Dubai: Abu Dhabi National Oil Co (Adnoc) is exploring its unconventional natural gas deposits as the state oil company seeks to boost output of the fuel to meet rising domestic demand.

"The first question senior management asks is, ‘how much does it cost?'" Musabbeh Al Kaabi, the company's exploration division manager, told reporters in Abu Dhabi yesterday.

"So the first thing we will do is assess the unit cost."

Adnoc is pursuing high- temperature, high-pressure gas found at a depth of 16,000 feet (4,900 metres) mainly offshore, Al Kaabi said. It will also explore relatively shallow source rock onshore that requires extraction techniques similar to those used for shale gas in North America, such as horizontal drilling, he said.

The UAE and Saudi Arabia are seeking to develop their gas reserves as domestic demand for the fuel in power plants and industrial development rises.

Developing fields

The UAE is working with Occidental Petroleum to develop the $10 billion Shah field.

Saudi Arabia may produce its first unconventional gas by 2020, Saudi Arabian Oil said.

Adnoc plans to drill an appraisal well this year in its deep gas reserves to test for commerciality, Al Kaabi said.

Its shale gas, at a depth of 7,000 to 14,000 feet, is in the early evaluation phase and the company may drill a well this year or next as "we can see strong and positive indications," he said.

Gas fell for the ninth day in 10 in New York. Gas for February delivery slipped more than 4 per cent to $2.246 per million British thermal units in electronic trading on the New York Mercantile Exchange at 8.24am London time, erasing a 0.9 per cent gain on January 20.