

To reach a more distinguished estimation of these factors, the researchers defined six types of initial shocks to economic sectors, reflecting their severity. For example, a zero-type shock does not affect demand negatively at all, which we have seen in the agriculture, food, and health sectors during the pandemic. While a type-five shock decreases the demand by 80%, which happened in the entertainment and air transport sectors during the complete ban period.

 

Experts suggested that the medium scenario is the most likely under current conditions, which states that the negative economic impact of the pandemic on GDP is estimated to be -7% in 2020. However, the Fiscal countermeasures and economic support packages launched by the Saudi government, around 70 billion Saudi Riyals, will have a positive effect and will reduce the negative impact by an estimated two point five (2.5) percent. Assuming a hypothetical economic expansion of 2% in a world in which COVID-19 did not occur, the estimated annual decline in overall GDP is about to reach minus two point eight percent in 2020. Looking at the remaining scenarios, the interval of annual GDP decline ranges from ‑0.4% to ‑5.4% this year.

 

The second estimation approach relies on the intensity of the nighttime lights in 18 photos of Saudi Arabia that were taken by satellites on the fifth and 26th of Ma

In 2010, Saudi Aramco launched its Accelerated Transformation Plan, which aims to extend the company’s E&P and downstream activities into new frontiers, and promote the production of unconventional natural gas resources in tight sands and shale formations. Currently, Saudi Arabia has over 600 trillion cubic feet of unconventional gas resources, half of which are technically recoverable. It holds the world’s sixth-largest estimated proven gas reserves, and the world’s ninth-largest marketable gas production.

 

In February 2020, Saudi Aramco announced the development of the Jafurah Basin as a resource of unconventional natural gas. It is Saudi Arabia’s largest unconventional natural gas field to date, and is located east of the giant Ghawar oil field, with 200 trillion cubic feet of wet gas resources. It will be developed in stages, and by 2036, production is expected to reach 2.2 billion cubic feet per day of natural gas.

 

The development of unconventional gas basins has emerged as a strategy to strengthen Saudi Arabia’s energy security and offers many opportunities for the country’s energy markets. For example, most of the Kingdom’s gas production was historically associated with oil, which means that the natural gas was initially dissolved in oil and was later separated after extraction. However, Saudi Aramco managed to increase the share of non-associated gas to nearly 60% of all gas production as of 2019.

 

Moreover, providing more quantities of natural gas for domestic consumption means that the Kingdom can use it to reduce the heavy reliance on less efficient and more carbon-intensive liquid fuels. These dynamics led Saudi analysts to predict that domestic natural gas demand will continue to grow at a compound annual growth rate of 3.7% for the next 10 years.

 

Nevertheless, a project of such magnitude will face many challenges, including drilling and completion costs, technical know-how, and water access. For instance, from the drilling and completion perspective and accounting point of view, Saudi Aramco’s approach to developing the Jafurah Basin gas field is similar to that of its other megaprojects, with a significant capital investment of $110 billion, as Saudi Aramco plans to deploy an array of advanced technologies in developing Jafurah, including horizontal multi-stage fracturing, and underbalanced coiled tubing drilling. This is due to the fact that unconventional wells usually have lower rates of productivity and rapid decline rates, thus requiring more wells to be drilled and placed into production simultaneously than conventional wells.

 

On the other hand, water availability will play a significant role here, as the extraction process for Jafurah will require substantial volumes of water, which contradicts the company’s priority of reducing groundwater use during fracturing treatments. Therefore, Saudi Aramco is exploring using seawater for fracturing applications, and is piloting the use of local sand in its gas fracking treatments rather than imported sand.

 

To manage and overcome all of these challenges, Saudi Aramco has established an unconventional gas department, and hired a large number of unconventional development specialists to bridge the knowledge gap, and outsourced fracking to leading oil service companies.

 

On the national level, the gas produced from Jafurah will be primarily reserved for domestic use and meet future energy demands for power generation, water desalination, and petrochemical production.

 

In conclusion, there are many significant benefits to developing domestic natural gas. Unconventional gas developments are major industrial projects that can enable the growth of local small and medium enterprises, foster job creation, and increase technical know-how in the Kingdom. This fits very well with the Saudi Vision 2030 goals of developing local industries and increasing local

The crisis of providing usable water is a major challenge for the future of all mankind, as the percentage of fresh water out of the total water on the Earth’s surface is only half a percent, which deprives a third of the world’s population of access to clean water today, whether due to the actual scarcity of water or economic scarcity. The GCC countries, in particular, suffer from water scarcity due to their dry and hot desert climate and low rainfall throughout the year.

 

This scarcity of surface water resources has prompted the region’s population to search for other sources of water. We can look at what the Emirate of Abu Dhabi in the UAE did as a vivid example of this, as the Emirate relies on groundwater by 60%, while desalination of seawater provides 35% of its water supply, and only 5% of clean water comes from wastewater recycling efforts.

 

Water is used in the Emirate of Abu Dhabi depending on different sources in the population, industrial, commercial and governmental sectors. However, statistics have found that agricultural activities alone in the UAE consume a total of 70% of the groundwater withdrawal. At high rates, that could reach 2 billion cubic meters annually of water, which is 26 times higher than the natural regeneration capacity of groundwater. This threatens the country’s water security and risks its limited resources with complete depletion within 55 years.

 

In order to find a practical solution to this problem, the King Abdullah Petroleum Studies and Research Center (KAPSARC) cooperated with the Environment Agency in Abu Dhabi and the Abu Dhabi Food and Water Control Authority. They conducted a research study to find the optimal way in which the Emirate of Abu Dhabi can reduce agriculture’s consumption of groundwater, while meeting the growing demand for agricultural products at the same time, in pursuit of environmental sustainability, economic efficiency and social justice.

 

Obviously, the first step toward this solution was to set a limited budget for the annual water consumption from groundwater sources, and then study the nature of crops grown in the Emirate and the level of its water consumption, and determine all of its economic value in UAE dirham. Afterwards, the researchers inserted these data into a linear programming model designed specifically to calculate water saving methods in agriculture and achieve the maximum economic benefit, according to a number of conditions and scenarios presented.

 

Various scenarios have found that the best possible economic and environmental outcome is to set a maximum limit for the annual agricultural consumption from groundwater by about only 1 billion cubic meters annually, with the possibility of importing some crops with high water consumption from abroad. This scenario can create an economic value exceeding 2 billion and 700 million AED, and prolong the life of the groundwater by 22 years to 77 years.

 

Among the crops that researchers recommend to localize are red pepper, pumpkin, sweet corn and squash, due to its low cost of production locally compared with the cost of import. They also recommend to reduce the cultivation of date palm, fodder such as alfalfa and Rhodes grass that are used as fodder for livestock, peas, cucumber and okra, where the cost of local production of these crops exceeds the cost of importing and it’s sold at a loss locally.

 

In spite of the importance of this analysis’ outcomes and its major applications in reality, the researchers pointed out that this model shows some aspects of shortcomings that can be improved in the future, as they did not take the cost of transport into their accounts. They also faced several problems in the lack of data, and did not consider some other important factors in determining the quantities of production, such as calorie concentration in crops, the amount of agricultural land required and its cultural significance. However, this research as a whole prov

[:en]KAPSARC's Hamid Al Sadoon and Colin Ward walk us through the latest findings from Q2 KAPSARC Oil Market Outlook (KOMO), where they discuss key issues for the oil market in 2020 and 2021, in addition to factors influencing price, and analyses of supply and demand in the oil markets through the forecast period.[:ar]يطلعنا الباحثان حامد السعدون وكولين وارد على آخر النتائج التي توصل إليها تقرير "تنبؤات كابسارك لأسواق النفط" للربع الثاني، إذ يشتمل على القضايا الرئيسة لأسواق النفط للعامين 2020 و2021، إضافة إلى العوامل المؤثرة على الأسعار، وتحليل الطلب والعرض في الأسواق خلال فترة التوقعات.[:]

The United Nations International Panel on Climate Change reports have highlighted that  “Rapid and far-reaching transitions in energy, land, urban and infrastructure including transport and buildings and industrial systems is needed to achieve climate goals”. Global emissions would need to be carbon neutral or net-zero by 2050 to stabilize global warming at the target level of 1.5 degrees Celsius.

 

Enerdata is a leading provider of data tracking CO2 emissions used by KAPSARC to understand the energy economy in Saudi Arabia and globally. Its “Global Energy & CO2 Database” brings together one of the most comprehensive and up-to-date energy databases, covering all fuels by sector from 186 countries.

 

In 2018 G20 countries accounted for around 80% of global emissions.  While Saudi Arabia is the 10th largest emitter of CO2, it has historically had one of the fastest-growing rates of CO2 emissions from fuel consumption among the G20 countries averaging around 5% per year.  What is significant is that in 2016 emissions stabilized and in 2018 fell significantly for the first time, declining by 4.4%.

 

This shift means that Saudi moved from having one of the fastest growing emissions from fuel consumption in the G20 to being the third fastest reducer of greenhouse gasses behind Brazil and France and but faster than Germany and Japan who rounded out the top five reducers of CO2 for 2018.

 

An analysis conducted by KAPSARC using Enerdata data traces the reduction to 2 main factors:

 

A strong fall of 5.48% in the economy’s energy intensity, or the amount of energy consumed per unit of GDP, which was responsible for 81% of the reduction in CO2 emissions. This was the fasted rate of improvement in energy intensity in the G20 group which reflects the level of energy efficiency in the economy and the share of energy intensive versus less energy intensive economic activities.

A fall of 1.3% in the carbon intensity of the energy supply, calculated by dividing the emitted CO2 by the total energy consumed, which was responsible for 19% of the reduction and due to an increase in the use of gas compared with oil.

These changes can be traced back to the transformational changes brought by Saudi Arabia’s Vision 2030, especially regarding new energy efficiency programs and energy price reforms. These policies have been the first step in supporting country’s plan to move towards a circular carbon economy as its pathway towards lower or net zero emissions.

Saudi Arabia’s CO2 emissions are produced by its three main energy consuming sectors: the transportation, industry, and buildings sectors.

 

The industrial sector is the largest sector consuming around 44% of the Kingdom’s total energy consumption. Buildings are the second largest consumer of energy in the Kingdom, accounting for around 29% of all energy consumed and most of the electricity consumption, 70% of which goes to powering air conditioning. The third largest sector is  transportation which accounts for around 21% of the country’s total energy consumption.

 

From the regulatory side, the Kingdom has brought in around 80 energy efficiency initiatives, managed by a number of governmental ministries, authorities, private sector entities, and overseen by The Saudi Energy Efficiency Center. The implementation of the Saudi Energy Efficiency Program has facilitated these initiatives, focusing on the three main energy consuming sectors.

 

In transportation, many initiatives were launched to decrease CO2 emissions, like setting requirements for fuel economy performance, fuel efficiency labeling, tire resistance and grip initiative, and improving the aerodynamics of vehicles. The majority of emission reductions during 2018 came from a 43% decline in diesel consumption.  This large decline can also be explained by a reduction in the use of diesel powered generators and illegal smuggling of diesel which historically has been a problem.

 

In the i

[:en]KAPSARC's Colin Ward and Hamid Al Sadoon walk us through the latest findings from the upcoming quarterly KAPSARC Oil Market Outlook (KOMO) to be released at the end of January. Among other factors they discuss oil market fundamentals, geopolitics, and possible associated risk factors through the forecast period.[:ar]

يطلعنا الباحثان كولين وارد وحامد السعدون على آخر النتائج التي توصل إليها التقرير الربع سنوي "تنبؤات كابسارك لأسواق النفط"، الذي سيصدر في نهاية شهر يناير. تشمل العوامل الأخرى التي يناقشانها أساسيات سوق النفط، والجغرافيا السياسية، وعوامل الخطر المحتملة والمرتبطة بها خلال الفترة المشمولة بالتوقعات

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[:en]Mark Finley, a fellow at the Center for Energy Studies at the Baker Institute, and visiting KAPSARC researcher discusses the future of energy security with KAPSARC's director of Markets and Industrial development.[:ar]

يتحدث في هذه الحلقة الأستاذ مارك فينلي، وهو زميل أبحاث في مجال الطاقة والنفط العالمي لدى مركز دراسات الطاقة بمعهد بيكر بجامعة رايس وباحث زائر في كابسارك، عن مستقبل أمن الطاقة مع مدير برنامج التنمية الصناعية وتأثيرها على الأسواق في كابسارك الأستاذ كولن وارد.

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[:en]Thermal comfort is a universal necessity to achieve and sustain high levels of productivity in any society, especially in areas with extreme weathers. In this episode, Simon Pearson and Scott Milne from Energy Systems Catapult, an energy non-profit based in the UK, discuss new heating technologies and services in the consumer sector.[:ar]تعد الراحة الحرارية ضرورة عالمية للوصول لمستوى عال من الإنتاجية واستدامتها في المجتمع، لا سيما في المناطق ذات الظروف الجوية القاسية. يناقش سيمون بيرسون وسكوت ميلن من مركز إنرجي سيستيمز كاتابولت –مركز غير ربحي في المملكة المتحدة يعنى بشؤون الطاقة- في هذه الحلقة التقنيات الحديثة للتدفئة وخدماتها في قطاع المستهلكين.[:]