OTC: Aramco pursues 70% oil recovery rate

Uchenna Izundu
OGJ International Editor

HOUSTON, May 5 -- Saudi Aramco wants to improve its oil recovery rate to 70% from 50% over the next 20 years by focusing on enhanced oil recovery (EOR) techniques and other new technologies, said Amin H. Nasser, Aramco senior vice-president, exploration and production.

Nasser told delegates May 4 at the Offshore Technology Conference in Houston that the company wants to expand its resources from 742 billion bbl to 900 billion bbl to address the world's future energy needs. "In the most optimistic scenario, world oil demand is placed at 125 million b/d and this would require 15-40 million b/d of additional capacity and compensation for declining fields."

Increasing Aramco's reserves will have many challenges, however, particularly developing technologies to enhance production and developing a skilled workforce, which Nasser said in light of the economic downturn, was the biggest concern. "We don't want to see huge layoffs as we did in the 80s and we only reacted to that in 2000. There is a big generation gap and it took almost 20 years to restore confidence. We are hiring at Saudi Aramco and putting high school people in universities around the world."

Nasser said collaboration between service companies, academia, national oil companies, international oil companies, and technology providers was crucial in overcoming the technology hurdle to fully exploit oil resources. These have decreased significantly in size and are difficult to access due to remote locations and complex geology. Nasser estimated that the world has 4.7 trillion bbl of recoverable and potential recoverable bbl, or at least 150 years of production at present levels.

Currently, Saudi Arabia has a spare production capacity of 4 million b/d. Nasser said last year had been an unusual year with the peak of oil prices at $147/bbl. "We told journalists there was enough capacity if needed for buyers of crude." It will focus on maintaining spare capacity of 1.5-2 million b/d, which is important in stabilizing the world market. "We're ready for the future if demand picks up," Nasser added.

He told OGJ that it was in negotiations with its contractors to reduce prices as costs for materials and construction had dropped. "We think it will drop further and this will allow us to do more work in the future. We have seen a slight drop of 10-15% in some service providers, but that doesn't match the going rate in 2005." He said he would like prices to fall a "lot more," but declined to give OGJ a target.

"It depends on what kind of contract it is," he said, adding, "We have excellent relationships with our contractors in Saudi Arabia—those where we haven't started construction we are negotiating. Others we think the cost should go down to match the crude price these days."

The company has been particularly successful in its water cut: For example, the Abqaiq Arab-D reservoir, which produces 300,000 b/d, has a water cut of 35%. Oil recovery from the field is expected to increase to 70% without EOR. Ghawar's water cut is 28% and it produces 5 million b/d of oil, he said. "Horizontal wells and equalizers to reduce the pressure draw down helped with the water cut," Nasser said. "We previously had horizontal wells and people are now talking about SMART equalizers. It's expensive up front, but good over the long term."

Natural gas development is also a major issue in Saudi Arabia. The kingdom wants to boost gas processing capacity to 9 bscfd from 6.2 bscfd by 2015, which will meet local demand and serve the petrochemicals industry.

Contact Uchenna Izundu at uchennai@pennwell.com.

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