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Page added on June 2, 2010
Saudi Aramco wrestles its domestic energy-consumption problem
Oil prices are where Saudi Arabia wants them. But rising demand in the kingdom could bring longer-term problems.
In a world of economic volatility, the country’s finances remain solid. And as the de facto leader of Opec, its steady hand on the pump has brought stability to the oil price, at around the $75 a barrel it wants.
Yet these successes have contributed to a new problem for the kingdom, one that is forcing a shift in thinking at state-owned Saudi Aramco. Domestic demand for energy is soaring. Unless the heavily subsidised consumption patterns of the country’s free-spending inhabitants changes, Aramco’s spare oil-production capacity – a bank of available oil critical to the direction of global crude prices – will increasingly be used to feed local demand.
That spare capacity stands at 4m barrels a day (b/d) after Aramco recently reached its capacity target
One Comment on "Saudi Aramco wrestles its domestic energy-consumption problem "
Stu on Thu, 3rd Jun 2010 8:46 am
4 million per day in spare capacity is a load of bullocks. In 2008 when oil prices were at record highs and the world was begging them to produce more…..they couldn’t…..but they kept saying that they had 2 million barrels of spare capacity then. I know they embarked on a massive multi billion dollar ramp up to install extra capacity, but if you look at the history of claimed oil reserves in Saudi Arabia, you will see that in the late 80s they added something like 60 percent to their proven reserves, all without a single discovery of new oil. Oil reserve figures are purely a political figure in Opec, and there is no audits from outside any opec country to confirm any of their figures. In fact, oil stats are very closely gaurded state secretes. We know that the biggest fielde in Saude Arabia, Ghawar, is in decline and has been on massive water injection for many years to maintain pressure. We also know that the water cut is increasing. This field provides over 50% of Saudi Arabias production and it is in decline. There are another few very old fields that are also in decline. This leaves them in the position of having to employ massive mega projects going beserk drilling thousands of new wells in increasingly marginal areas to extract small qauntities of oil to try and make up for the decline in their major fields. They are also drilling offshore now. You don’t go offshore to look for oil unless you can’t get enough onshore…….why would you, its harder, more expensive, and dangerous…..the reason the world is resorting to drilling under miles of water and stripping forests and moving millions of tons of earth to extract small amounts of low grade crude in the form of tar sands is because we can not find or extract enough on land anymore…….it’s running out…….its that simple. If anyone trys to say otherwise consider this…….would you believe a man who you see searching through public bins for food scrapes to eat…..if he told you he has enough food at home to feed an army……..of course not…….why else would he be going to the extremes of effort, of hardship….of risk……to search for remains of some old mouldy sandwich if he really had enough food at home…..so why do we drill wells 5 miles down…..under 2 miles of water……why do we mine tar sands……shale oil…..why do we put good farmland to use growing corn for ethanol instead of for food…..why are we talking about coal to liquids conversion….etc etc……….because we are screwed thats why.