Saudi Arabia Can It Deliver ?
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Saudi ArabiaCan It Deliver ?
by Jack Zagar
MHA Petroleum Consultants
ASPO Conference – Lisbon, Portugal – May 19-20, 2005
Explanatory text is the Notes section of each slide
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Three Key Factors
• Political Will and Economic Incentive10 MM/d capacity for last 30 yearsInternal needs supersede rest of the WorldComplex market
• Security and Access to Technical People“Easy oil” already developedSerious internal problems threaten stability Anti-Western sentiments
• Valid Reserves ???
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0
10
20
30
40
50
60
70
80
1935 1945 1955 1965 1975 1985 1995 2005
An
nu
al
Dis
co
ve
rie
s O
IIP
, G
b
0
100
200
300
400
500
600
700
800
Cu
mu
lati
ve
OII
P,
Gb
Cum Producing Disc Cum Static Disc Producing Discoveries Static Discoveries ARAMCO 2004 OIIP
AbqaiqAbu Hadriya
1947
Qatif 1946
GhawarYear on production - 1951
~200
Safaniya1957
Khurais 1964Manifa 1966
Abu Safah 1966Berri 1967Zuluf 1973 Shaybah
1998
Hawtah Trend1994
Khursaniyah1961
Dammam1938
OIIP – Oil Initially In Place
16 Produced Fields – 83% of OIIP10 Producing Fields – 64% OIIP
65 Static Fields – 17% of OIIP
ARAMCO OIIP GrowthCICS 2/04
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source: Saudi Aramco 2/2004
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Abqaiq FieldOil Recovery
12 Gb Ultimate
Recovery 20 Gb OIIP
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J. Laherrere, 1997
Abqaiq and Ain Dar / Shedgum better than 97%
~35
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source: Saudi Aramco 2/2004
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Depletion TimingStatfjord Field - North Sea
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 10 20 30 40 50 60
Years on Production
An
nu
al R
ate
, % M
ax
.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
% D
ep
lete
d
“First 70% produced quicker and easier than
last 30%”
Forecast
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Exploration Wells in Saudi Arabia
source: Saudi Aramco 2/2004
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source: Saudi Aramco 2/2004
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OIIP Hyperbolic Creaming CurveSaudi Arabia
0
100
200
300
400
500
600
700
0 100 200 300
Cumulative Wildcats
Cu
mu
lati
ve
Dis
co
ve
rie
s, G
b
1974 2000
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Saudi Arabia Oil Reserves
-200
-100
0
100
200
300
400
500
. .
Gb
Undiscovered
Possible
Probable
Proved
Produced
105 105
260 165
35303030
70
90
455
255
AramcoPerception
???
MostLikely???
Aramco ??? ML ???OIIP by 2025, Gb 900 660
Proved 52% 45%2P 57% 50%3P 67% 55%
Total, by 2025 62% 55%
Recovery Factor, % OIIP
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10 Million Barrels / Day Capacity50-Year Scenario
Proved Reserve Decline Point
0
2
4
6
8
10
12
2005 2015 2025 2035 2045 2055
Oil
Ra
te
Mill
ion
Ba
rre
ls p
er
Da
y
ARAMCO Fcst Most Likely ???
20422025
5 Gb of Prob. & Pos. Reserves
48 Gb of Prob. & Pos. Reserves
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0
2
4
6
8
10
12
14
2005 2015 2025 2035 2045 2055
Oil
Ra
te
Mill
ion
Ba
rre
ls p
er
Da
y
ARAMCO Fcst Most Likely ???
12 Million Barrels / Day Capacity50-Year Scenario
Proved Reserve Decline Point
20332020
19 Gb of Prob. & Pos.
73 Gb of Prob. & Pos. & Disc.
2014
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Saudi Spare Capacity
• Govt policy goal of maintaining 2 MM/d of spare capacity(only country to do so)Now repeatedly stretched and used
• March 14, 2005 stated prepared to meet increased demand forecast for late 2005 which would use all spare capacity
• Twice in last two yearsMarch 2003 to compensate for loss of Iraq oil2004 to offset USA hurricane losses
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Saudi’s Ability to Increase Production . . .
Does it Matter?
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Meeting the ChallengeIndustry Outlook - Oil & Gas Demand/Supply
MOEBD
‘80 ‘85 ‘90 ‘95 ‘00 ‘05 ‘10 ‘15 ‘200
40
80
120
160
200
RequiredNew
Production
RequiredNew
Production
Existing ProductionExisting Production
Existing Field Decline ~ 4 - 6%Existing Field
Decline ~ 4 - 6%
World DemandWorld Demand
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Real Discovery Trend
0
10
20
30
40
50
60
1930 1950 1970 1990 2010 2030 2050
Gb
Past Discovery
Future Discovery
Production
“ Growing Gap”
Past after ExxonMobil
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0
20
40
60
80
100
120
140
Non-OPEC Crude + Condensate
NGL’s, OPEC Condensate, Other
MBD
Canadian Oil Sands
Liquids Demand
OPEC
2823
~30
~41~50
80 90 00 10 20 30
World Liquids Production Outlook
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Conclusions• Published critical data is sparse.• Many uncertainties abound• Best in class in terms of quality of fields and
operation of field If successful will have the highest reserves and highest
recovery efficiency of any oil producing country on the planet
It is prudent to be skeptical
• Saudi Aramco has no obligation to try and meet wildly optimistic forecasts by the EIA and IEA of Saudi production increases
• Verifiable production forecasts from exporters would allow for orderly transition to alternative energy forms with fewer oil shocks