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Saudi Aramco plans massive spending to extend field life

BY ANTHONY DIPAOLA  & YUJI OKADA

DHAHRAN (Bloomberg) -- Saudi Arabia, the world’s largest oil exporter, is making “massive investments” as it seeks a production buffer to guard against swings in global crude prices while addressing a decline in output from its older fields.

Saudi Aramco, plans to maintain spare output capacity of more than 2 MMbpd, according to CEO Khalid Al Falih. The company raised its annual capital budget tenfold to $40 billion over the last decade and, in the past two years, has adjusted its daily production by more than 1.5 MMbbl, he said.

“We are on track to increase the average of our conventional oil recoveries to 70 %, which is more than double the current world average,” Al Falih said at the World Energy Congress in Daegu, South Korea. “So resources are, in fact, abundant.”

Benchmark oil futures have rallied 11 % in New York this year amid speculation Middle East unrest may disrupt shipments from a region that accounts for more than a third of global production. Saudi output increased to 10 MMbpd last month, coinciding with a drop in supply from Libya, according to a Bloomberg survey of analysts and producers.

Global crude reserves, estimated at 1.6 Tbbl , are equivalent to half a century of production at current rates, according to Al-Falih. Demand will rise by about 20 MMbpd over the next two decades, he said. Daily consumption is forecast at 92.1 MMbbl next year, the International Energy Agency said in an October 11 report.

Manifa Deposit

Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, will maintain its output capacity at 12.5 MMbbl by starting new fields including the offshore Manifa deposit, according to Al-Falih. Saudi Aramco also aims to add 550,000 bpd of capacity from the Shaybah and Khurais fields by 2017.

Manifa, which produces Arabian Heavy grade crude, and Shaybah and Khurais, which will supply lighter varieties, will help Aramco replace the oil that’s no longer being pumped from aging fields, he said.

“These are to basically allow us to relax production from the more mature fields and reservoirs and extend them, and also to rebalance our crude slates because with Manifa we’re tilting towards more heavy,” Al-Falih said.

Shaybah will reach a capacity of 1 MMbpd by the end of 2016 or early 2017, after adding 250,000 bpd output capability, he said. The company will add 300,000 bpd of capacity at Khurais, bringing it to 1.5 MMbpd in 2017.

Saudi Aramco will have relatively more light crude for export once the new deposits start producing, according to Al Falih. The heavier output from Manifa is earmarked for new joint-venture refineries the company is developing in the coastal towns of Jubail and Yanbu. A third oil refinery the company is building at Jazan will be completed by late 2016, Al-Falih said. The facility will produce some export products from light and medium crudes.

The company plans to build a 3,000 MW power plant at Jazan, Al-Falih said. It awarded the contract for the supply of the turbines to Siemens in August. Aramco will also add a residue gasification unit at the refinery, he said.

10/14/2013

 

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