Saudi Arabia's offshore mega projects7 December 2011
The Persian Gulf continues to yield massive resources, with Saudi Arabia best poised to reap the rich rewards. Guy Richards finds out when a number of offshore mega-projects are likely to come on stream - and asks just how much of it will the rest of the world actually see?
The Persian Gulf continues to yield plenty of fresh hydrocarbon riches with Saudi Arabia's Saudi Aramco best placed to benefit through the development of some huge and recently discovered offshore oil and gas fields, principally Karan, Hasbah-Arabiyah and Manifa - said to be the fifth largest oil field in the world.
Between them, the three projects will add about 4.4 billion scfd of gas, 900,000 bpd of oil and 65,000 bpd of condensate to the state-owned company's production over the next few years. Karan and Manifa are already producing, though not at full capacity yet, with Hasbah-Arabiyah due to add their contribution by 2014.
As of December 2011, five of Karan's final tally of 21 wells had been commissioned and were in production, feeding about 400 million scfd into the kingdom's master gas system.
Another 14 wells are due to be tied in and put on stream by June 2012, raising production to 1.5 billion scfd, while the last two should be ready by April 2013.
Karan is similar to Hasbah-Arabiyah - all three are non-associated gas fields, so production can begin without having to wait for an associated oil column to be depleted. Hasbah and Arabiyah will have seven and six single-well platforms respectively, each well producing an average of 200 million scfd, with all converging to one tie-in platform per field.
Drilling began during the first half of 2011. Manifa is Saudi Aramco's biggest project at the moment and its development is being synchronised with that of Karan, the two being about 40km apart. Lying in shallow and environmentally sensitive water, Manifa is being developed using as much onshore drilling - and as few offshore platforms - as possible.
The project includes 27 drilling islands for shallow-water wells and 13 platforms for production in deeper water and water-injection wells, each of which has a cuttings re-injection well to save removing drill cuttings by barge. Due for completion in 2015, Manifa is designed to produce 500,000 bpd of Arabian Heavy crude by 2013 and the full 900,000 bpd by 2014.
Saudi Aramco has a vigorous r&d programme to support its exploration and production activities, deploying a range of technologies that are the fruit of collaborations between its Research and Development Center (R&DC) and academic institutions around the world.
At Manifa, for example, it's using a system called GigaPOWERS (Parallel Oil, Water and Gas Enhanced Reservoir Simulator) which, the company says, can simulate the critical properties of the reservoir at seismic or near-seismic resolution. The models it produces have more than a billion cells, hence the "Giga" prefix.
The system is said to create mathematical equations by combining relevant physics, chemistry and thermodynamic relationships, the solutions to the equations then being presented in grid blocks to give a detailed visual picture of the oil field.
R&DC has also field tested a system of reservoir nano-robots in an observation well. Called Resbots, each about 1/10,000th the width of a human hair, they're designed to be added to water injected into a reservoir and measure parameters such as reservoir pressure, temperature and assess fluid type.
They're then recovered and the data they've collected downloaded. Two types of Resbot are being researched - Active, to measure the reservoir parameters, and Reactive, which will be designed to adjust reservoir conditions by delivering surfactants to ease the flow of reservoir fluid.
Researchers are also developing a multiphase flow meter to measure flow at production wells. The ultrasound-based unit is designed to sense the pressure and temperature of oil, water and gas flowing through the wellhead tubing during production, doing away with the need to connect the well to a test separator. It will be portable, so the company expects it to use it particularly for remote offshore platforms and exploration wells.
One last interesting development is the company's possible use of membrane separation technology to remove nitrogen and acid gas contaminants from hydrocarbons, to upgrade sales gas quality. Trials of the technology have been carried out at the company's Shedgum gas plant and validation of it is in progress.
Who gets the oil and gas?
To a casual observer, such project and technology developments look like good news for global supplies, but the fact is that much of this new production is intended to feed domestic demand.
Fuel subsidies worth more than $13bn a year have helped to mitigate social unrest in the kingdom during the Arab Spring, but in turn have spurred rampant demand for energy, with some analysts predicting that Saudi power plants will have burned 1.2 million bpd of oil in 2011, about double what they consumed in 2009.
Few expect the subsidies to be cut in the near future, as the turmoil in the Middle East continues, but with internal consumption taking ever-greater chunks out of the world's largest oil reserves, there's a pressing need for Saudi Arabia to produce more gas - and fast - while its nuclear programme ramps up, which is why projects like Karan and Hasbah-Arabiyah are so important to the ruling dynasty.
Also, the ongoing debt crisis in Europe and the US, the slowing of the Indian and Chinese economies and the resumption of exports from Iraq and Libya are all helping to soften rises in the price of oil - which, given the Saudis' need to maintain export earnings to help finance the subsidies, is being viewed by them as a dangerous trend.
In a research note written in October 2011, Deutsche Bank oil analyst Paul Sankey said: "We believe Saudi Arabia now requires oil at $92 a barrel to break even fiscally, up from $60 a barrel in 2008, on higher post-Arab Spring spending, [so they] will cut production to defend $92."
As it turned out, a month later Saudi Aramco announced it was simply not going to expand its oil production beyond 12.5 million bpd, saying other countries will meet rising demand over the next few years.
Whether that means Iraq, Libya or whoever is a moot point. But what looks likely is that we will all have to get by on a lot less Saudi Arabian oil in the years to come.