Production

An Elephant in The Desert

INTRO

Only time will tell whether OPEC will effectively implement its recent decision to curb oil supplies and reverse a price slump that’s persisted for almost 3 years. But amid the many predictions of where the price of oil is going, something else has become clear. When it comes to oil production, the U.S. is in a much better position today than it has been in years. The big unconventional plays here have changed the economics of world oil, plays like the Bakken, the Eagleford, and the Permian.

Since the dawn of the petroleum industry, thousands of oil fields have been discovered and over 70,000 oil fields are still in use. However, not all fields were created equally. Even among all of the biggest fields we have in the U.S., Saudi Arabia still has bragging rights to having the biggest oil field in the world – The Ghawar Oil Field.

GIANT FIELDS DEFINED

Publications by the American Association of Petroleum Geologists over the past three decades have identified 500 to over 900 oil fields as world-class “giants;” those with proven oil reserves of 500 million barrels or natural gas reserves of 3 trillion cubic feet. A “supergiant field” is one with 5 Bbo (or oil equivalent) reserves. Despite their relatively lower population, the giant fields account for over half of the world’s oil resources. Their distribution, however, is uneven; over 200 of them are concentrated in the Persian Gulf region. Giant fields are hard to come by, and the life span and reservoir management of these fields will have a drastic impact on the global oil industry and market in the coming years. (1)

GHAWAR OIL FIELD

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Although the Ghawar Field is a single field, it is divided into six areas. From north to south, they are Fazran, Ain Dar, Shedgum, Uthmaniyah, Haradh and Hawiyah. Although Arab-C, Hanifa and Fadhili reservoirs are also present in parts of the field, the Arab-D reservoir accounts for nearly all of the reserves and production.

Ghawar is entirely owned and operated by Saudi Aramco.

This massive structure is so productive that it typically gets compared to other countries, not other fields. In fact, according to the Energy Information Administration (EIA), the field has more oil reserves than all but seven countries.

Discovered in 1948 and located some 200 km east of Riyadh, Ghawar has produced on average about five million barrels of oil per day in the past three decades. Ghawar is based on the name the Bedouin tribes used for the region. Production began in 1951 and reached a peak of 5.7 million barrels per day in 1981. This is the highest sustained oil production rate achieved by any single oil field in world history. Oil from Ghawar has a density of 30-34° API and the oil column in the field has been reported to be 396m.

Ghawar Today

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Approximately 60–65% of all Saudi oil produced between 1948 and 2000 came from Ghawar. Cumulative production has exceeded 65 billion barrels. Ghawar also produces approximately 2 billion cubic feet of natural gas per day.

At the current rate of oil production, it is estimated that Ghawar should produce 40 more years, supporting Saudi Arabia’s hold on the oil market. It’s impossible to anticipate if production will increase or at what rate. Without Ghawar’s oil reserves, Saudi Arabia’s influence in the world would be greatly diminished. As of 2008, Ghawar’s reserves had been depleted by 48% of its entirety. The increase of U.S. production will continue to decrease the power and reach of OPEC upon the world.

The field has long undergone secondary recovery methods including gas and water injection. In 1995 Aramco conducted a 3-D seismic survey to examine the reservoir structure and fracture distribution to guide future development of the field.

Ghawar had more than 3,000 injector and oil producer wells by the end of 2012. Halliburton is the prime contractor and was awarded a five-year contract in 2009 to develop as many as 185 oil production, water injection, and evaluation wells.

No one exactly knows how much oil lies beneath Ghawar. Some estimates previously put the oil in place as high as 250-300 billion barrels. However, recent and more technically updated estimates show recoverable oil reserves to be in the 75-100 Bbo and natural gas reserves of around 186Tcf.

Will Another Ghawar Be Discovered?

The oil we pump up today was formed between 10 and 600 million years ago, from dead plants and animals falling to the bottom of the sea. Turning these organisms to oil is a precise recipe, involving burial and slow maturation at temperatures of between 70 and 160°C. Every year a few million barrels worth of new oil matures underground somewhere, but this is a mere droplet compared to our global consumption of around 30 billion barrels of oil per year. (2).

Since the geology of virtually all of the world’s sedimentary basins is at least partially known, geological inference indicates that it is unlikely that any undeveloped region will be found to contain such another giant field. Drilling and exploration have taken place in some of the most remote places on earth and no field the size of Ghawar has been found. If such a field does still exist, it is most likely offshore and finding it will prove difficult and costly to produce.

Saudi Aramco – Saudi Arabia’s National Oil Conglomerate

Most popularly known just as Aramco (formerly Arabian-American Oil Company), is a Saudi Arabian national petroleum and natural gas company based in Dhahran.  Saudi Aramco’s value has been estimated at over US$1.25 trillion.

In 1973, following US support for Israel during the Yom Kippur War, the Saudi Arabian government acquired a 25% stake in Aramco. It increased its shareholding to 60% by 1974, and finally took full control of Aramco by 1980, by acquiring a 100% stake in the company.

In early 2016 the Deputy Crown Prince of Saudi Arabia, Mohammad bin Salman Al Saud, announced he was considering listing shares of the state-owned company, and to sell around 5% of them in order to build a large sovereign fund.

Back in 2008, Abdallah Jum’ah, Saudi Aramco’s president and CEO gave CBS’s 60 Minutes a tour of the company’s command center, where engineers scrutinize and analyze every aspect of the company’s operations on a 220-foot digital screen.

Sources:

  1. Sorkhabi, Rasoul: Source: GeoExPro Vol. 7, No. 4 – 2010 –The King of Giant Fields
  2. Ravilious, Kate: Source: The Guardian, March 1, 2015
  3. Abdallah Jum’ah. Interview by Leslie Stahl. 60 Minutes. CBS. WCBS, New York: 7 Dec., 2008. Television.

Compiled and Published by GIB KNIGHT

Gib Knight is a private oil and gas investor and consultant, providing clients advanced analytics and building innovative visual business intelligence solutions to visualize the results, across a broad spectrum of regulatory filings and production data in Oklahoma and Texas. He is the founder of OklahomaMinerals.com, an online resource designed for mineral owners in Oklahoma. ☞Email: [email protected]

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