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Work in no upstream environment has the potential to raise the pulse of an oil company like the promise of work in Saudi Arabia. Not only does it have the potential to meet much of the world’s future energy needs, it also holds the opportunity to work on genuinely exciting and cutting edge recovery projects.
Comments from CEO Khalid Al-Falih, and information from Saudi Aramco shines a light on the state of play for the Kingdom’s largest upstream oil and gas projects.
In His Words – Khalid Al Falih
Addressing delegates at the World Oil and Gas Assembly in Bangalore last month, Khalid Al-Falih, CEO of Saudi Aramco said that the Manifa and Khurais projects were vital to addressing the long-term call on oil, and that Aramco was aggressively ramping up exploration, improving recovery and building its reserves every year.
“While oil fields in many basins throughout the world are becoming increasingly mature, the share of the Middle East in global oil supplies will steadily rise. I am proud to say that Saudi Aramco has played, and will continue to play, an even bigger role as one of the key suppliers of oil to India, Asia and the whole world,” said Al Falih.
Here are the project specific excerpts from his keynote address.
On Manifa
“Our Manifa project, at 900 000 barrels per day capacity, is one of the largest heavy crude oil increments ever commissioned by the industry, but distinctive aspects of the field made for costs not typically associated with development. Manifa lies in shallow waters in the fragile ecology of the Arabian Gulf, requiring unique access solutions involving drilling islands. When we made this investment decision, oil prices were above $70 per barrel, and as in the Khurais example, demand prospects were strong. After contracts were awarded, however, prices declined to below $35, demand projections fell, but costs did not proportionally decrease, clouding the robustness of the investment. We reviewed the programme, and with some execution plan modifications, including deferring completion by two years, decided to continue.”
On Khurais
“At 1.2 million barrels per day capacity, the Khurais program is the single-largest crude increment ever commissioned by the industry. When we made this investment decision, oil prices were in the range of $55 per barrel with expectations of stronger prices; oil demand projections were healthy; and costs in the usual range. Mid-programme oil peaked at around $140 per barrel. And yet toward the end of the programme, prices had fallen to below $35 and demand had tumbled due to the financial crisis, while costs spiraled, doubling our investment.”
Manifa offshore oilfield
At an estimated cost of US$9 billion, the Manifa oilfield was expected to begin production in mid-2011. The scope of the field includes 900,000 bpd of oil, 120 million scfd sour gas, 50,000 bpd condensate and 950,000 bpd of produced water. Among the known contractors working on the project are Saipem, Halliburton, Foster Wheeler, Technicas Reunidas and Jan De Nul Group.
It was announced in April that the project was expected to be delayed by six months. The main problem surrounding the field, is the large amount of heavy sour crude, which is expensive to process. In the current economic conditions, it has been thought best to delay the project.
UPDATE: The Manifa project has now been given a 2015 completion date by Saudi Aramco. The company revealed in a December 2009 statement that the project will be completed for the new date, representing a delay of around two years on previous projections.
Zuluf oilfield
Zuluf is one of the country’s largest oilfields and is located near the Safaniyah and Marjan oilfields. Exploration and development has been expected at the field since Aramco announced it would be exploring non-producing fields such as the Red Sea, Nafud Basin and northern and western Saudi Arabia.
UPDATE: Aramco has awarded two seismic contracts to explore offshore oil and gas reserves worth $373.3m to Arabian Geophysical and Surveying Co (ARGAS). The Saudi-based company expects to start gathering the data in the Zuluf oilfield in November 2010, it said in an e-mailed response, adding that work would be completed in two years. Seismic work at Zuluf is an extension to the shallow water contract which Argas completed last month and would extend to the Iranian border.
