Transcript Robert Comtois Capital, Inc. Queen Elizabeth Hotel

Saudi Arabia
Can It Deliver ?
by
Jack Zagar
MHA Petroleum Consultants
ASPO Conference – Lisbon, Portugal – May 19-20, 2005
Explanatory text is the Notes section of each slide
Three Key Factors
• Political Will and Economic Incentive
10 MM/d capacity for last 30 years
Internal needs supersede rest of the World
Complex market
• Security and Access to Technical People
“Easy oil” already developed
Serious internal problems threaten stability
Anti-Western sentiments
• Valid Reserves ???
OIIP – Oil Initially In Place
~200
80
800
Ghawar
Year on production - 1951
70
ARAMCO OIIP Growth
CICS 2/04
700
Safaniya
1957
600
65 Static Fields – 17% of OIIP
Khurais 1964
Manifa 1966
50
500
16 Produced Fields – 83% of OIIP
10 Producing Fields – 64% OIIP
40
Abu Safah 1966
Berri 1967
Zuluf 1973
Abqaiq
Abu Hadriya
1947
30
300
Shaybah
1998
Qatif
1946
20
200
Hawtah Trend
1994
Khursaniyah
1961
10
400
100
Dammam
1938
0
0
1935
1945
Cum Producing Disc
1955
Cum Static Disc
1965
1975
Producing Discoveries
1985
Static Discoveries
1995
ARAMCO 2004 OIIP
2005
Cumulative OIIP, Gb
Annual Discoveries OIIP, Gb
60
source:
Saudi Aramco 2/2004
Abqaiq Field
Oil Recovery
12 Gb
Ultimate
Recovery
20 Gb
OIIP
Abqaiq and Ain Dar / Shedgum better than 97%
~35
J. Laherrere, 1997
source:
Saudi Aramco 2/2004
Depletion Timing
100%
100%
90%
90%
80%
80%
70%
70%
60%
60%
“First 70% produced
quicker and easier than
last 30%”
50%
40%
50%
40%
30%
30%
Forecast
20%
20%
10%
10%
0%
0%
0
10
20
30
40
Years on Production
50
60
% Depleted
Annual Rate, % Max.
Statfjord Field - North Sea
Exploration Wells in Saudi Arabia
source: Saudi Aramco 2/2004
source:
Saudi Aramco 2/2004
OIIP Hyperbolic Creaming Curve
Saudi Arabia
Cumulative Discoveries, Gb
700
600
500
400
300
200
100
1974
2000
100
200
0
0
Cumulative Wildcats
300
Saudi Arabia Oil Reserves
OIIP by 2025, Gb
500
455
400
90
Gb
300
70
35
200
100
Proved
2P
3P
Total, by 2025
255
30
30
30
260
165
105
.
105
Aramco
Perception
???
Most
Likely
???
0
-100
-200
.
Aramco ???
ML ???
900
660
Recovery Factor, % OIIP
52%
45%
57%
50%
67%
55%
62%
55%
Undiscovered
Possible
Probable
Proved
Produced
10 Million Barrels / Day Capacity
50-Year Scenario
Proved Reserve Decline Point
2042
2025
Oil Rate
Million Barrels per Day
12
10
8
6
4
2
5 Gb of Prob. & Pos. Reserves
48 Gb of Prob. & Pos. Reserves
0
2005
2015
2025
ARAMCO Fcst
2035
2045
Most Likely ???
2055
12 Million Barrels / Day Capacity
50-Year Scenario
Proved Reserve Decline Point
2014
2033
2020
Oil Rate
Million Barrels per Day
14
12
10
8
6
19 Gb of Prob. & Pos.
4
2
0
2005
73 Gb of Prob. & Pos. & Disc.
2015
2025
ARAMCO Fcst
2035
2045
Most Likely ???
2055
Saudi Spare Capacity
• Govt policy goal of maintaining 2 MM/d of
spare capacity
(only country to do so)
Now repeatedly stretched and used
• March 14, 2005 stated prepared to meet
increased demand forecast for late 2005
which would use all spare capacity
• Twice in last two years
March 2003 to compensate for loss of Iraq oil
2004 to offset USA hurricane losses
Saudi’s Ability to
Increase Production . . .
Does it Matter?
Meeting the Challenge
Industry Outlook - Oil & Gas Demand/Supply
MOEBD
200
World Demand
160
Required
New
Production
120
80
Existing Field
Decline ~ 4 - 6%
40
Existing Production
0
‘80
‘85
‘90
‘95
‘00
‘05
‘10
‘15
‘20
Real Discovery Trend
60
Past Discovery
50
Future Discovery
40
Gb
Production
Past after
ExxonMobil
30
20
“ Growing Gap”
10
0
1930
1950
1970
1990
2010
2030
2050
World Liquids Production Outlook
MBD
140
120
Liquids Demand
100
~41 OPEC
80
~50
~30
28
60
23
Canadian Oil Sands
NGL’s, OPEC Condensate, Other
40
20
Non-OPEC Crude + Condensate
0
80
90
00
10
20
30
Conclusions
• Published critical data is sparse.
• Many uncertainties abound
• Best in class in terms of quality of fields and
operation of field
 If successful will have the highest reserves and highest
recovery efficiency of any oil producing country on the
planet
 It is prudent to be skeptical
• Saudi Aramco has no obligation to try and meet
wildly optimistic forecasts by the EIA and IEA of
Saudi production increases
• Verifiable production forecasts from exporters
would allow for orderly transition to alternative
energy forms with fewer oil shocks