The numbers attribnuted to Saudi Arabia's energy sector are staggering, with its wealth of reserves and producion volumes ligjtiing up the eyes of any oil tycoon, but how sustainable is this? Glenn Freeman reports
Growth in global oil production will be led by OPEC countries of the Middle East, with Saudi Arabia a clear leader, according to the US Energy Information Agency (EIA). Last year alone, the GCC region’s biggest state produced more than 8.4 million bpd of crude oil, along with 1.8 million bpd of natural gas liquids (NGLs) and other liquids. This ramped up to more than 9 million bpd each month from February 2011, according to OPEC and EIA figures.
“Saudi Arabia’s dominance in the oil industry has never been in doubt, for a variety of reasons including its prominent role in OPEC, its record of professionalism and reliability, its commitment to maintaining effective spare capacity and its ability to provide a rapid response to unanticipated volatility in both the physical and financial oil markets,” says Dr Sadad I. Al Husseini, former senior VP for exploration and production at Saudi Aramco, now president of Husseini Energy Co, a Saudi-based consultancy.
With more than 100 oil and gas fields and in excess of 1,500 wells across both onshore and offshore locations, Saudi Arabia lays claim to the world’s largest field, Ghawar, and also has the world’s highest-producing offshore field, Safaniya. The superlatives don’t stop there, with the Kingdom having embarked upon what Saudi Aramco, its national oil company, refers to as the biggest expansion program in the history of both the industry and the company itself. This multi-billion dollar programme, completed in 2009-2010, included new increments at its Khurais and Khursaniyah fields, in the country’s north, adding some 1.2 million bpd and 500,000 bpd respectively, in maintaining its gargantuan production capacity.
Fit for a Kingdom
Comprising drilling work for 310 wells, the expansion of Abu Jifan and Mazalij fields alone, along with facilities to capture associated gas reserves, required some 28,000 contractors across 14 separate locations, drawing labour from 26 contractors and 106 sub-contractor organisations, according to Saudi Aramco.
Safaniya field, located just offshore northeast Saudi Arabia, has production capacity of 1.5 million bpd of Arab heavy crude, with plans to add significantly to its output, with new developments flagged for completion in 2017.
Another offshore field development at Manifa is due for a phased completion across 2013 and 2014. Located on Saudi Arabia’s mid-eastern Gulf coast, Manifa is the world’s fifth largest oilfield, consisting of 27 man-made islands which support a series of drilling rigs, in turn connected to the mainland by a 40km causeway.
“Many of the fields that are producing are relatively mature, but many of them are so large they haven’t been fully developed,” adds Gibson.
Demand from afar
Since early 2011, one of the most immediately visible factors driving Saudi Arabia’s oil production was the war in Libya, which brought a major disruption to the former OPEC nation’s supply of more than 2 per cent of global oil supply.
Given the ongoing energy demands from emerging economies, particularly in Asia, which consumed some 27.5 million bpd in 2010 according to BP’s 2010 Statistical Review of World Energy, this excess oil needed to come from somewhere.
“We do believe demand is outstripping supply increases from non-OPEC producers, so somebody will need to develop new reserves.” says Gibson, pointing to Saudi Arabia as the obvious source. It provided China with around 1 million bpd in 2010, a quarter of its total imports, in addition to shipping fuel to Japan, South Korea and
Taiwan, according to the EIA. “The overall demand picture points to the re being a need for increased supply that non-OPEC countries won’t be able to achieve.”
Husseini doesn’t necessarily agree with the above outlook though: “I believe expensive marginal developments such as tight sands, oil shales and deep offshore developments will generate sufficient oil equivalent capacity elsewhere in the world to make it unnecessary for Saudi Arabia to add capacity beyond the Manifa field development.”
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