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 Incentive
• 10 MM/d capacity for last 30 years
• Internal needs supersede rest of the World
• Complex market
• Security and Access to Technical People
• Easy oil already developed
• Serious internal problems threaten stability
• Anti-Western sentiments
• Valid Reserves ???

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(No Transcript)
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OIIP Oil Initially In Place
ARAMCO OIIP Growth CICS 2/04
65 Static Fields 17 of OIIP
16 Produced Fields 83 of OIIP 10 Producing
Fields 64 OIIP
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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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Abqaiq and Ain Dar / Shedgum better than 97
35
J. Laherrere, 1997
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source Saudi Aramco 2/2004
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Depletion TimingStatfjord Field - North Sea
First 70 produced quicker and easier than last
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Forecast
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Exploration Wells in Saudi Arabia
source Saudi Aramco 2/2004
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(No Transcript)
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source Saudi Aramco 2/2004
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OIIP Hyperbolic Creaming CurveSaudi Arabia
1974
2000
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Saudi Arabia Oil Reserves
455
90
255
70
35
30 30 30
260
165
105
105
AramcoPerception ???
Most Likely ???
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10 Million Barrels / Day Capacity50-Year
ScenarioProved Reserve Decline Point
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12 Million Barrels / Day Capacity50-Year
ScenarioProved Reserve Decline Point
2014
19 Gb of Prob. Pos.
73 Gb of Prob. Pos. Disc.
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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 years
• March 2003 to compensate for loss of Iraq oil
• 2004 to offset USA hurricane losses

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Saudis Ability to Increase Production . .
.Does it Matter?
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Meeting the Challenge
Industry Outlook - Oil Gas Demand/Supply
MOEBD
200
World Demand
160
Required New Production
120
80
Existing Field Decline 4 - 6
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Existing Production
0
80 85 90 95 00 05 10 15 20
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Real Discovery Trend
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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