Saudi Arabia reported finding new gas in the northern Jalamid area, which it said could be commercially exploited.

Tests showed the Jalamid-3 discovery well in al-Sannara reservoir flowing at 12.1 million cubic feet per day, Reuters quoted the official SPA news agency as citing Petroleum and Mining Minister Ali al-Naimi.

“Initial estimates show that the gas can be exploited commercially,” Naimi said, adding that the well was drilled to a depth of 2,986 metres.

“This well can produce greater quantities under normal production conditions,” Naimi said adding that the gas field would be developed.

Saudi Arabia has been stepping up its search for gas to cater for a demand that is growing 7% annually after an oil price rally between 2002 and 2008 fuelled the creation of more power and industrial projects.

The kingdom is expected to start producing 450 MMcfd of gas from the first phase of the Karan gas project by mid-2011, state oil giant Aramco said last year.

As most Saudi gas is produced in association with oil output, volumes fluctuate with oil production.

Saudi oil output is at one of its lowest levels since the most recent oil boom began as the kingdom and Opec curb output to match falling demand.

This has left gas supply in the kingdom tight.

Aramco has said that it plans to raise its daily gas supplies by 30% within five years to 8 Bcf.

The kingdom plans to build the largest ever gas plant in the kingdom expected to process more than 1.8 Bcfd of gas to supply utilities and some industries.

(Upstream Online)