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SAUDI ARABIA

Arabia/Persian Gulf

  

Saudi Arabia is, without doubt, the most important oil producer in the world with by far the greatest production capacity and largest reserves volumes. The country’s reserves lie in the Persian Gulf, in adjacent regions onshore and west and south of Qatar.

 

In its position of swing producer it is also one of the most critical countries controlling global oil supply at times of high and low oil demand growth. Restriction of output through the early 1980s has delayed the production peak and future potential production restrictions must be determined to estimate future output. Its gas supply industry is relatively undeveloped but it is also set to become a major producer. 

 

The first oil concession in Saudi Arabia was granted to Chevron in May 1933, subsequently joined by Texaco. The company made its first oil discovery in 1938 with the Damman Well No. 7 in the east of the country. Two further discoveries followed but the most momentous was in 1948 when Ghawar was drilled, the largest oil field in the world. Safaniya, the world’s largest offshore field and on the same trend as Ghawar, was discovered in the Persian Gulf in 1951.

 

In 1947 Chevron and Texaco’s local operating subsidiary Aramco had been joined by Exxon and Mobil and the company continued to explore and produce until 1976 when Saudi Arabia acquired all Aramco’s assets. However, the four US majors continued to operate on its behalf on a fee basis.

 

Aramco did not become a Saudi-registered company until 1988 when its name was changed to Saudi Aramco and a head office was opened in Dhahran. The four US companies then formed the Saudi International Service Company and signed a service contract in 1991.

 

Saudi Aramco controls all upstream and most downstream operations except for those in the Neutral Zone. Since 2000 its subsidiary, Aramco Gulf, has operated the offshore part of this zone.

 

In geological terms, Saudi Arabia covers the western margin of the Middle East basin, and possesses two petroleum systems. The main system depends on Jurassic source rocks and reservoirs in gentle structures, with salt seals. In fact, there is a single main structural uplift, which spans the country to which oil from adjoining basins has migrated. Ghawar and most of the offshore fields in the Gulf lie on this uplift. The second system, primarily onshore, depends on deep Silurian source-rocks that have charged reservoirs in the overlying Permo-Carboniferous, yielding mainly gas and condensate.

 

Throughout the country around 80 major fields have been discovered although just 5 super-giant fields discovered between 1940 and 1965, collectively produce nearly 90% of oil output. All 5 fields are now maturely developed. Ghawar, now produces over 1 mm Bbls per day of water along with its 5 mm Bbls of oil. There is a huge challenge for Saudi Arabia to maintain and raise production and a number of massive projects are going ahead.

 

Offshore: The first offshore field, Safaniya, was brought onstream in 1957. Other large offshore fields are Abu Safah, discovered in 1963 and brought onstream in 1966, Zuluf and Marjan discovered in 1965 and 1967 respectively and both brought onstream in 1973, and Manifa, discovered in 1957 and Berri, discovered in 1964, which both lie partly offshore.

 

Around 16 fields produce offshore. All Abu Safah output, which overlaps with Bahrain, is given to Bahrain. Offshore production capacity was increased in the early 1990s when a secondary development programme at the Zuluf and Marjan fields was completed, boosting their capacity, however, the Zuluf extra oil was not brought onstream at the time.

 

Between 1990 and 1997 rehabilitation of offshore fields in the north of the Gulf was carried out raising capacity. Work on Safaniya and hook up of Berri, Marjan and Zuluf was also carried out.

Drilling is now increasing offshore and will probably continue to increase as production maintenance becomes more necessary in the older fields. Oil and gas output from the Abu Safah field is also to be expanded.

 

Gas: All offshore gas production is associated gas, mainly from the Safaniya and Zuluf fields. Growth in output is limited by the capacity of the onshore gas gathering network called the Master Gas System (MGS), which came onstream in 1982.

 

The MGS processes and distributes Saudi Arabia’s gas from 3 plants at Berri, Shedgum and Uthmaniya.  Most gas comes from Ghawar but Aramco has also installed gas compression plants at the offshore Safaniya and Zuluf fields.

 

In 1996 a 5-year expansion programme to the MGS was begun, increasing capacity to 68 Bcm per year in 2001 and 91 Bcm per year in 2003, from a processing capacity of 41 Bcm per year and a transport capacity of 60 Bcm per year. These levels have not yet been reached but there is considerable additional gas available in deep Khuff reservoirs below the on- and offshore oil fields and in non-associated gas fields in the south.

                                                                                          

 

CAPITAL

 Riyadh

 

Population

 27.0 million

 

Onshore area

(000's sq kms)

1,960.6

 

Offshore area

(000's sq kms)

NEW

 

OIL PEAK YEAR

forecast 2019

 

A low-priced and up-to-date oil and gas production and consumption forecast report on this country can be commissioned, including all relevant charts. Contact us for price and contents list.

 

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(All photographs in this website are © 2008 Dr Michael R. Smith).