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Weekly UpdatesThe main producing Najd fields are: Hawtah, 190 km south of Riyadh, on stream since late 1994 with a capacity of 150,000 b/d, and its reserve of liquids has been put at about 1.5 bn barrels; Nu'ayyim, 25 km east of Hawtah, which came on stream with a limited capacity in January 1997, using facilities at Hawtah; Hazmiyah, south of Hawtah; and Ghinah, whose liquid reserves have been estimated at almost 1 bn barrels.
These and several other Najd fields are linked to Petroline (the east-west pipeline) by a 325-km spur for export to Ras Tanura in the Gulf or Yanbu' on the Red Sea. At present, the ASL is exported through Ras Tanura. The pipeline has been partly converted to pump natural gas from the east to Yanbu'.
Shaybah: A super-giant discovered in the early 1970s - with light/sweet oil in place having been estimated at about 14.3 bn, including 7 bn barrels recoverable, plus 25 TCF of gas - Shaybah came on stream in mid-1998 for tests. Its capacity reached 500,000 b/d in early 1999 and it was inaugurated in March 1999. Other projects include the Phase-2 expansion of Shaybah, which will add 300,000 b/d of extra light crude by 2008.
AEL from the field is transferred through a pipeline to Abqaiq for blending with AL. About 880 MCF/d of gas is reinjected into the field (see background in Vol. 61, No. 14).
Saudi Aramco on March 31, 2007, signed a $100m contract with Stroytransgaz, a construction arm of Russia's energy giant Gazprom, for laying a 200+-km crude oil pipeline from Shaybah to Abqaiq within 18 months. (President Vladimir Putin in February 2007 made a two-day visit to Saudi Arabia, which was the first visit of a Russian head of state. Saudi-Russian trade has risen from $88.5m in 1999 to $412m in 2005. The kingdom exports wood, coal, wood products, and paper products to Russia, while its imports from Russia include yeast, copper products, and steel. The two countries have only five joint industrial and non-industrial projects worth SR37m).
To explore for associated and non-associated gas, Saudi Aramco is to drill 307 wells, including 67 for exploration, between 2007 and 2011 (see gmt13SaudiGeoSep24-07).
The Divided Zone: The divided (formerly "neutral") zone is shared equally by Kuwait and Saudi Arabia, under a treaty signed on Dec. 2, 1922 to settle a territorial dispute between the two countries. The treaty was revised on July 7, 1965. The joint administration accord was supplemented in 1969 by an agreement whereby the northern half was administered by Kuwait and the southern part was run by Saudi Arabia. An undivided half interest in all resources was maintained over the entire area by each state. A joint Kuwaiti-Saudi committee oversees exploitation of these resources.
Texaco (Chevron), which has the onshore concession to 2010 in the northern half, shares its area's oil production equally with Kuwait. Saudi Arabia gets taxes and royalties on Texaco's share. Texaco's production capacity reached 420,000 b/d in 2005. It had risen after the Gulf war from 100,000 b/d in 1991/92 to 120,000 b/d in 1995 and 270,000 b/d in late 1998 and the first half of 1999. Texaco operates three onshore oilfields: Wafra, South Fuwaris and South Umm Gudair (see their profiles in the Kuwait survey in Vol. 68). The former US operator onshore, Getty Oil, was sold to Texaco in 1984.
Aramco Gulf Operations Co. (AGOC) is a unit of Saudi Aramco set up at end-February 2000 to take over half the operations of Arabian Oil Co. (AOC) of Japan - which had the offshore concession to February 2000 on the Saudi side and to Jan. 4, 2003 on the Kuwaiti side. AOC lost both concessions and now works as a service contractor for Kuwait Gulf Oil Co. (KGOC). The offshore area's oil production capacity is 300,000 b/d maintained since the 1980s. The area has two producing oilfields: Khafji which is offshore and Hout which is onshore. It also has a huge but undeveloped offshore gas field, Dorra, and a very small undeveloped structure called Lulu, and both are on the median line with Iran's waters. Lulu forms an extension of Iran's Esfandiar offshore field.
AGOC and KGOC have formed an operating JV called Khafji Joint Operations (KJO), which is spending $1.5 bn to upgrade and expand the capacity by late 2007 in two phases. Toyo Engineering got a contract in June 2003 to repair and upgrade the oil production facilities by end-2004 to ensure another 10 years of operations. Phase-2, 2005-07, required Toyo to prepare a plan and designs for rebuilding the al-Khafji facilities to ensure stable production levels during the next 30 years.
It has been proposed that Dorra, to be exploited jointly for Kuwait and Saudi Arabia, with a share to go to Iran as part of a territorial deal, will have a major stream of natural gas and this will feed a big electric power plant (see gmt14SaudiFieldsOct3-05).
Saudi Aramco earlier in 2007 unveiled a plan to expand its known resources by finding new oilfields while also concentrating on ultimate recovery from existing and yet to be found fields. It is looking into areas hard to explore and the potential of unconventional oil.
A pilot project for heavy oil involves a steam-flooding process developed by Chevron in Indonesia and other parts of the world - continuously injecting high pressure steam into Fms of heavy oil in the Divided Zone (DZ). The additional heat and condensation causes expansion in the liquid, releasing it from the surrounding rock. It reduces the liquid's viscosity, enabling it to be pumped out more easily. About $300m are being spent on this with Saudi Arabian Texaco (SAT). Targeted production is 300,000 b/d from 2010.
Saudi Aramco is looking into the DZ's offshore part and elsewhere in Saudi Arabia's Persian Gulf waters. Its Supreme Council, headed by King Abdullah, has authorised the NOC to share the risk of its new extraction plans for heavy oil with IOCs specialised in deep offshore E&P. It recently signed a deal with state-controlled Brazilian IOC Petrobras to tackle technological challenges in extracting heavy oil offshore and having a related olefins complex. This will be an integrated heavy oil E&P/downstream petrochemical JV likely to involve several billion dollars. If this experience proves successful, Saudi Aramco may have similar JVs with other specialised IOCs.
The DZ is said to hold at least 3 bn barrels of heavy oil. MEED on June 29, 2007, quoted Abdullah S. al-Saif, Saudi Aramco's senior VP for E&P, as saying: "Heavy oil is a big part of our future. Obviously, some is more difficult to reach than others but we realise 20, 30, 40 years down the line, heavy crude will play a very big part in our firm's production base". But extraction of heavy oil is not the only process under study.
Saudi Aramco's Diverse Operations: In March 2003 Saudi Aramco gave a five-year, A$150m ($89.1m) contract to Worley of Australia to provide PMC and engineering services to cover all of its ongoing offshore oil and gas projects including fixed platforms and submarine pipelines. The contract has provisions to extend Worley's services for another four years, with work having begun in April 2003.
A consortium led by Saipem of Italy in September 2007 won a seven-year contract, worth more than $250m, to provide offshore engineering and construction services to Saudi Aramco as part of its programme to maintain potential facilities. Saipem and its local partners - the Industrialisation & Energy Services Co. and al-Rushaid - will engineer, procure, transport and install offshore platforms and pipelines. A minimum workload of 16 platforms and 80 km of sealines is guaranteed during the first four years.
Saudi Aramco has four IPPs being built on BOT basis for a 1,000 MW capacity at Ras Tanura, Ju'aymah, Uthmaniyah and Shedgum. These were among 94 Saudi Aramco projects, worth $4 bn, tendered from early 2002 to end-2003 for execution in the upstream and downstream sectors. Saudi Aramco is having an ethylene cracker built at its Rabigh oil refining centre on the Red Sea coast (see DT No. 14 & 15). Some of its non-core units are to be privatised. Among other ventures, Saudi Aramco is to help found a private holding firm to produce equipment and machinery as well as provide services needed in the petroleum industry. Such firms can also produce for the other Middle East markets.
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