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Saudi Arabia Can 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. Three Key Factors. Political Will and Economic Incentive 10 MM/d capacity for last 30 years

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Saudi arabia can it deliver l.jpg

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


Three key factors l.jpg
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 ???


Oiip oil initially in place l.jpg
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


Slide6 l.jpg

source:

Saudi Aramco 2/2004


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Abqaiq FieldOil Recovery

12 Gb

Ultimate

Recovery

20 Gb

OIIP



Slide9 l.jpg

source:

Saudi Aramco 2/2004


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Depletion TimingStatfjord Field - North Sea

“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

2000

1974


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Saudi Arabia Oil Reserves

455

90

255

70

35

30

30

30

165

260

105

105

AramcoPerception

???

Most

Likely

???


10 million barrels day capacity 50 year scenario proved reserve decline point l.jpg

2042

2025

5 Gb of Prob. & Pos. Reserves

48 Gb of Prob. & Pos. Reserves

10 Million Barrels / Day Capacity50-Year ScenarioProved Reserve Decline Point


12 million barrels day capacity 50 year scenario proved reserve decline point l.jpg

2033

2020

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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Meeting the Challenge

Industry Outlook - Oil & Gas Demand/Supply

MOEBD

200

World Demand

160

Required

New

Production

120

80

Existing Field

Decline ~ 4 - 6%

40

Existing Production

0

‘80 ‘85 ‘90 ‘95 ‘00 ‘05 ‘10 ‘15 ‘20




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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


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