On the Natural Gas Production, Transportation, and Consumption in Saudi Arabia: A 2000 Perspective
Industrial Engineering, CCSE, King Fahd University of Petroleum and Minerals
Dhahran 31261, Saudi Arabia
2003
Abstract
In the year 2000, more than 40 % of the electric power generated in Saudi Arabia came from natural gas. In the same year, more than 0.8 billion tons of gas were sold and consumed locally by small businesses and households. Natural gas is becoming one of the important sources of energy in Saudi Arabia. Recent discoveries of new associated and nonassociated natural gas in the Western, Central and North-Western regions have made the natural gas the fuel choice for the future in the country. In this article, an effort is made to size the natural gas market in Saudi Arabia by comparing it with similar markets in other countries, including the countries of the Gulf Cooperation Council (GCC), Europe, Asia, and North America. In addition, the article presents up-to-date information about the gas production sector (associated and nonassociated) along with the gas consumption pattern and behavior by small businesses and households. To do that, the author collected data that are not available for public access and included them in the article.
Keywords: Saudi Arabia, natural gas, analysis.
1. Introduction:
Natural gas has risen up on the energy use ladder in Saudi Arabia to become one of the primary sources of energy in the country. Because of the abundant supplies of natural gas from wells in the East, Center, and North-West of the country and the recent additions of new oil/gas discoveries, no doubt that natural gas shows to be one of the most reliable sources of energy and, by observing the recent natural gas consumption trends, natural gas will be relied on even more in the future to sustain the rapid development in the Kingdom. Saudi Arabia has embarked on a new gigantic natural gas project with an estimated cost of 40 billion US dollars. The Natural Gas Initiative (NGI) after its completion by 2010 will increase the national natural gas production to between 350 to 450 billion cubic meters per day. Eight international companies will work together in this project to develop gas fields in three main areas: two in the Empty Quarter and one in the Northern Red Sea. This article is intended to give a quantitative overview of the current (in the years between 1999 and 2001) natural gas market (production, distribution, and consumption) in Saudi Arabia. The article is divided into three sections which cover the natural gas production sector, the natural gas transportation structure, and the consumption side.
The Gulf Cooperation Council, the GCC, comprising of the six states is regarded as one of the world’s fastest growing regions, driven by the relatively cheap indigenous energy supplies. It will be helpful to the reader to give a general overview of the GCC in terms of the natural gas consumption and production. The per capita natural gas consumption in the GCC is one of the highest in the world; in fact, Qatar, Bahrain, and Kuwait are ranked on the top of the list of the countries that have the highest per capita gas consumption in the world [1,2]. Table 1 presents the time series of the annual per capita natural gas consumption in the GCC from 1995 to 2000. The per capita gas consumption has risen in 2000 by as much as 8 percent over that of the year before; while the year ’99 has shown the largest increase in per capita gas consumption of about annual 45% in a five-year span. The year 1998 was a special year in which there was a slight decline in the per capital gas consumption of about 0.7% from the previous year, which occurred as a result of the decline in the natural gas consumption in United Arab Emirates and Kuwait.
The linear regression model for the per capita natural gas consumption in GCC based on the data presented is given by the linear function:
PCGD = 5,563 Y – 11,063,489 (1)
where PCGD is the per capital natural gas consumption and Y represents the years. The coefficient of determination for this regression model is 0.77. From this model, the annual increase in per capital gas consumption in the GCC is projected at about 5563 m3. Based on this projection, it is expected the per capita natural gas consumption in 2010 will rise to about 119 thousand m3, it will be 147 thousand m3 by 2015, and it will be 175 thousand m3 by 2020; this suggests that the GCC will experience an annual increase in per capital gas consumption of about 5 per cent over the coming 20 years. Thus, it is apparent that the GCC population’s dependency on natural gas is rising at a significant rate.
The GCC region is unique in that the GCC natural gas production is not affected by the domestic gas demand, but rather it is greatly influenced by the world’s natural gas demand disposition. Between 1997 and 2000, the natural gas production in the GCC increased at an average annual rate of about 9.5%, from 140.7 to 184.8 billion m3. In 2000, the natural gas production grew 8.3%, more than its 1999 level. The GCC’s shares of the world’s total gas production have risen over the years. For instance, in 1997, the GCC produced about 6.3% of the total gas produced in the world; while in 2000, the GCC’s share increased to 7.6%, which indicates the increasing importance of the GCC in the world’s supply market. The annual total natural gas production in the GCC and percentage shares of the world production are shown in Table 2.
The data of the actual natural gas production in the GCC are regressed in a linear form to project the expected future production and the relation between the year and the production is given by:
NGPGCC = 14.5 Y - 28855 (2)
for which the coefficient of determination is 1. NGPGCC stands for the natural gas production in the GCC and Y represents the year. Therefore, it is expected that the natural gas production will rise to 290 billion m3 in 2010, to 362.5 billion m3 in 2015, and to 435 billion m3 in 2020. These projects suggest that the natural gas production will increase in an annual growth of about 9 per cent over the next 20 years. Obviously, for the GCC to commit this kind of production, it has to enlarge its natural gas production base by expanding the existing facilities, constructing new facilities, and exploring new oil/gas wells.
In the GCC, the ratio of total production over total reserve is around 0.007 [3,4,5]. This ratio is too low when compared to other regions’ ratios. For instance, in North America, the ratio is about 0.119; and in Asia, the ratio is around 0.027. Eastern Europe, which includes Russia, has a ratio of about 0.012. If the GCC is going to maintain the current production volume and the current natural gas reserves estimates are to be accurate, then the GCC will be able to supply natural gas continuously for the coming 140 years. This observation adds to the observation previously mentioned which pointed out the important role the GCC plays in the world’s natural gas supply.
The contribution of the GCC countries to GCC’s natural gas production is not equal. As it can be seen from Fig. 2, Saudi Arabia and UAE share most of the natural gas production, 29% and 28% respectively. Qatar, which has the largest gas reserves, shares 22% of the total production. Bahrain, Kuwait, and Oman are on the lower end of the scale with a share of 6 – 8%.
Almost half of the natural gas produced in the GCC is exported. The natural gas consumption over production ratio in the GCC is around 0.56 and hence the GCC consumes 56% of the gas it produces and the rest is exported. North America and Asia are one of the gas importing regions. The consumption-production ratio in North America is around 1.03 and it is 1.15 in Asia. Eastern Europe is an oil exporting region with a ratio of 0.88. This means that 12% of the gas produced in Eastern Europe is exported [1]. The increase in the amount of gas flared in the GCC is due to the expansion in the oil industry and the discovery of new oil and gas fields. The amount of gas flared in 2001 increased by as much as 32% over the 2000 level of about 2,456 million m3 [6].
In comparison, the per capita natural gas consumption in North America in 2000 was 5.4 m3 per day at a growth rate of about 4.0 percent [1]. It seems, therefore, in North America the per capita gas consumption is lower than that of the GCC but they grow at the same rate. In Western Europe, the per capita gas consumption was 6.2 m3 per day with a growth of 3.5%. Africa’s per capita natural gas consumption in 2000 was 0.2 m3 per day. As most African countries are poor and only few of them have gas resources, it is not surprising to find the gas consumption to be this low. It is more startling to know that the per capita gas consumption is growing at a rate of 12.0 %.
In 2000, the world’s natural gas production was 2,436 billion m3; North America’s share was around 32%. Eastern Europe came into the second place of about 29%. Asia supplied about 10% of the total gas produced; while the GCC produced 8% of the total. Fig. 1 shows the percentage shares of the gas production in 2000.
2. Natural Gas Production in Saudi Arabia
2.1. Historical Background
The oil production in Saudi Arabia started in 1938 and up and until 1975 most of the associated gas and the gas produced as a by-product of oil production was flared and some was re-injected to maintain an appropriate well pressure. A number of reasons prevented the utilization of the associated gas. Firstly and most importantly, the financial return from the associated gas had been poor compared with oil; and hence oil companies were reluctant to invest in it. Lack of a national system for gathering and investment in gas was also a reason prevented the investment in associated gas. Additionally, the technology at that time was not advanced enough to provide ways and means that are cost effective to benefit from the associated gas. Lastly, oil prices were lower compared to other energy resources which included natural gas [8].
Facilities for re-injection of associated gas were built in Abqaiq field in 1954 and in Ghawar field in 1958 to re-inject the associated gas back to the oil fields to maintain their pressure and to store it for later use. These two oil fields were the only oil fields suitable for reinjection and gas was flared especially in remote fields. In the late fifties and early sixties, the Saudi Aramco started searching for buyers for the gas it produced. In 1960, a cement factory, located close to Shedgum field, was the first industrial user of domestic gas in Saudi Arabia. Then, Aramco went to build new facilities in Abqaiq and Ras Tanura to process the associated gas and produce hydrocarbon materials which will be sold. In Abqaiq, processing plants were built and natural gas is sent to Ras Tanura to be fractionated and then shipped.
In 1961, the work was finished from building a processing plant in Ras Tanura to process the gas which comes from oil refineries and transform it into liquefied natural gas and Saudi Aramco started to ship propane and butane, called liquefied petroleum gas (LPG), to world markets. The LPG plant in Ras Tanura was one of the first plants which were designed specifically to provide LPG suitable for shipment by tankers.
The next project for Saudi Aramco came in 1975 to build a processing plant in Berri. The work on this plant started shortly before Saudi Aramco was tasked to build the master gas system (MGS) and the plant, which was first designed to gather, compress, and process the high pressure associated gas from Berri field, was commissioned in 1977.
In 1980, the work was competed to build the processing plant in Shedgum, the fractionation plant in Juaymah, and a shipping port on the Gulf. In 1981, the processing plant in Uthmaniyah was competed; and in 1982, the Yanbu fractionation plant was completed. And in 1991, additional facilities were built in Shedgum plant to process the gas from Khuff field and the processed gas is pumped through the gas network in the Eastern Province. Fig. 3shows a map of the major gas fields in Saudi Arabia, such as Mazalej, Teenat, and Janoby.
The year 1975 was the start of a new era for the natural gas industry in Saudi Arabia. In November of that year, the Saudi government requested Saudi Aramco to design and build a system of pipelines and processing plants to amass and process the associated gas from oil fields. The system was completed in the early 80’s and it has become what is called the Master Gas System or MGS.
The system was first designed to gather and process about 85 million cubic meters per day. It was later expanded to include gas from offshore oil fields and the associated gas from Khuff field and the capacity of the processing plants in Shedgum, Uthmaniyah, and Berri was increased to 115 million cubic meters per day. The gas first is sent via pipelines to the processing facilities to be striped out of the non-carbohydrate materials and other impurities and sweet gas is produced. This gas, mostly methane, is send under pressure through a network to consumers in the Eastern Province. The rest of the liquefied natural gas, which is comprised mostly of ethane and heavier gases, is pumped from the processing plants in Shedgum and Uthmaniyah via pipelines to the two fractionation plants in Yanbu and Juaymah. The liquefied natural gas, which contains methane, from the facilities in Berri is sent to Ras Tanura or Juaymah to be fractionated; methane is produced in gaseous form which will be used mainly as a feedstock to the petrochemical industries in Jubail and Yanbu. After methane is removed, the remaining gas is fractionated to propane, butane (LPG), and natural benzene. LPG is shipped from Yanbu, Juaymah, and Ras Tanura and natural benzene is shipped from Ras Tanura. A representative map of MGS is shown in Fig. 4.
When the gas processing plant in Berri was opened in October 1977, it was the largest plant Saudi Aramco had ever built. The plant was designed to process 20 million cubic meters of feedstock gas, 600 million cf of fuel gas, and 90,000 barrels of liquefied natural gas per day. Berri plant receives gas from four oil fields; two onshore fields: Berri and Safaniya, and two offshore fields: Dholof, and Marjan. The plant also is capable to process 12,700 barrels of ethane per day which comes from fractionation facilities in Juaymah and store about 350,000 barrels of liquefied ethane. In addition, ethane can be vaporized at a rate of 11,400 barrels per day to be used as a feedstock for petrochemical industries in Jubail, which is located 4 km to the north-east of Berri plant. In addition to gas, the plant is the first plant in Saudi Arabia for the production of sulfur, with a capacity of 1,400 ton per day. In 1996, the capacity of Berri plant was expanded by adding additional 9.8 million m3 per day to its capacity with a cost of 240 million Saudi riyals, about 64 million US dollars.
The two gas plants in Shedgum and Uthmaniyah were built to process associated and nonassociated gas. The gas plant in Shedgum, 40 km to the south west of Abqaiq, receives gas from 15 separation facilities, 10 in Shedgum and Ain Dar, which are both part of Ghawar oil field, and 5 in Abqaiq field on to the north east. Uthmaniyah gas plant, located 56 km to the south west of Shedgum, receives gas from 15 separation facilities in Uthmaniyah, Hawiyah, and Haradh. Gas from Uthmaniyah, Hawiyah, and Haradh has lower levels of sulfuric hydrogen, which is considered impurity, than Shedgum, for this reason Uthmaniyah plant has only 3 processing units and 3 sulfur units; on the other hand Shedgum has 4 of units of each. The processed gas is sent via pipelines from Uthmaniyah to Shedgum and then to the fractionation plants in Juaymah and Yanbu. Shedgum and Uthmaniyah plants have a combined capacity of 125 million cubic meters per day. The production rate at both plants has a maximum capacity of 45 million cubic meters per day [10,11]. Recently, Saudi Aramco has finished the work to expand the production capacity of Uthmaniyah plant; the plant will be capable of processing up to 65 million cubic meters per day [12].
The fractionation plants in Juaymah and Yanbu receive NGL from the processing plants and remove from it ethane, propane, and butane. Yanbu fractionation plant is capable of processing 21,000 barrels of ethane per day and store 350,000 barrels. Ethane produced in Yanbu is used as a feedstock to Yanbut petrochemical plant and some is used for water desalination.
2.2. Hawiyah and Haradh Gas Processing Plants
The production volume of the associated gas depends on the oil production which in turn depends on OPEC quota; to provide enough supplies of gas, the government embarked on two projects to excavate and recover nonassociated gas in Hawiyah and Haradh fields. In 2001, Hawiyah plant was commissioned to supply 42 million cubic meters per day of natural gas; most of this gas is transported by pipelines to Riyadh for electricity generation in three power generation stations to replace liquid fuel which was used for the same purposes. The second industrial city in Riyadh has received natural gas for the first time from Hawiyah. The gas supplied to Hawiyah plant comes from gas fields in Hawiyah, Haradh, and Jouf. Haradh gas plant was competed in 2003 and the plant has a capacity of about 42 million cubic meters per day which will be added to the capacity of MGS. With all recent additions added up, the MGS will have a capacity of 200 million cubic meters per day [13].
2.3. Marketed Gas
On average, the marketed natural gas production in Saudi Arabia has increased over the last decade. In 1999, however, there was a drop in gas production by as much as 1.1% over the 1998 level of 46,720 million m3; things went to normal in 2000 when the Kingdom increased its production to 49,970 million m3. The data from OPEC’s 2002 Annual Statistical Bulletin is shown in Table 3. In 2000, Saudi Arabia’s share of OPEC marketed natural gas production was 13% and it was 2% of the world’s total production [16]. Fig. 5 shows the percentage share of Saudi Arabia of the total marketed natural gas production in the world. The decline in gas production can be attributed to the drop of the world oil prices in 1998 when oil prices fell by 35 percent.
Source: Saudi Aramco
3. Natural Gas Consumption
Saudi Arabia has the third largest natural gas production over reserve ratio; Bahrain is the first and Oman is the second. In 2000, the production-reserve ratio was 0.008. As it has been indicated earlier, Saudi Arabia experienced a decline in gas production in 1999 from 46,720 to 46,200 million m3; while gas consumption stayed unchanged. The consumption-production ratio in 1999 was 0.80 and it went down in 2000 to 0.76. In 2000, Saudi Arabia’s consumption-production ratio was the second highest in the GCC, after Qatar. The per capita gas consumption in Saudi Arabia is one of the smallest in the GCC. Larger than Oman, Saudi Arabia’s per capita gas consumption in 2000 was 1,724.1 m3 per year or 4.7 m3 per day [1,15]. In comparison, the per capita gas consumption in North America was 2,569 m3 per year.
3.1. Gas Sales
According to the 37th Statistical Year Book, published by Central Department of Statistics, a division of the Ministry of Planning, the total natural gas consumption in 2000 was 1.1 billion cubic meters. The monthly sale of natural gas by plant is shown in Table 4. From the table, it is clear that there is a pattern at work here. From the data and with the help from Fig. 6, it is quite apparent that gas sales in winter months, December and January, are higher than the gas sales in the summer months; in fact, June is the lowest month in the year in terms of gas sales. To emphasize this difference, if the relative difference between the gas sales in December and June is taken, it can be found that the former is larger than the latter by as much as 27.4%, which is very large when the amount of gas sold is considered.
An equally important observation that can be made is that gas sales by the plants are substantially different; Riyadh plant sells about 27% of the total gas sold; while Qasim plant has the least sales share of about 8%. Medina and Taif plants share the same percentage of 9%. The plant in Dammam, which is the host of one of the two industrial complexes in the Kingdom, shares around 16% of the total gas sales. Jeddah plant shares 19%, and Abha 12%.
4. Natural Gas Transportation
4.1.The National Gas and Industrialization Company- GASCO
In the years preceding 1975, the discontinuity of gas supplies to households and businesses was frequent in all the Kingdom’s regions. The services rendered by the companies and establishments, which were operating in this field, became worse due to the tough competition between them. That situation led the government to the establishment of one company that united all local gas distributors; it was called the National Gas and Industrialization Company, GASCO. The company has been given the authority to deliver gas to residential and commercial consumers in and out of the country. Since its establishment, GASCO has an excellent record of order fulfillment; and at no time has GASCO had a backlog. The company operates in all regions of the country and delivers gas, mainly LPG, to residents and businesses. In addition, its operations extend to consumers outside the country; GASCO has customers in Lebanon and UAE.
4.2. GASCO’s Gas Distribution Operations
GASCO’s distribution operations are described as follows. The company has distribution centers, or what they call branches, scattered around the country; and these branches are located in key areas in order to optimize the gas distribution operations. In each branch, there are spherical storage tanks; and these tanks act as buffers between the supply and demand. The capacity of these tanks ranges between 1,500 to 2,000 m3; however they are filled 80% of their capacity. GASCO has a total of 19 tanks which can store collectively around 20 million cubic meters of gas. Janob, Qasim, and Taif are the largest branches; each has a capacity of 4.5 million cubic meters. The details are listed in Table 5.
Trucks are used to transport gas from gas processing plants to the company branches. GASCO has a fleet of more than 350 trucks, with each having a capacity ranging between 26,000 and 32,000 liters. Table 6 shows the gas transportation distances and costs from gas plants to branches. The third column in the table lists the distances between the gas plants and GASCO branches; these gas plants are operated by Saudi Aramco and GASCO buys gas on purchase aggregation basis. The fourth column lists the total transportation cost; the cost of transportation includes the driver’s wage, truck fuel, truck repair, and other smaller expenses. In the fifth column are the costs of gas transportation per m3. The last column in the table presents the transportation cost per m3 per km. After taking the average, it is found that GASCO pays around 4.5´10-4 Saudi riyals to transport one m3 of gas for a distance of one km.
GASCO operates in three areas depending on the type of gas used, the delivery of what’s called the normal gas for residential consumers, and the delivery of two types of gas, butane and propane, to businesses and special consumers, such as hospitals. In 2002, GASCO purchased from gas plants a total of 2 billion liters of normal gas, 11 million liters of butane, and 1.3 million liters of propane. Butane is purchased only from Yanbu gas plant; propane is purchased only from Ras Tanura gas plant. Normal gas is purchased from all the four gas plants; where Ras Tanura Plant supplies most of the normal gas. Riyadh branch receives gas from Riyadh and Ras Tanura plants; Jeddah receives gas from both Jeddah and Yanbu plants. Gas in Taif comes from one plant, Yanbu plant. Normal gas, propane, and butane are delivered to Dammam from Yanbu and Ras Tanura plants. Medina branch receives gas from Yanbu plant, which is the closest. Qasim receives gas from both Yanbu and Ras Tanura plants; so does Janob branch. Table 7 summarizes the gas purchases from gas plants, by branch and gas type, for the year 2002.
 |
 |
|---|---|
(1) |
(2) |
(1) Administrative Divisions of Saudi Arabia.
(2) Areas served by GASCO branches.
4.3. GASCO’s Gas Sales
In four years, GASCO’s gas sales increased by 9.7%, an average annual growth of 3.1%. Of all the 8 branches GASCO has, Riyadh branch is the largest in terms of gas sales; in 2001, sales from Riyadh were 318 million m3, which is about 26.8% of the total sales. GASCO branch in Jeddah, the second largest city in the Kingdom, accounted for 22.3% of the total gas sales. On the other end, gas sales from Yanbu branch is the least of all, only 0.4% of the total. The gas sales by branch from 1998 to 2001 are shown in Table 8.
The monthly GASCO gas sales pattern has a v-shape; being the smallest gas sales in the middle of the year, in August to be exact, and the highest at the beginning and the end of the year. It seems that there is an inverse relation between gas sales and temperature. Gas sales drop during the summer months; August is the hottest month; and sales increase during the winter months, January and December. It is not clear exactly how gas consumers behave as the temperature changes; but one reason which can explain this is because most of the gas sold is used for cooking, households tend to cook less during the summer because of the excessive heat; and during the winter months, consumers return to normal cooking lifestyle. The monthly gas sales data are shown in Table 9.
4.4. GASCO’s Sales Branches
As it was indicated earlier, GASCO has branches in different locations across the country; each branch serves a certain area or region. For instance, Qasim branch serves customers in Qasim, Hail, and Jouf; Dammam branch delivers gas to consumers in the Eastern Province and the Northern Boarder. Riyadh branch, on the other hand, covers consumers in Riyadh region exclusively. Medina and Yanbu branches cover Median and Tabuk regions. Asir, Baha, Jizan, and Najran regions, in the southern part of Saudi Arabia, are served by Janob branch. Fig. 7 illustrates the areas served by GASCO’s braches in the Kingdom, along with the name of each branch.
Gas is delivered to customers by trucks from the company branch and stored in special gas tanks at the customer locations. At the sign up with the service, GASCO installs the tank with all necessary connections; and the customer will fill a refill order every time gas in the tank runs low; the company suggests that the customer should call for a refill before the pressure indicator runs in the red area. The company sells a variety of tank sizes, ranging from 640 m3 to 9.3 million m3; some are above the ground, some can be buried in the ground for extra safety. Gas sale price, obviously, varies and it is largely determined by how far the customer is from the company branch; on average, the sale price is about 0.9 Saudi riyals per m3.
4.5. Natural Gas and Electricity Generation
Historically, the role of natural gas in electricity generation in Saudi Arabia has been increasing; thanks to the economical and environmental conscience on part of the government. From 1977 to 2000, the amount of gas consumed by the electricity generation sector rose by 2,307%, an average annual growth of about 31%. Prior to 1999, gas as electricity generation fuel had been confined exclusively in the Eastern Province; however, that has changed after the three gas powered electricity plants in Riyadh were opened. In the rest of the country, other fuel types are used, such as crude oil, heavy fuel oil, and diesel. The gas consumption data in electricity generation is shown in Table 10.
Using the actual gas consumption data for electricity generation, a linear regression model has been constructed and the parameters are given in this equation:
NGCE = 393.94 Y – 777828 (3)
The coefficient of determination for this model is 0.88. In this model, NGCE stands for the natural gas consumption for electricity generation, in million m3, and Y represents the years. According to this projection, the annual increase in natural gas consumption for electricity generation is about 393.94 million m3 and accordingly the total gas consumption in 2010 will be about 13,991 million m3, will be 15,961 million m3 in 2015, and will be 17,931 million m3 in 2020. It seems, therefore, that the Kingdom is into a period in which natural gas demands for the generation of electricity will be high; and the government, represented by the Ministry of Petroleum and Mineral Resources and Saudi Aramco, has already started projects for upgrading existing gas distribution networks, such as the Master Gas System, and building new upstream pipeline systems in the Eastern Province.
The Kingdom’s policies of better utilization of natural resources have led to more utilization of natural gas for electricity generation than other types of fuel, such as diesel or crude oil. As depicted in Fig. 8, in 2000, 41% of the electricity power generated came from gas-fired power stations; far less came from steam stations satisfying about 31% of the demand. Stations powered by diesel are almost phased out; only 1% of the total power generated came from diesel-powered stations [17,18,19,20].
5. Conclusion
In this article, the natural gas production, transportation, and consumption in the Kingdom of Saudi Arabia have been analyzed. Saudi Arabia is the major natural gas producer in the GCC; Saudi Arabia has the largest share of the total gas produced in the GCC. In terms of the natural gas production-reserves ratio, Saudi Arabia is ranked third in the GCC, and it is ranked second in terms of the consumption-production ratio. Several reasons existed in the past which prevented the proper utilization of the associated gas and most of the gas was wasted or flared. Saudi Aramco has started projects to install new facilities to gather and process this gas, an investment which will have a high return. From the data presented in the article and based on the forecasts for the next 20 years, it is very likely that the domestic consumers- residential and industrial- of natural gas in the Kingdom will be demanding more of gas and the demand will rise annually at a considerable rate. The electricity generation sector in particular will be, according to the plans of the Saudi Electricity Company, a major gas consumer.