Editor's
Note:
Today we present for your consideration a presentation by Mohammed Al Qahtani, President and CEO, Aramco Services Company, at the recent Arab-US Policymakers Conference in Washington, DC. Mr. Qahtani spoke about future global energy demand Saudi Aramco's contributions to meeting those requirements.
His presentation was among those of Clay Sell, Deputy Secretary of the US Energy Department; Michael Dolan, President ExxonMobil Chemical Company and VP, ExxonMobil Corporation; John Hofmeister, President, Shell Oil Company; Gary Heminger, President, Marathon Petroleum Company and Sigmund Cornelius, Senior VP, ConocoPhillips; in a panel chaired by Dr. Frank
Verrastro, CSIS. Those presentations are available in the SUSRIS Special Section,
AUSPC 2007.
Mohammed Al Qahtani
Good afternoon, ladies and gentlemen. I am really honored to share the stage with such a distinguished group of panelists, and to talk to about Saudi Aramco's role in helping meet future energy demands. I would like also to thank Secretary Sell for his kind remarks towards Saudi Arabia and Saudi Aramco. Thank you very much.
It's also a pleasure to be back in Washington and to be around so many people who recognize the importance of strong U.S.-Arab relations. I believe the timing of this conference is especially appropriate because it offers the opportunity to address some of the issues raised in the National Petroleum Council report. The NPC's study correctly concludes that the world is going to need more energy, a lot more energy in the years to come. Experts predict that global energy demand will grow by about 50 percent over the next 25 years. While there is no quick and easy way to meet this growing appetite for energy, I believe we can successfully address our global energy supply challenges through a four-point approach. First, add new production capacity and additional reserves to keep pace with the growing demand for oil. Second, build new refineries and reconfigure existing plans to process a wider range of crude grades. And third, increase energy conservation and improve efficiency. And fourth, invest in technology that will help us find and produce more energy, use it more efficiently, and reduce the environmental impact.
Today, I will discuss Saudi Aramco's contributions to each of these areas. But first, I think it would be useful to look at oil's role in meeting future global energy demands. The U.S. Energy Information Administration forecasts that hydrocarbons will provide about 85 percent to the world's energy needs for at least the next 25 years, with alternative sources providing the rest. The world will continue to rely on hydrocarbons, and oil in particular, with alternatives complementing oil, not replacing it.
So the question is: Where will the oil come from? Widely accepted estimates put proven conventional oil reserves at approximately 1.2 trillion barrels, while recoverable non-conventional reserves, heavy oil and tar sands, are at least one-and-a-half trillion barrels. In addition, experts believe that ongoing exploration activities and advances in technology will enable us to find an additional two trillion barrels from new fields and increase recovery rates in existing fields. Added together, we are looking at more than four-and-a-half trillion barrels of potentially recoverable oil.
When you consider that the world's total production of oil to date totals about one trillion barrels, this means we have tapped less than 20 percent of the estimated global crude oil resources. Let's put it in other words. There is enough oil in the ground to meet the world's needs for at least the next 140 years at current consumption levels.
So what is Saudi Aramco's role in all of this? Saudi Aramco conservatively estimates its proven crude oil reserves at 260 billion barrels, which equals to about 25 percent of the world's total. The company also manages the world's fourth largest natural gas reserves. In addition, Saudi Aramco delivers more than 10 percent of all the oil used throughout the world every day. And I can assure you that the company is firmly committed to maintaining this leadership role as a reliable and a responsible supplier.
As part of this long-term strategy, Saudi Aramco is pursuing an unprecedented expansion program to increase total capacity from about 10 million barrels per day in 2004 to maximum sustained capacity of 12 million barrels by 2009. And if you look at the entire Saudi Arabia, it is 12.5; that includes the northern neutralized zone. Importantly, this increase in capacity, which has already reached 10.8 million barrels per day will enable the company to continue to maintain a spare production capacity in the range of one-and-a-half to two million barrels per day. Although expensive to the company, the maintenance of this buffer is crucial to help ensure market stability in the event of disruptions in the supply from other producers. This extra capacity has helped moderate volatility in world oil markets during major supply interruptions caused by political turmoil in producing countries and natural disasters like Hurricanes Katrina, and Rita.
Two major components of Saudi Aramco's crude oil production capacity expansion program are Hures (phonetic), which represents the largest incremental increase in the history of the oil industry with 1.2 million barrels per day, and Manifa (phonetic), which represents the oil industry's largest ever offshore increment with 900,000 barrels per day. Saudi Aramco is also pursuing an aggressive expansion of its exploration activities in frontier areas like the Rub' al Khali [Empty Quarter] desert and the Red Sea. The company has tremendous potential for discovering additional reserves of oil and natural gas resources.
In addition to conducting exploration on its own, Saudi Aramco is participating in a number of joint ventures with international oil companies to explore for natural gas in Saudi Arabia. In the downstream sector, Saudi Aramco is planning to increase its worldwide refining capacity by nearly 50 percent to almost six million barrels per day during the next four to five years. Some of this capacity will be in the U.S. and much of it will be capable of processing heavy sour crude, thereby helping correct the worldwide mismatch between crude quality and existing refining configurations. Saudi Aramco is also developing a number of integrated refining and petrochemical facilities in the kingdom, which will help meet the grown global demand for petrochemicals and their derivatives.
Throughout all of these projects and programs, the company has strong commitment to environmental stewardship and energy conservation. For example, Saudi Aramco has developed a carbon management technology roadmap to help reduce CO2 emissions. The company is also implementing energy conservation measures to reduce the amount of energy required to produce a barrel of oil.
Now, I would like to talk about the vital role that technology plays in all of this. Saudi Aramco has achieved a strong record of developing and deploying advanced technologies. Cutting-edge innovations, like seismic processing, intelligent fields, and sophisticated reservoir simulation, have enabled the company to make great strides in exploration and production. For example, the company's earth scientists and engineers are meeting the challenge of boosting well productivity through dramatic innovations and multilateral well drilling. Their use of advanced down well technologies allows the number of laterals to increase several-fold and maximum reservoir contact wells can boost recovery rates ten-fold or even higher.
Looking to the future, major technology opportunities include the use of nanotechnology in subsurface and engineering, and the development and deployment of new tools to better manage the reservoirs. New technologies also hold great promise for improving energy efficiency and reducing the environmental footprint of global energy use. As part of Saudi Aramco's commitment to this objective, the company is a major sponsor of the Weyburn-Midale CO2 Storage and Monitoring Initiative, an international effort to study the feasibility of long-term carbon storage in conjunction with enhanced oil recovery.
Now that I have covered Saudi Aramco's projects and technology, I want to talk about cooperation as a critical factor in the global energy equation. While the prospects of energy independence might seem appealing, the bottom line is that no company or country can go it alone in a global energy market. Therefore, we much approach issues like energy security, economic impacts, infrastructure, and environmental and policy matters in an integrated and cooperative manner.
I certainly believe that working together we can accomplish this. Saudi Aramco, for example, is involved in numerous mutually beneficial partnerships. In addition to the natural gas exploration joint ventures I have previously mentioned, the company participates in joint technology development with oil fields service companies and collaborative research with academic institutions. The company also has a number of productive partnerships with IOCs and refining and marketing activities throughout the world, including here in the U.S.
The strong bond between Saudi Aramco and American oilmen began in the 1930s when Damman well number 7 literally "gushered" in the oil business for Saudi Arabia. Since then, thousands of Americans have spent their careers working for Saudi Aramco, helping build the world's leading oil company.
Saudi Aramco currently delivers 1.4 million barrels of crude oil to the United States every day. This represents about 15 percent of the total U.S. oil imports. In addition, Saudi Aramco has purchased billions worth of goods and services from American suppliers during the last decade alone. And it now has hundreds of contracts with U.S.-based companies.
Saudi Aramco is also a partner through a wholly-owned subsidiary with Shell and Motiva Enterprises. We just last month announced a 325,000 barrels per day capacity expansion at its Port Arthur, Texas refinery. The expansion will increase the refinery's crude oil throughput capacity to a total of 600,000 barrels per day. This will make it the largest refinery in the U.S. and one of the largest in the world. It will also enhance the refinery's ability to handle more diverse grades of crude oil. It also will strengthen America's supplies of gasoline, diesel, and aviation fuel. And it will provide about 4,500 construction jobs and 300 new permanent jobs upon completion.
There is also mutual benefit resulting from Americans working for Saudi Aramco. The company appreciates the skills and talents of the American members of its workforce and maintains an aggressive recruiting program to attract experienced geologists, engineers, and other specialties from across North America. Higher education is another example of the company's close ties with the U.S. Over the past 40 years, thousands of Saudi Aramco-sponsored students, myself included, have benefited from the U.S. university experience. Nearly 700 of the company's students are currently enrolled in universities and advanced professional programs here in the U.S. Many of Saudi Aramco's executives have benefited from the exceptional education and training they received here in the United States and the contacts they made while in the U.S. universities have helped set the stage for productive business relationships going forward.
So I'd like here to summarize my remarks by reemphasizing three key points. First, Saudi Aramco is bullish on the role of petroleum and helping meet the world's future energy supply challenges. The company is committed to increasing its sustainable production capacity to 12 million barrels per day by 2009. In addition, Saudi Aramco has begun an aggressive exploration program to find additional oil and gas reserves. The company is also increasing its worldwide refining capacity by nearly 50 percent in the next four to five years.
Second, Saudi Aramco, recognizing that innovation and innovative technologies will provide more energy, improve efficiency, promote conservation and result in a cleaner environment. And third, Saudi Aramco believes that increased cooperation through joint ventures, partnerships and alliances will be crucial to dealing effectively with the world's energy challenges. I'd like to conclude my remarks by applauding this conference, not only for addressing energy and other key issues, but also for emphasizing the importance and value of nations and people working together. Thank you very much.
Transcript courtesy of the National Council on US-Arab Relations
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