Saudi Aramco is currently undertaking the largest expansion programme in the company’s 75-year-old history.
“In recent years, world demand for petroleum has continued to grow, but investments in production and processing capacity and distribution networks have not kept pace, straining world energy markets,” the company notes in its 2006 Annual Review. “Saudi Aramco stands out in this regard —we have committed ourselves to the largest expansion programme in our history.”
By 2009, Saudi Aramco will increase its maximum crude oil production capability by some 3 million barrels per day, roughly a 20 per cent increase over current capability. These new crude oil producing and processing facilities will supply the lighter crude grades most in demand, helping to stabilise global markets and meet growing consumer needs in the mid-term. New production increments envisioned for development after the end of this decade will tap some of the Kingdom’s heavier crude reserves.
One of the central components of Saudi Aramco’s expansion is its drilling programme. “At a time when worldwide demand for drilling rigs is at historic highs, we increased our drilling rig count by 26 per cent, from 90 to 113 rigs,” the report states. “This total rig count comprised six exploration rigs and 75 development rigs (65 onshore and 10 offshore). In addition, we deployed 32 workover rigs (24 onshore and eight offshore). We drilled 368 new development and 13 exploration wells, and performed 206 re-entries and 136 workovers.”
More than 80 per cent of all wells drilled in 2006 were horizontal wells with either single or multiple laterals. Crude oil increment drilling continued throughout the year, including the completion of 73 wells for the Haradh-III increment, 28 of which were MRCs. Drilling for the AFK increment continued with 54 wells. Saudi Aramco began drilling for three other crude oil increments in 2006: Khurais, Shaybah and Nuayyim. The Hawiyah gas increment drilling programme was initiated, with 32 wells planned. The Haradh-III Increment came on-stream in January 2006, five months ahead of schedule, adding 300,000 barrels per day (bpd) of Arabian Light crude oil production capacity to Ghawar, the world’s largest oil field, and 140 million standard cubic feet per day (scfd) of associated gas. Haradh Gas-Oil Separation Plant 3 is the first plant in Saudi Aramco’s Southern Area to have completely automated well control and monitoring, allowing remote operations.
“The Haradh-III project benefited from successful integration of four technologies: MRCs; intelligent well completions (using control valves for preventing premature water breakthrough); geosteering (for optimal placement of wells in the reservoir for maximum recovery); and the i-field concept, in which real-time subsurface data transmissions enable continual monitoring of key reservoir indicators,” the report says.
“Average well production rates in Haradh-III are 10,000 bpd, compared with 3,000 and 6,000 bpd for Haradh-I and II, respectively. This is due primarily to the use of MRC wells and the previously mentioned technologies, which slashed unit well development costs threefold. If Haradh-III had been developed with conventional vertical wells, 280 producers would have been required, as opposed to 32 MRCs, as is the present case. Khurais, the fourth largest crude oil field in the world, is the largest integrated project in Saudi Aramco history. This increment, which includes production from Abu Jifan and Mazalij fields, is projected to produce 1.2 million bpd of Arabian Light crude oil by 2009. Associated facilities include dehydration and compression of 450 million scfd of gas, and expansion of Southern Area seawater injection capacity by 4.5 million bpd to support reservoir pressure in the Khurais and Ghawar fields.
“In addition, the East/West NGL pipeline capacity will be increased from 425,000 bpd to 555,000 bpd to accommodate increased NGL production. Downstream pipelines for stabilised crude oil, NGL, sour gas and fuel gas will also be constructed.”
The AFK (Abu Hadriyah, Fadhili and Khursaniyah) development project is designed to produce and process 500,000 bpd of Arabian Light crude and 300 million scfd of associated gas by December 2007. The overall Khursaniyah development project, which also includes a grass-roots gas plant in addition to the crude processing facility, is creating a significant impact on the local economy. By the end of 2006, nearly $500 million in manufactured materials — nearly half of the total — was purchased from local vendors, and more than $1 billion in engineering services, manufactured items and construction, more than half the total thus far, was obtained in-Kingdom.
Shaybah, located deep in the Rub Al Khali, has delivered 500,000 bpd of Arabian Extra Light crude oil since 1998. Construction activities are under way to increase production capacity to 750,000 bpd by late 2008. Major installations include a gas-oil separation plant as well as gas gathering, compression and injection facilities. Manifa, originally discovered in 1957 and produced until 1984 when world demand for crude oil slumped, is the fifth largest crude oilfield in the world. Saudi Aramco is planning to redevelop the field with new onshore and offshore wells to produce 900,000 bpd of heavy crude oil and 105 million scfd of sour gas.
In collaboration with King Fahd University of Petroleum & Minerals (KFUPM), Saudi Aramco conducted studies to determine how best to mitigate the environmental impact of the Manifa project created by the construction of 41 km of causeway and a 3 km bridge to support 27 drilling islands in the shallow waters of the Arabian Gulf. There will also be 11 offshore platforms for deeper water producing and injection wells.
Onshore facilities for the Manifa project will include nine drill sites, a central oil and gas processing facility, water supply wells and injection facilities, and multiple gathering, water injection and product distribution pipelines. Drilling is set to begin by the end of 2009, and the increment is scheduled to come on-stream by mid-2011.
Nuayyim, a field in central Saudi Arabia, is slated to add 100,000 bpd of Arabian Super Light crude oil by 2008. Construction was scheduled to commence on the grass-roots production facilities in 2007.
Last year Saudi Aramco also commissioned and began operations at four third-party cogeneration plants, located at Uthmaniyah, Shedgum and Juaymah gas plants and Ras Tanura Refinery. The cogeneration plants will produce 1,050 mW of electrical power for the gas plants and refinery, and harness exhaust from the power stations to produce 4.4 million pounds per day of high pressure steam.
Managing mega-projects involves much more than engineering and construction: Saudi Aramco is enhancing various project management processes, such as standardising procurement processes and equipment designs, increasing the productivity of local design and construction contractors, and leveraging capital programme data for improved planning. It is also fast-tracking its contracting, design and purchasing activities.
Facts & Figures
OTHER PROJECTS
In addition to work on the current roster of megaprojects, Saudi Aramco also accomplished an impressive string of other major projects.
One example is a group of Maintain Potential projects. These projects are designed to ensure that Saudi Aramco meets its commitment to the world’s energy needs by maintaining targeted maximum sustained production capability. In 2006, it connected 237 new oil and water wells onshore, increasing oil production capacity by more than 1 million bpd. Saudi Aramco also connected 23 new gas wells, increasing gas production by 500 million scfd to supply Ghawar-area gas plants.
Offshore, 23 new platforms were installed and 38 new wells were connected. To support increased drilling activities, 11 drilling support jackets were fabricated and installed in only 11 months, in contrast to a normal 18-22 month schedule.
Work continued in the offshore Safaniyah field to install 42 electrical submersible pumps to boost production by 150,000 bpd. The project also involves installation of a 3,000-ton tie-in platform and the upgrade of seven existing platforms by early 2007.
In conjunction with projects to increase crude oil production capacity, Saudi Aramco is expanding its distribution network.
Saudi Aramco operates 17,169 km of pipeline to transport oil, gas and refined products from production plants to downstream processing plants, export terminals and refineries.
“The Pipeline Integrity Management programme continues to be a critical success factor in ensuring the reliability of our pipeline network,” the report states. “More than 3,000 km of pipeline were inspected in-line with high-resolution instrument-scraping technologies. This ongoing inspection programme provides essential data for pipeline repair and rehabilitation programmes.
Saudi Aramco commissioned the Pipeline Monitoring Center to ensure smooth, efficient management of the pipeline network. This centre is the collection point for critical data, transferred from across the entire network.
Driven in part by a slate of mega-projects, the pipeline network is growing rapidly, with more than 2,300 km of new pipeline forecast. This year Saudi Aramco is started working on the Khurais Downstream Pipeline project, which involves laying six pipelines for stabilised crude, NGL, sour gas and fuel gas to support the Khurais increment. Saudi Aramco plans to expand the Shaybah-Abqaiq Pipeline capacity to 750,000 bpd in support of the Shaybah crude oil expansion project.
In 2006, Vela International Marine Limited, Saudi Aramco’s wholly owned shipping subsidiary, completed more than 1,000 voyages, transporting roughly 1.8 million bpd of crude oil to customers in the US and Europe. The domestic fleet carried more than half a million bpd of crude oil and refined products between Kingdom ports.
During 2006, Vela took delivery of two new product tankers, the Altarf Star and Zaurak Star. The tankers are each 49,000 deadweight tons, 656 feet (200 m) long and capable of carrying roughly 348,000 barrels of refined products.
Vela also signed contracts with a shipbuilding yard in the Republic of Korea to build six new double-hull VLCCs (very large crude carriers) to be delivered between 2008 and 2009. In addition, four additional double-hull VLCCs will also be built.
In recognition of Vela’s work in developing Saudi seaman’s documentation consistent with the International Maritime Organisation’s globally recognised “White List” requirements, Vela received the first six Saudi seagoing seaman’s books issued by the Saudi Ministry of Transport.
Two young Saudi captains earned their Class 1 Master Mariner Certificates, one of the highest qualifications in the maritime industry.
The US Coast Guard notified Vela that the company achieved the prestigious “Quality Shipping for 21st Century” designation for all 19 of its VLCC vessels. This is a designation received by less than 10 per cent of the foreign-flagged ships operating in the US. In addition, 17 Vela vessels received awards from the US Coast Guard for its automated merchant vessel reporting system.
