Direction: Saudi Aramco is looking to expand its upstream sector
Saudis 'working to build oil buffer'
A senior executive with Saudi Aramco today acknowledged that a fall in the oil sector’s spare output capacity has helped spur oil prices higher, saying that Saudi Arabia is working to help restore the buffer with its effort to boost its own capacity to 12.5 million barrels per day by the end of the decade.
Abdallah Al-Saif, Saudi Aramco senior vice president for exploration and production, told delegates at the Offshore Technology Conference in Houston that a lack of capacity has been an important factor, albeit not the only one, in the relentless rise of prices.
Today oil futures are trading well above $70 per barrel, with immediate price strength buoyed by political tension over Iran’s nuclear programme and worries about violence in Nigeria.
To ease the underlying tightness that has helped prices to climb so high, Al Saif highlighted the need for “significant increases in investment” in both upstream and downstream oil and gas.
For Saudi Arabia, in addition to new investment in refineries at home and abroad, that means directing billions of dollars into its upstream expansion programme, where it will add more than 2 million bpd to capacity over the next five years.
In addition to the 300,000 bpd of capacity that was added just this year from the Haradh III project, Al-Saif noted that 500,000 bpd of production will come from the Khursaniyah project in 2007, with another 250,000 bpd from phase two development of the Shaybah field in the Empty Quarter in 2008 and another 100,000 bpd from the Nuayyim field in the same year.
However, by far the biggest amount of extra production will come from the giant Khurais project that is scheduled to start production in 2009 and hit a massive 1.2 million bpd.
Al Saif said that Khurais is the biggest-ever increment of production to be added by Aramco and said that the overall project has reserves of nearly 27 billion barrels.
The vast majority of those reserves – totalling 22.8 billion barrels – are located in the Khurais field itself, with another 2.6 billion in Abu Jifan and 1.4 billion in Mazalij.
Al-Saif said that in addition to its 1.2 million bpd of crude, Khurais will also produce 350 million cubic feet per day of gas and 70,000 bpd of natural gas liquids.
As many as 310 horizontal wells will be drilled into the fields, which will be given reservoir support from up to 2-million-bpd of seawater injection.