With activity levels spiking throughout the Kingdom, and a raft of international partnerships delivering unprecedented success, business prospects in Saudi Arabia have never looked better
Saudi Aramco’s strategy throughout the economic downturn has been to sustain its traditional long-term view of petroleum supply and demand, forging ahead with — and formally completing — the largest oil production-capacity expansion program in its history.
Aramco was the world’s second largest producer and top exporter of crude oil in 2010, and was the only major producer that was a leading supplier to all three major market regions — North America, Europe and Asia — and the leading supplier of crude to Asia.
A little known fact is that KSA became the biggest single supplier to China, providing roughly a million barrels of oil per day (bpd), a quarter of that country’s total oil imports.
Building Reserves
Over the course of the last year, KSA once again maintained its world-leading conventional crude-oil reserves at 260.1 billion barrels, replacing 2010 production with oil from new field discoveries, expansions of existing fields and production optimization.
Four new oil fields and one new gas field were discovered during the year, and six new oil reservoirs and three gas reservoirs were added to existing fields.
Two oil Increments completed in 2010 — Khurais and Khursaniyah — added 1.7 million bpd of oil production capacity.
The state-super-major also maintained its sustainable production capacity of 12 million bpd, reached in 2009, including considerable spare capacity to help stabilize international oil markets during any potential crisis.
Drilling of three previously discovered gas fields, including Karan, the company’s first offshore non-associated gas field (produced independently of oil), proceeded on schedule in 2010.
Development of a fourth field, Midyan, was completed, and the company also started drilling tight-gas tests for developing relatively nonporous gas reservoirs in the northwest areas of the Kingdom, a challenging but significant opportunity for expansion of gas production with applications in many areas of the country.
Aramco’s upstream gas joint ventures, with four European and Asian industry partners, have continue to search for new gas reserves in the Rub‘ alKhali desert.
Expanded gas-production capabilities allowed the company to markedly increase its gas output in 2010 to an all-time high of about 8 billion standard cubic feet per day (scfd) during the high-energy-demand summer months, when 300 million scfd of non-associated gas (produced independently of oil) was processed to manage peak demand and reduce burning of crude oil for power generation.
New Frontiers
The company increased the pace of its Kingdom-wide exploration program in 2010 to prepare for future hydrocarbon demand.
These efforts yielded success, with the discovery of four new oil fields and one new gas field, increasing the total number of Saudi Aramco discovered fields to 112, plus the addition to existing fields of six new oil reservoirs and three new gas reservoirs.
Saudi Aramco uses cutting-edge technology to continuously search for new petroleum reserves, and its exploration program is becoming more focused on frontier and emerging areas, such as the Red Sea.
The company is also exploring potential in conventional and unconventional reservoirs, offshore plays and deep-water targets.
In 2010, Saudi Aramco stepped up seismic activity in relatively unexplored areas with potential to add significant reserves. One key project was a major expansion of exploration operations in the Red Sea, with the deployment of a second seismic crew.
The transition zone 2D seismic crew that commenced work in November 2009 continued acquiring data along the northern Red Sea coast that will be integrated with all existing seismic and well data to create an improved understanding of the potential of the basin.
A marine 3D crew began operations in October 2010 in the northern Red Sea, acquiring data in deeper offshore waters, as Saudi Aramco expands its expertise in deep-water exploration.
Work has also continued on the 3D marine and transitionzone seismic acquisition program to support the Manifa Field development, which started in November 2009, and two additional 3D marine seismic crews started operations in the Arabian Gulf.
One crew is acquiring data over the Hasbah field to support the planned 2.5 billion scfd gas increment for the new Wasit Gas Plant. The second crew is focused on deeper exploration targets, and will also produce improved seismic images and characterization of shallow oil-producing reservoirs.
In support of improving the quality of images derived from seismic surveys, a next-generation seismic crew was deployed to complete a test of dense seismic data acquisition over the Marzouk oil field.
In 2010, the company deployed a trailer-mounted Mobile Geological Laboratory for rig-site assessments of the fossil record in reservoir rock. Microscopic, organicwalled plant and animal fossils — essential to identifying subsurface rock formations — are extracted for study from small quantities of drill cuttings or cores during drilling, to accommodate timely and optimum drilling decisions.
Saudi Aramco has begun a strategic initiative to evaluate “tight” gas and shale gas potential in the Kingdom (“tight” refers to low-flow, low-permeability gas reservoir rock). The initial focus is in the northwest and in the area of Ghawar, where gas infrastructure exists. Initial knowledgebuilding from similar plays in North America is being supplemented with internal technical studies and research programs to help solve geological and engineering challenges unique to Saudi Arabia and to locate specific wells.
Current Plans
The company is innovatively combining knowledge and research to maximize gas reserves and Production from conventional and unconventional resources in order to meet growing domestic demand.
The four Upstream Joint Venture (UJV) companies continued gas exploration programs in the Rub‘ al-Khali. The 2004 ventures resulted from the Natural Gas Initiative (NGI) of the Supreme Council for Petroleum and Mineral Affairs.
The objectives are to maximize economic and social benefits to the Kingdom by entering into joint ventures with international energy companies to explore for natural gas fields in specific areas of the Rub‘ al-Khali desert (also known as the Empty Quarter). The UJV activities are undertaken in parallel with Saudi Aramco’s own Kingdom-wide oil and gas exploration program.
The partnerships include EniRepSa gas limited (EniRepSa — 50 percent ENI, 30 percent Repsol, 20 percent Saudi Aramco): EniRepSa’s First Exploration Period (FEP) was extended by the Ministry of Petroleum and Mineral resources (MinPet) until June 27, 2011, for the reprocessing of the Anbak 3D seismic data, and then it will decide whether to drill the fourth remaining commitment well.
Also in the mix is Sino Saudi Gas Ltd. (SSG 80% Sinopec, 20% Saudi Aramco): SSG has decided to enter into a second exploration period), and MinPet has approved its plans — 80% Lukoil, 20% Saudi Aramco): Luksar decided to enter into the appraisal phase and not to enter the SEP, retaining the appraisal area in Tukhman and Mushayib.
Luksar drilled its first appraisal well (Tukhman-4) and encountered a very tight reservoir in the Unayzah zone. Luksar is performing further studies, looking to improve well rates via fracture stimulations.
In remote operations, the South Rub‘ Al-Khali Co. ltd. (SRAK — 50% Shell, 50% Saudi Aramco) drilled its last FEP well, Kidan-7, in the southern end of the North Kidan field. The well flowed high gas rates of 44.5 million scfd in the Arab-C formation. A test in the Arab-D indicates the upper zone is gas-bearing while the lower zone is in the gas-water transition zone.
The results of Kidan-6 and -7 wells have led to an increase in reserves in the North Kidan Field compared to those previously booked by Saudi Aramco. SRAK has also decided to enter into a SEP.
New Oilfields
During 2010, Saudi Aramco discovered four new oil fields and one new gas field, increasing the total number of company discovered hydrocarbon fields to 112. The company also discovered six new oil reservoirs and three new gas reservoirs in existing fields, and extended, confirmed and delineated reserves in its Midyan, Jaladi, Rabib, Shiblah, Manifa, Nujayman, Habari, Shaden, Khurais, Jalamid, Hasbah, Karan and Tinat fields.
Saudi Aramco, in 2010, put finishing touches on major parts of the biggest capital program in its history that began in 2009, raising maximum sustainable oil production by 1.7 million bpd to 12 million bpd. Development didn’t stop there: Significant progress was made on another giant oil increment — 900,000 bpd Manifa, an Arabian Heavy crude oil field. Aramco also launched an upgrade of Safaniya, the world’s largest offshore oil field.
King Gas
Gas projects took center stage at Saudi Aramco in 2010, as the company sharply focused on ensuring a steadily increasing supply of natural gas and NGL products via the Master Gas System (MGS) for the Kingdom’s growing industrial sector, including fuel for power generation and water desalination and feedstock for the burgeoning domestic petrochemical industry.
Ethane and NGL products are critical feedstocks for the Kingdom’s downstream petrochemicals industry to manufacture value-added consumer products and generate jobs. To help meet these goals, key milestones were marked in development of three new offshore non-associated gas fields — Karan, the company’s first in the northern area, to be followed by the Hasbah and Arabiyah fields.
The company commissioned and achieved full capacity at the 1 billion scfd Khursaniyah Gas Plant and the 3.8 billion scfd Hawiyah NGL recovery plant in 2010. Construction is under way for processing non-associated Karan gas in Khursaniyah Gas Plant. Development also was started on Wasit Gas Plant, and a site preparation contract was awarded for the Shaybah NGL Project.
Khursaniyah
Built to expand the Kingdom’s petrochemical products portfolio, Khursaniyah Gas Plant (KGP) began operation in 2010, north of Dhahran. KGP is designed to process 1 billion scfd of associated gas and 80,000 bpd of condensates from Abu Hadriya, Fadhili, Khursaniyah, Marjan, Safaniyah and Zuluf oil fields. KGP can produce up to 560 million scfd of sales gas for the MGS and 260,000 bpd of ethane plus NGL (C2+NGL), 1,800 metric tons per day of sulfur and 300 MW of power.
KGP uses turbo-expander technology to maximize valuable ethane recovery. The plant is integrated with Khursaniyah Central Oil Processing Facilities to minimize required utilities and capture synergies. KGP will be expanded in 2012 to process non-associated gas from the Karan field. With the Karan expansion, KGP output will increase to 1.8 billion scfd of sales gas and 280,000 bpd of NGL.
Hawiyah NGL
The plant, which came on-stream in 2009 to supply incremental ethane and NGL products to the Kingdom’s petrochemical industry, was commissioned in January 2010 to begin providing additional NGL to the MGS.
The plant was designed to process 3.8 billion scfd of sweet gas, with 95 percent NGL recovery, from the nearby Hawiyah and Haradh gas plants. The facility produces 290,000 bpd of ethane plus NGL and supplies the MGS with 3.4 billion scfd of sales gas. This facility uses turbo-expander technology to maximize valuable ethane recovery.
Shaybah NGL
The recovery programme initiated at Shaybah will increase NGL production, helping meet increasing in-Kingdom demand for petrochemical feedstock and ensuring secure and sustainable NGL product supply.
The program will build a grass-roots NGL facility capable of processing 2.4 billion scfd of gas and yielding 190,000 bpd of ethane plus NGL. It will also increase the gas-handling capacities of the four existing Shaybah GOSPs to allow higher gas-oil ratios.
Shaybah NGL Plant will utilize turbo-expander technology to maximize ethane recovery. New fractionation facilities to handle the additional NGL from Shaybah will be installed at Wasit Gas Plant to capture utilities and project execution synergies. To support the early start of the Shaybah NGL Project, a sitepreparation contract was awarded in November, and project proposals were completed. The program is scheduled for completion in 2014.
Wasit Gas Plant:
To meet the Kingdom’s energy demand beyond 2014, the non-associated gas from the offshore Arabiyah and Hasbah fields will be developed for processing in a new stand-alone gas plant at Wasit, located 8 kilometers from Khursaniyah Gas Plant.
Wasit Gas Plant has been designed to process 2.5 billion scfd of Arabiyah and Hasbah non-associated gas from 13 offshore gas platforms in the Arabian Gulf. Once completed in mid-2014, the plant will produce 1.8 billion scfd of sales gas.
This fuel will support electric power generation throughout the Kingdom and rapidly expanding petrochemical and other industries. In addition, the plant will include a new facility to fractionate NGL recovered from Shaybah to be used as feedstock for the petrochemical industry.
The new NGL fractionation module will process 240,000 bpd of ethane plus NGLs to satisfy growing local customer demand for ethane, propane, butane and natural gasoline. Site preparation and temporary communications contracts have been awarded, and work is under way at the site.
All major purchase orders have been awarded, and the main automation contractor selected. The project aims to help eliminate burning of crude oil for industry and power generation, thus increasing crude exports.
The gas plant will utilize the relatively new Sulfinol® gas-treatment technology, which increases the efficiency of the sulfur recovery units from about 95 percent to 99.3 percent
Karan Field
Saudi Aramco’s first offshore nonassociated gas field development Discovered by Saudi Aramco in April 2006, Karan gas field is the first non-associated gas field located in Saudi territorial waters of the Arabian Gulf, 160 kilometers north of the company’s headquarters in Dhahran.
Non-associated gas fields do not have an associated oil column and can thus be produced without waiting to deplete the oil reserves before producing the gas cap associated with an oil field.
The Karan field was discovered when the Karan-6 well drilled into deeper formations, finding gas in the Khuff carbonate reservoirs laid down from 200 to 299 million years ago in the Permian and Triassic periods.
With a Khuff gross thickness up to 1,000 feet, Karan’s is the thickest Khuff reservoir section ever encountered in Saudi Arabia. The Khuff formation ranges in depth from 10,500-13,700 feet, and Karan lies in medium-depth waters of 40-60 meters.
Karan, designed to produce 1.8 billion standard cubic feet per day (scfd) of raw dry gas to support the company’s Master Gas System, will be produced from 21 increment wells distributed over five offshore wellhead platforms.
The gas production will be staged with five wells already drilled and completed that will be tied-in and commissioned for 400 million scfd in early production planned for four months during 2011 summer peak demand.
Three other platforms with 14 wells will be drilled, completed, tied-in and on stream in June 2012, and the remaining two wells and platform will be ready in April 2013, bringing the field to full-capacity production. By January 2011, overall drilling and completion progress was 78 percent.
Produced gas will be co-mingled at one Tie-In Offshore Platform through five 20-inch subsea flowlines. Then, gas will be transported via one 38-inch subsea pipeline onshore to the Khursaniyah Gas Plant (KGP), where new gas-processing facilities are being constructed. This project marks a milestone in the company’s gas expansion program.
Additional Khuff offshore gas fields, similar to Karan, at Arabiyah (1.2 billion scfd) and Hasbah (1.3 billion scfd) were recently discovered and have been approved for development, with drilling to start in June 2011.
These fields along with other offshore gas discoveries will provide a vital part of the Kingdom’s gas production for the foreseeable future from Hawiyah NGL Plant acid gas stream for injection into the Uthmaniyah Field.
Seven wells are planned in the pilot project, with a comprehensive evaluation program including selective coring and saturation logs for characterizing the reservoir at close spacing and monitoring the water-CO2 flood.
Haradh gas focus
Haradh Gas Plant capacity was debottlenecked to reach 1.8 billion scfd of raw gas, yielding approximately 1.7 billion scfd of sales gas to the MGS, thus improving efficiency and output, and increasing gas supply to the gas system.
The Condensate System De-bottlenecking project was completed in September 2010, increasing the plant’s condensate handling capacity 64 percent, from 140,000 bpd to 230,000 bpd.
Staff
A new building has changed the Dhahran core area skyline. The highly anticipated Upstream Professional Development Center (UPDC) facility will soon open its doors to house an updated integrated training program for Upstream Operations employees.
All upstream training is being redesigned to combine technical depth and breadth with behavioral skills necessary for upstream professionals to excel in a dynamically changing work environment.
“UPDC is more than a facility… more than a training program,” said Amin H. Nasser, Upstream senior vice president. “It is Saudi Aramco’s proactive decision to stay ahead of the times. It represents our commitment to prepare our workforce for the unique challenges that lie ahead.”
Global energy demands are expected to rise substantially in the next 30 years. According to Abdullatif A. Al-Ghanim, director of Upstream Continuing Excellence: “UPDC is designed to address unprecedented professional development needs. We have aggressive targets of higher hydrocarbon discovery and recovery factors that require more complex activities and technologies to achieve. Exploration efforts are reaching into new environments, such as the Red Sea and deep gas exploration in the Arabian Gulf.
“The technologies used during routine operations will continue to evolve with new tools and advancements appearing at a rapid pace. With the advent of enormous amounts of real-time data that allow critical operational decisions to be made on the fly, engineers and geoscientists are taking collaboration and joint decision processes to a new level.”
Saudi Arabia’s Newest Oil & Gas Fields:
• Namlan-1, exploration well (BI-33), located 166 kilometers northwest of Al Jubail, was tested and flowed 566 barrels of oil per day (bpd) and 0.22 million standard cubic feet of gas per day (scfd) from the Hith Stringers.
• As Sayd-1, wildcat well (BI-33), located 400 kilometers north of Riyadh flowed 500 bpd from the Hith stringers reservoir and 185 bpd from the Rimthan reservoir. This well confirmed the presence of a significant Hith fairway along the flanks of the Gotnia Basin.
• Arsan-1, wildcat well (BI-33), located 120 kilometers southeast of Riyadh, flowed 125 bpd from the Unayzah A and continues the successful drilling in the Duayban Siriyyan area of Central Arabia.
• Qamran-1, wildcat well (BI-33), located in the Rub’ al-Khali 180 kilometers west of Shaybah field, flowed 630 bpd from the Mishrif reservoir. The well is expected to flow at a higher rate if stimulated. This is the first oil field discovery in the Rub’ al-Khali since the start-up of recent exploration efforts in the area.
• Jalamid-3 exploration well (BI-33), located 95 kilometers south east of Turayf, was tested and flowed 12.1 million scfd from the Sarah reservoir.
Saudi Aramco’s Completed projects
• Khurais increment: The giant Khurais Crude Oil Increment is the largest of several Saudi Aramco projects intended to boost the production capacity of Saudi Arabia’s oil fields to meet current and future world demand. The Khurais facilities are designed to produce 1.2 million bpd of Arabian Light crude oil. The Khurais project comprises three oil fields: Khurais, Abu Jifan and Mazalij. In addition to high-quality Arabian Light crude oil, Khurais can produce approximately 450 million scfd of associated gas and 80,000 bpd of produced NGL condensate. Khurais was commissioned in June 2009, and in 2010 it reached its maximum sustainable capacity. Khurais has the most advanced intelligent-field applications of any field in the company’s roster, maximizing oil recovery and protecting its reservoirs.
• Khursaniyah Program: The complex at Khursaniyah, which includes an oil-processing facility and gas plant, reached 500,000 bpd of crude production capacity after Khursaniyah Gas Plant, which has a capacity of 1 billion scfd, was commissioned in April. Khursaniyah blends Arabian Light oil from the Khursaniyah, Abu Hadriya and Fadhili fields, and generates 300 megawatts (MW) of electricity with its on-site co-generation plant, providing power to the plant and exporting excess power to the national grid to support the Kingdom’s energy demand.
Business update: alderley in KSA
Alderley Industrial Company Dammam, a subsidiary of Alderley FZE, has confirmed to Oil & Gas Middle East an annual turnover of more than US$20m for its 2010-11 financial year. This represents an increase of over 70% when compared to the previous year’s results.
Established five years ago, Alderley Industrial Company provides metering systems and support packages, both for new systems and upgrades of existing equipment for clients in the Kingdom of Saudi Arabia.
Keith Stephen, general manager of Alderley Industrial Company, says, “Saudi Arabia is a key area for growth for Alderley, and that is why the Kingdom was selected to be the location for one of Alderley Group’s key strategic manufacturing facilities. The services that we deliver in the country are in great demand, and this has contributed to our strong financial performance over the last 12 months.
“Our base in First Industrial City in Dammam has allowed us to provide our key customers with the vast global experience and knowledge of the Alderley group of companies on a local scale.
We are an approved local manufacturer in Saudi Arabia and the local investment we have made in establishing our base here in the last five years has allowed us to deliver our full suite of services for metering systems and support.
“The benefit of being located in Dammam is that we are close to our key customers, design contractors and engineering, procurement and construction companies. Being located in the Kingdom also shows our long-term commitment to the region, and helps us to gain a much better understanding of local needs and markets.”
Since moving into the Dammam facility in 2007 the company has psoted strong consistent growth.
“The financial results for the past 12 months are extremely encouraging, and we see a very bright future for Alderley Industrial Company in the Kingdom of Saudi Arabia. We are one of the newest companies in the Alderley family, and believe that our ambition and local knowledge base, combined with the expertise gained from other companies in the group, bodes extremely well for the years to come.” Alderley is a multi-disciplined engineering company operating in the oil, gas and petrochemical industries.
Business update: Edgen murray boosts KSA presence
Edgen Murray, a global distributor of speciality steel products and logistics solutions for the energy sector, has recently expanded its global footprint with the establishment of a new office in Al Khobar, Saudi Arabia to support its existing joint venture with leading Saudi Arabia-based oil, gas and petrochemicals company, Shoaibi Group.
The joint venture – operating as ‘Edgen Murray Saudi Company’ was established in 2008 and opened direct access to the world’s 8th largest energy infrastructure market, valued at an estimated US$176,674 million. The new office will stock and sell Edgen Murray products including Pressure Vessel Plates, Seamless and Welded API 5LX 65 steel pipe, Chrome-moly, Stainless Steel and Nickel Alloy Flanges and Fittings.
Craig Kiefer, chief operating officer, Edgen Murray says, “The key to success in this region is developing a strong team of people who understand the local market. Our partnership with the Shoaibi Group is shaped by long-term goals that include developing and strengthening key customer relationships.”
The initial product focus will be on high-end and high-grade pressure vessel grades used in extreme environments. To support this strategy, Edgen Murray Saudi Company has a preferential agreement to distribute premium Hydrogen Induced Cracking (HIC) and non-HIC tested Carbon Steel Plates and Heads and Roll bonded Clad Plates and Heads in the Saudi Arabian market.
Khalid Al Shoaibi, Group Director of Shoaibi Group, said the joint venture strengthened the Group’s ability to service the growing energy infrastructure market.
“Shoaibi Group brings considerable in-depth local experience coupled with international business standards and enjoys a solid reputation operating in the Kingdom for over 40 years. We see the JV becoming the key specialty steel supplier to the Saudi energy markets – we believe the JV will continue for as long as we remain focused on excellent service and supply, along with updated knowledge of local market requirements.”
Shoaibi added that whilst non-JV entry into the Saudi Arabian energy space was possible, he was a strong believer in the JV model. “All markets have their own peculiarities and there are several ways to do business in Saudi Arabia without involving a local partner, although it is not recommended, particularly in energy related fields.”
Piping Hot
Shedgum-Yanbu’ pipeline Phase ii: As part of Saudi Aramco’s continuous efforts to meet increasing ethane and NGL demand on the west coast, the East-West NGL Pipeline’s Shedgum-to-Yanbu’ (SHY-1) line capacity is being increased from 425,000 bpd to 585,000 bpd maximum sustained production capacity. This will be achieved by installing a fifth NGL shipper pump and a pipeline loop. Construction is well underway, and completion is forecast in 2011.
Snapshot: MIS Arabia
Maritime Industrial Services (MIS) Arabia Co. Ltd. has recently completed the successful roll-out of one of the largest pieces of project equipment ever to be manufactured in the GCC region.
The Xylene Rerun Column supplied for Jubail Export Refinery Project (JERP) to Saudi Aramco-Total Refining & Petrochemical Co measured almost 100m along its length and weighed approximately 1400 tonnes in weight.
Rightfully termed as the “mammoth”, it is a part of the Aromatics unit for the JERP being built by Samsung Engineering. When completed the refinery will be one the most advanced of its kind in the world, and geared towards processing Arabian heavy crude.
The giant column pictured is an integral building block of the processing facility. This unit was one of nine large scale columns for the project won by MIS Arabia, directly ordered by SATORP and later novated to various EPC contractors including Samsung Engineering, Tecnicas Reunidas, Technip and the Samsung-Chiyoda JV.
“This is a landmark achievement for MIS Arabia and an underlining of the fact that locally based manufactures in Saudi Arabia possess the required capabilities to manufacture the biggest and most complex equipment to the highest quality standards within the stipulated time and cost,” says Sunny Sidhartha, marketing engineer at MIS Arabia.
MIS Arabia is a joint venture company between AYTB, Shaoibi Group and MIS- UAE (Lamprell). Based in the industrial hub of Jubail, KSA the main facility spreads across a staggering land area of 88,000m2 with 2 covered shops of 6,000m2 and 4,000 m2. area respectively.
