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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.
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