CERA: Aramco chief calls for energy planning, cooperation

Feb. 13, 2008
Aramco's Pres. and CEO Abdallah S. Jum'ah told a CERA conference that there are enough conventional and nonconventional petroleum resources to satisfy global demand for liquid fuels "for many decades."

Sam Fletcher
Senior Writer

HOUSTON, Feb. 13 -- There are enough conventional and unconventional petroleum resources to satisfy global demand for liquid fuels "for many decades," but it will require better planning and cooperation between industry and governments to accomplish that task, the president and chief executive officer of Saudi Aramco said.

In the opening address at the annual energy conference sponsored by Cambridge Energy Research Associates in Houston, Abdallah S. Jum'ah said, "The world simply cannot afford to leave massive quantities of oil, gas, and coal in the ground and move precipitously to unproven alternatives, while still hoping to satisfy future growth in global energy demand."

Head of the world's largest oil corporation, Jum'ah said, "Even if we leave aside the potential of coal-to-liquids, gas-to-liquids, and biofuels, the world's total in-place endowment of conventional oil and nonconventional fuels ranges between 13-16 trillion bbl. To put that number in perspective, to date the world has consumed roughly 1.1 trillion bbl, or between 7-9% of the in-place endowment." Analysts estimate recoverable conventional and unconventional resources at 3-6 trillion bbl "depending on the economics of development, improvements in technology, recovery factors to be achieved, environmental considerations, government policies, and of course regional and global political trends," said Jum'ah. The 3 trillion bbl estimate is "ultraconservative" and "will be exceeded in most scenarios," he said.

Improve recovery
There is potential to improve oil field recovery rates through new tools, techniques, and cutting–edge technologies "such as extended-reach wells, intelligent completions, and geosteering, combined with better reservoir description, improved monitoring, and reservoir management strategies emphasizing longer term field performance," Jum'ah said. "At Saudi Aramco, we are starting to raise recoveries in some fields to the level of 70% of original oil-in-place. In fact, I have challenged our professionals to set that recovery level as the target for as many of our oil fields as possible."

He sees "tremendous potential" to uncover yet-to-be-discovered oil resources by applying emerging technologies and extending exploration to new frontiers. "We should tap the vast potential of nonconventional resources, where the principal challenges are not finding these resources but overcoming a variety of technological, environmental, and economic hurdles associated with their production and processing," Jum'ah said. "The special challenges facing higher, economic recoveries from the unconventional heavy oil and oil shale resources include the need for cutting-edge R&D and development of ground-breaking technologies in addition to the allocation of necessary gas and water sources," he said.

'Confusing' policies
However, Jum'ah warned, "If conventional and nonconventional oil resources fall victim to well-intentioned but ultimately flawed or confusing energy policies, then the necessary investment of time, toil, and treasure may not materialize, and a significant proportion of these precious resources might not be recovered."

Jum'ah acknowledged the need to draw on alternative energy sources to help meet future demand. "Yet a number of well-intentioned strategies call for a much more aggressive displacement of fossil fuels, despite major technological, economic, infrastructure, and public acceptance hurdles remaining in the way of achieving such targets. That has led to considerable confusion over what is realistic when it comes to alternatives and what the future call on alternatives and conventional sources will actually be," he said.

Market confusion and uncertainty about the future energy mix make the oil and gas industry's investment decisions "more difficult than they should be, instead of reinforcing our ability to meet future energy demand in a responsible, responsive manner," said Jum'ah.

Nonetheless, he noted that both the US Department of Energy and the International Energy Agency in Paris both predict fossil fuels will continue to meet 82-87% of total energy demand through 2030.

Aramco plans to invest $90 billion in upstream and downstream projects in Saudi Arabia and around the world over the next 5 years, Jum'ah said. "The oil production increments we currently have in progress total about 3 million b/d. Some of this capacity will be utilized to offset natural decline of oil fields while the rest will be employed to expand our production capacity from about 11 million b/d presently to 12 million b/d next year," he said.

The company's worldwide refining capacity will almost double to 6 million b/d from the current 3 million b/d. Saudi Arabia's Motiva joint venture with Shell Oil Co. is expanding its Port Arthur, Tex., refinery by 325,000 b/d to 600,000 b/d to become the largest US refinery and one of the largest in the world.

Environmental issues
Environmental issues—"particularly reducing greenhouse gas emissions"—are important and pressing imperatives, "though the methods by which they can be achieved while minimizing damage to the world's economies and societies, particularly in developing countries, remain divisive," said Jum'ah. "Alternatives are simply not ready to shoulder the load [from fossil fuels], nor will they be in a position to do so anytime soon."

Therefore, he said, the world community must reach a consensus on protecting the environment while at the same time delivering the energy necessary to sustain the world's economic and social development.

"First, agree that we should continue to develop fossil energy resources while making their utilization cleaner and more efficient. Second, craft a consensus on energy strategies that devote sufficient attention to the rational development of alternative sources of energy and technologies, so that the level of their contributions can be increased at a realistic pace," Jum'ah recommended.

"Third, enhance the efficiency of energy use and conservation to the greatest extent possible; and finally, emphasize a range of both natural and technological solutions to carbon sequestration based on their economics and practicality," he said. "There is a vast unrealized potential when it comes to applying futuristic technological solutions to carbon sequestration, and the world may have just scratched the surface on this issue."

Contact Sam Fletcher at [email protected].