Reliable energy supplies far into the future

Saudi Aramco is continuously seeking new oil resources, as well as expanding production through efforts including the two largest single increments in its history (Khurais and Manifa), and expertly managing its existing portfolio of some 100 fields to maximize recovery. And as the world’s oil supplies become more challenging to produce, Saudi Aramco is taking the lead in developing technologies to produce conventional oil reserves more efficiently

Crude Oil

Not long ago, Saudi Aramco President and CEO Abdallah S. Jum’ah issued a challenge to the wider oil industry: Find enough new resources to add 1 trillion barrels to world reserves over the next 25 years. That challenge began at home. Saudi Aramco is leading the strategic development charge to help ensure reliable energy supplies far into the future. Saudi Aramco is continuously seeking new oil resources, as well as expanding production through efforts including the two largest single increments in its history (Khurais and Manifa), and expertly managing its existing portfolio of some 100 fi elds to maximize recovery. And as the world’s oil supplies become more challenging to produce, Saudi Aramco is taking the lead in developing technologies to produce conventional oil reserves more efficiently.

This 10-year, Kingdom-wide capital program includes an exNN ploration strategy that aims to replace reserves to match our annual crude oil production and add at least 5 trillion standard cubic feet of non-associated gas reserves per year. The program includes drilling and seismic activities to generate prospects and improve imaging in support of finding both oil and non-associated gas. Some of the capacity added by these major crude oil increments will offset natural decline, and the remainder will expand our maximum sustained production capacity, which by the end of 2009 will reach 12 million barrels per day (bpd).

These efforts to discover new resources and add to reserves for years to come are just one reason Saudi Aramco is the world’s cornerstone for crude oil.

Two Days, Two New Oil Discoveries

Success stories for 2007 included two new oil discoveries, both located in the Eastern Province southeast of Ghawar, the world’s largest onshore oil field.

The first, Mabruk, struck on April 26, is the first discovery in the Hadriyah reservoir south of Ghawar.

Saudi Aramco’s mega-project slate is geared to ramp up production in response to the growing global need for energy. Collectively, these strategic increments alone will match the daily oil production of some oil exporting countries.

Saudi Aramco’s mega-project slate is geared to ramp up production in response to the growing global need for energy. Collectively, these strategic increments alone will match the daily oil production of some oil exporting countries.

The Mabruk-1 well fl owed 5,600 bpd of Arabian Heavy oil with 2 million standard cubic feet per day (scfd) of gas. Under normal production conditions, the well is expected to fl ow at a higher rate. The following day, on April 27, the Dirwazah field was discovered in the Unayzah reservoir. The Dirwazah-1 well flowed 5,569 bpd of Arabian Light oil with 2.8 million scfd of gas.

Mega-Projects: Production Success Stories

Saudi Aramco’s ambitious capital program achieved many milestones during 2007 toward construction of crude oil increments. Since 2001 through the scheduled completion of Manifa in 2011, the company will have built more than 4 million bpd of oil production capacity and 3.3 billions cfd of new gas-plant output.

Mega-projects, generally defined as programs exceeding $1 billion in value, are not big news just for their size or cost. Their impact also is huge. Major crude increments will add the following amounts to Saudi Aramco’s oil output capacity: Khurais, 1.2 million bpd; Manifa, 900,000 bpd; Khursaniyah, 500,000 bpd; and Shaybah, 250,000 bpd. While Nuayyim does not qualify as “mega,” at 100,000 bpd, it will add significantly to production capacity.

An unprecedented number of major crude oil increments were in progress during the year: Khursaniyah is near completion, and Shaybah, Khurais, Nuayyim and Manifa are under construction.

To put the grand scale of this expansion program in perspective, consider that the collective capacity these increments represent is equivalent to the daily oil production of some exporting countries.

Khursaniyah: The Khursaniyah Oil Production Facilities project neared completion at the end of 2007, with facilities slated to come on-stream in 2008. The plant has the capacity to process and stabilize 500,000 bpd of Arabian Light crude. All gathering and distribution pipelines, and communication and industrial support facilities were commissioned in 2007. The integrated Khursaniyah Gas Plant (KGP) designed to process the associated gas will be commissioned with a first-time distinction: a 100-percent Saudi workforce.

Khurais: The Khurais program, the largest integrated project in company history and the largest industrial project in the world, is on track for facilities completion in 2009.

Saudi Arabia Crude Classifi cations

Arabian Super Light (ASL) – API > 40°
Arabian Extra Light (AXL) – API 36-40°
Arabian Light (AL) – API 32-36°
Arabian Medium (AM) – API 29-32°
Arabian Heavy (AH) – API < 29°

Natural Gas

Discoveries and Expansions Saudi Arabia’s expanding domestic economy and industrial enterprises depend heavily on Saudi Aramco’s natural-gas reserves. Current use is at the highest level in the history of our gas program. To meet this demand, Saudi Aramco is working hard to find reserves and build its production and distribution capacity. Total gas production average was 8 billion scfd at year-end. Saudi Aramco plans to increase gas capacity to 13 billion scfd by year-end 2011.

Saudi Aramco’s exploration efforts were rewarded with the discovery of two signifi cant gas reservoirs in 2007, both located in oil fields originally discovered in 1967. Karan-7, an extension of our largest gas field, Karan, is located six km south of Karan-6, a 2006 reservoir discovery. Gas also was discovered at the Jana-6 offshore well.

Gas Cornerstones

The Karan Gas Field Development Project will provide offshore platforms and pipelines for the production of 1.5 billion scfd of gas by 2012. Associated gas from Khursaniyah will be processed at Berri Gas Plant until the new Khursaniyah Gas Plant is completed. Scheduled to begin operations at the end of 2008, the new plant will process 1 billion scfd of associated gas from Khursaniyah, Abu Hadriyah, Fadhili and neighboring fields.

The Hawiyah NGL Recovery Plant, on track for start-up in thirdquarter 2008, will process nearly 4 billion scfd of sales gas to yield 310,000 barrels of natural gas liquids. The NGL products will be used as feedstock for the Kingdom’s expanding petrochemicals industry, creating thousands of job opportunities for Saudi citizens. Approximately 379 km of related pipelines and two pump station upgrades were completed in November 2007, and are ready to deliver the NGL products to end users.

“Total gas production average was 8 billion scfd at year-end. We plan to increase gas capacity to 13 billion scfd by year-end 2011.”

Another component of the project, the expansion of Ju’aymah Gas Plant, is set for startup in second-quarter 2008 and will fractionate additional NGL products. The last part of the program, the Hawiyah Gas Plant Expansion, will process an additional 800 million scfd of nonassociated gas.

The integrated Khurais program will dehydrate and compress 450 million scfd of gas, and the Manifa Oil Field program will produce 120 million scfd of gas by third-quarter 2011. The expansion of Yanbu’ Gas Plant will increase ethane and NGL processing by 185,000 bpd, and will support the strategic aim of growing feedstock supply to industries at the Yanbu’ and Rabigh petrochemicals complexes.

The Master Gas System Eastern Region Expansion Project, funded in July 2007 and slated for completion in 2010, will expand the MGS distribution system with 215 km of 56-inch pipeline parallel to existing lines and increase capacity by 30 percent.

Innovations and Breakthroughs

Saudi Aramco has developed new drilling practices that led to drilling horizontal wells targeting separate layers and improving access to gas reserves. As part of this process, we also developed clean drilling-fluid designs in 2007. An added benefit of this latest fluid development is a much lower cost.

The mystery of black powder, a corrosive nuisance that clogs and damages control valves, parts and pipelines and whose origin has stymied the industry for years, was solved when Saudi Aramco’s Research and Development Upstream Program completed a two-year study and presented its findings in Norway in 2007. The company’s scientists determined that black powder results from the gas components of oxygen and moisture; they also identified the culprit’s punishing properties, which include tiny particles of metal, sand, dirt, hydrocarbons and elemental sulfur. The team worked closely with the Pipelines Department to isolate black powder’s origin and composition, and Southern Area Labs contributed to the breakthrough by conducting gas analysis.