Saudi Aramco is expenditure $10 billion to retool the Al Khurais field to effect 1.25 million barrels of light crude a daytime

by Stanley Reed

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In the aftermath of their emergency meeting on high oil prices (BusinessWeek.com, 06/22/08), the Saudis are on a campaign to show the world that it should not underestimate their magnitude to produce oil. Their showcase is a field called Al Khurais, which lies here and there 100 miles east of Riyadh in flat red desert.

Saudi Aramco, the national oil company, is spending some $10 billion to retool Al Khurais as a monster battle-field with 27 billion barrels of reserves and the capacity to produce 1.2 million barrels per day of desirable Arab light awkward. That amount, when it is achieved, will outstrip the undiminished output of some oil-producing countries, such as Indonesia, and is roughly equivalent to the annual increase in cosmos demand for oil.

To get to Al Khurais, one flies into a remote desert location called Pump Station 3 on the East-West pipeline from Dahran to Yanbu. The airstrip is a 50-mile guide from the oil field, and together the route you beware herds of black camels, scruffy truck stops where mechanics fix vehicles in the desert sun, and the casual drilling put on.

The numbers for Al Khurais sound impressive on paper, but the field’sitting massive scale can only be appreciated up close. The guts of the infrastructure, known as the central processing facility, stretch in favor of nearly a mile. The workers—in that place are already 28,000 of them and the number is likely to rise—are covered by protective garb from head to foot and wear hoods that stick deficient in from by means of their hard hats to shield them from the scorching Arabian sun. They look like aliens, moving about under the girders or hammering together wooden forms for pouring concrete.

Al Khurais’ managers say that both Schlumberger (SLB) and Sinopec (SNP) are drilling for them. Seventeen drilling rigs are working on the field, using the latest smart technology that allows employees to remotely monitor pressure and degree of heat and adjust emanate rates. Saudi Aramco also is installing long horizontal wells designed to ensure maximum contact with the oil-bearing quiet. Such technologies are allowing the Saudis to cut regular course back on the number of wells—but they’re still drilling relative to 310 reinvigorated ones and working over another 110.

Khalid Abdulqader, the project conductor, insisted that the field would subsist ready to produce by means of June of next year. Over a lunch of Lebanese salads and firm sheep baked in rice, Abdulqader said that preliminary testing indicated that the opportunity might be exactly more productive than expected.

Al Khurais is the centerpiece of a Saudi effort to rise lengthening magnitude from the current 11 million or so barrels per day to 12.5 million barrels quotidian by nearest year. Aramco executives fall short to emphasize that their advance is conservative and long phrase. To make the point, exploration and production chief Amin Nasser said that Aramco’sitting medium depletion rate—the volume of oil it produces a year as a percentage of reserves—was only about 2%. By contrast, he said other producers and international oil companies medium 4% to 9% depletion rates. This approach, he said, lets the Saudis deploy better technology and recover more oil than an energy company under difficulty to produce as much as possible before its let runs out.

Overall, the Saudis come off as an exclusion to the otherwise anaemic supply picture. Many other oil countries, including Nigeria, Russia, Venezuela, and Mexico, are coming up short on output (BusinessWeek, 6/19/08). That leaves the Saudis, who say they are the greatest in number reliable suppliers, with an awfully huge burden to shoulder.