Tuesday, July 01, 2008

Really Big Oil

Yes, we can, say the Saudis:
Khurais, about 90 miles east of Riyadh, the Saudi capital, is one of the planet's last giant oil fields. The Saudis say that it holds 27 billion barrels of oil — more oil than all the proven reserves of the United States — and that it will significantly bolster the kingdom's production capacity once it starts pumping a year from now, easing global need.

Some oil traders and analysts doubt that. Their pessimistic forecasts of dwindling oil supplies have helped propel the current increase in prices, which pushed past $140 a barrel last week and seem to be heading higher.

....Starting in June 2009, the field will produce 1.2 million barrels a day, enough to satisfy the expected growth in global demand next year. The Saudis say they are investing more than $10 billion, with 26 contractors, 106 subcontractors and 28,000 employees. It is the largest piece of a five-year, $60 billion effort to expand oil production capacity at a time of fast-rising demand.

....Aramco officials acknowledged that they faced unusual challenges here, including a plan of daunting complexity in a tight contractor market. There are also risks: if the current high prices drive down demand, the Saudis could find their market for all this oil shrinking.

But they said they were on schedule or ahead of it, with the pipeline network 88 percent complete and the main processing plant 55 percent done. They also vehemently disputed the claims of oil-supply skeptics.

A variety of new technologies, including multiple lateral wells and microscopic robots swimming through rock pores deep underground, will allow the company to start recovering much more of the oil in its fields, said Mohammed Saggaf, who runs Aramco's advanced exploration research wing. The company expects to increase the amount of oil it can recover from its fields to 70 percent from 50 percent over the next 20 years, Saggaf said, adding another 80 billion barrels to reserves.

With all this oil becoming available, the Aramco officials said they were baffled that the market seemed to be behaving as though there were a shortage.

"We've asked all the international oil companies that buy from us if they want more oil," Nasser said. "But we can't find customers."

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