Algeria expects to increase its export capacity by 50% within the next two to three years and is revamping its facilities to meet that target.
KUALA LUMPUR, Malaysia -- Two new liquefied natural gas plants are under construction and a fourth pipeline between Algeria and Europe is being studied. All of these projects are part of Algeria’s efforts to expand its export capacity.
Currently, Algeria has two pipelines to Spain and one to Italy. The fourth pipeline would also connect with Italy, said Youcef Yousfi, Algerian minister of energy and mines, at a press conference at the World Gas Conference 2012 on June 7 in Kuala Lumpur.
At the same time, domestic demand for natural gas is expected to double the next two years. Algeria must increase its production to meet the rising demand.
“Our policy is to intensify exploration, not only in mature basins but in new basins. We are opening basins in the southwest and north of the country. We are going to start exploration offshore in two years,” Yousfi said.
“Besides our conventional resources, we have large resources of unconventional hydrocarbons. These unconventional resources are either in tight reservoirs for oil or gas and in shale gas and oil,” he explained.
Demand Will Grow Quickly
Currently, Algeria is producing around 140 billion cubic meters [Bcm] (5 trillion cubic feet {Tcf}). Of this volume, 50 to 55 Bcm (1.76 to 1.94 Tcf) is reinjected in both oil and gas fields to recover liquids. Another 30 Bcm (1.06 Tcf) goes to domestic consumption. Present levels of exports are 55 to 60 Bcm (1.94 to 2.12 Tcf).
“Concerning domestic consumption, natural gas represents 60% of our primary energy. Of that, 45% goes to power generation, 35% to industry and 20% to residential,” Yousfi explained.
“Our general policy is to keep gas prices as low as possible to introduce gas massively in the country to limit deforestation. We have few forests, and we are trying to preserve them as much as we can.
“We are trying to replace liquids with natural gas. Consumption is going to double in the next three years,” he added.
At the same time, Algeria has a very aggressive program to introduce renewable energy. The country has an objective of producing 40% of its electricity from renewables by 2030. According to Yousfi, this will take a lot of hard work but the government thinks it is possible.
Boosting Infrastructure
Algeria has two companies in charge of its energy. Sonatrach is responsible for upstream production, transportation and liquefaction. Sonelgaz serves the power generation, industrial and residential sectors.
Sonatrach has about 10,000 km of transportation pipeline. Sonelgaz has 13,000 km, which will increase to 23,000 km in three years. The natural gas distribution network consists of 60,000 km, which will increase to 80,000 km in three years.
Export capacity today is 27 Bcm (953 billion cubic feet [Bcf]). “It is going to reach 40 Bcm (1.4 Tcf) in two to three years when we finish construction of the two new LNG plants,” Yousfi said.
Algeria also has pipeline export. In two to three years, Algeria will have total export capacity of 90 Bcm (3.2 Tcf) -- 50 Bcm by pipeline and 40 Bcm by LNG, he continued.
“We are optimizing all of these things. We need to revamp our tanker fleet. We need to revamp our LNG plants. It is all about optimization.”
Challenges With Unconventional Gas Development
The country is in the process of evaluating its unconventional gas resources. “The first estimate for tight gas is around 1,000 Tcf. For shale gas, the volume is estimated at 8,000 Tcf. We have to confirm these first evaluations,” he said.
Yousfi noted that Algeria faces at least four challenges with developing unconventional resources. “The first is technology. Producing unconventional gas and oil is not the same as conventional. We have to prepare ourselves for the new technology.
“Second is cost. We have the cost of natural gas linked with oil prices. Third is water management. These resources are mostly in desert regions, and water is a scarce resource. We have to preserve it. The fourth challenge is environmental protection.”
Contact the author, Scott Weeden, at sweeden@hartenergy.com.
