Giant Saudi Oil Field May Pay At The Pump

The State-Owned Oil Company In Saudi Arabia Will Pump 1.2 Million Barrels A Day From Untapped Field

(AP)  This massive oil field surrounded by the desolate sands of Saudi Arabia's vast eastern desert feels like the middle of nowhere.

But what happens over the next year at Khurais, one of Saudi Arabia's last undeveloped giant oil fields, could hold the key to what drivers will pay at the pump for years to come.

Under way at Khurais and two other smaller fields nearby is what Saudi Arabia calls the single largest expansion of oil production capacity in history.

With consumers howling over record fuel prices and the United States pushing Saudi Arabia to produce more oil, this patch of sand 100 miles west of the Saudi capital of Riyadh has become one of the most important places in the world economy.

Saudi Arabia's state-owned oil company, Aramco, is spending $10 billion to build the infrastructure to pump 1.2 million barrels of oil per day by next June from the Khurais field and its two smaller neighbors. That alone would be more than the total individual production of OPEC members Qatar, Indonesia and Ecuador.

The project forms the centerpiece of the Saudi plan to increase the total amount of oil it can produce to 12.5 million barrels per day by the end of 2009 - up from a little more than 11 million barrels per day now.

Consuming nations have pushed Saudi Arabia to boost production capacity even further and also want the world's top oil exporter to begin pumping more crude immediately to bring down record oil prices hovering near $140 a barrel. They say oil production has not kept up with increased demand, especially from China, India and the Middle East.

Saudi Arabia plans to produce 9.7 million barrels of oil per day, or 11 percent of the world's total, in July. It is the only nation with significant excess capacity that it could put on the market quickly.

But the kingdom has resisted calls to increase production further, saying financial speculators and the falling dollar are to blame for high oil prices, not a shortage of supply.

These disagreements came to a head June 22 at a rare meeting of oil producing and consuming nations hosted by Saudi Arabia. In the end, Saudi Arabia said it could increase oil production capacity to 15 million barrels per day if needed in future years. But it gave no indication that step, or an immediate increase in output, was necessary or planned.

The political tussle over output masks the challenge Saudi Arabia faces in boosting production capacity by developing giant fields like Khurais.

"That is what people don't appreciate," said Manouchehr Takin, an oil expert at the London-based Centre for Global Energy Studies. "These are major projects, and people don't realize they aren't that easy."

The Saudis estimate Khurais and the nearby smaller Abu Jifan and Mazalij fields hold a total of 27 billion barrels of oil encased in solid rock 5,000 feet below the baking desert.

Saudi Arabia is no stranger to developing giant oil fields. Its massive Ghawar field, with an estimated 70 billion barrels of remaining reserves, is the world's largest.

But oil experts say Khurais, which was discovered in 1957, is geologically more difficult to tap.

Aramco is using hundreds of mostly South Asian workers to build a massive processing facility at the field. More than 150 wells will pump crude to the surface, where water and gas will be separated out. The oil then will be funneled to the country's east-west pipeline for delivery to ships in the Red Sea.

Workers are also building a huge sea-water injection system to pump more than 2 million barrels of water per day from the Gulf into 120 wells. That will maintain the necessary pressure underground to push the oil to the surface.

Disputes over Saudi's decisions aside, "when you talk about the fields and the engineers and so on, I think you have to respect their technical ability," Takin said.

With its twisting maze of metal, the half-finished facility rises out of the desert like a massive space station. Workers wear gloves and wrap bandanas across their faces to hide from the searing sun as they work 10-hour shifts in temperatures well above 100 degrees.

Aramco officials say that in addition to geological challenges, they also face difficulty finding enough qualified workers and equipment. The project will use 145,000 tons of steel - almost enough to build two Golden Gate bridges.

"We are trying to do it in a world market where contractors are in high demand," said Muhammed al-Rubeh, head of Aramco's project department.

When completed, the processing facility also will be protected by two layers of fences, crash barriers, security cameras and government forces, Aramco says. Al Qaeda has called for attacks against Saudi Arabia's oil facilities to disrupt the flow of crude.

Aramco officials insist that despite the tight construction market, the Khurais project will be ready to produce 1.2 million barrels per day by next June.

But equipment and labor shortages have delayed production at another field, Khursaniyah, which was originally scheduled to begin pumping 500,000 barrels per day at the end of 2007. Aramco officials now say Khursaniyah will come online in August.

Also in the works is the development of the Manifa field, which sits offshore in the Gulf and is Saudi Arabia's only other giant oil field still untapped.

If all goes as scheduled, Aramco forecasts more than 50 billion barrels of fresh reserves from the giant fields by 2011. That amount alone would give Saudi Arabia the ninth largest oil reserves in the world, not even counting its existing reserves.

Outside analysts estimate the kingdom's total current reserves at about 260 billion barrels. But Saudi Arabia refuses to provide detailed data to allow independent verification.

Amin Nasser, senior vice president for production and exploration at Aramco, acknowledges the company sometimes faces criticism for that secrecy. "We have a tradition of letting our actions and accomplishments speak for themselves," he said.

[samsel3]

Iraq''s oil infrastructure was rebuilt when Cheney controlled Haliburton. Halliburton/Iraq deal was done through the French because it was illegal for US companies to deal with Iraq, except for the oil for food program which US oil companies participated in. Saddam was charging US interests more for oil then other countries and cutting off supplies at times so they took him out.

Taking out Saddam helped BIG OIL drive the prices up. A few months before the invasion, gasoline was under a dollar the lowest since the seventies oil embargo era.
Saddam actually lowered the world price of oil by selling it cheaper to Russia, China, France, Germany and South Korea before the invasion. He created an advantage against US & British oil by charging them more for oil than these countries increasing competition. US oil companies then got subsidies from Congress.

The Times of India August 2007 reported : " Iran, Iraq signed an agreement to build pipelines for the transfer of Iraqi crude oil and oil products." Under the deal crude will be refined and sent back to Iraq. Bush opposes this agreement and wants the Iraqi Parliment to accept and sign a U.S. designed oil law that would result in huge profits for BIG OIL. Iraqi oil workers and 63% of Iraqis polled are opposed to the Bush law and prefer a hands off Iraq oil policy.

[samsel3]

Reuters UK December 30, 2007 Reports: "Bin Laden says U.S. seeks to exploit Iraqi Oil". OBL states: "America seeks, alongside it''''s agents in the region, to create an allied government...that would accept in advance the presence of major U.S. bases in Iraq and give the Americans all they wish of Iraqi Oil. The true intent for the Iraq invasion was to gain control of world oil markets for BIG OIL. US oil interests and British petroleum were tired of Saddam flooding the market with cheaper priced oil and then charging US oil companies more for oil then Russia, France, Germany, China and Korea. The administration is not interested in what you have to pay at the pump. The bottom line is profit for BIG OIL, which is the reason BIG OIL put up 150 million dollars for the election campaign of G.W. Bush.

[petro49l]

How much money did the Saudis pay George W. Bush today to remain silent on the high price for gasoline? The Saudis could raise the price for a barrel of oil to $150. What if it rises to $200? Or $250? The Saudis use illegal political graft to influence American politicians. Certainly, this is not the free enterprise system.

[pensacola88]

In the late 70''s and early 80''s, the US Government would pay for the fourth oil well drilling cost, after a US Citizen paid for the first three. It was "Buy Three - Get the Fourth Free". By the mid 80''s the price of oil went down so far, that all those producers were selling at a loss.

In 1973, Mexico watched Saudi Arabian oil go up so high, that the Mexican government borrowed money for oil production and refineries. The price was high enough to make a profit after repaying the loans. Then oil went down and Mexico was producing oil at a loss. The loan repayment sent the entire country into a depression that lasted 25 years. The Peso exchanged in 1971 for 12.5 Pesos to 1 US Dollar. The Peso devalued to 12,400 Pesos to 1 US Dollar in 2001.

Hesitance to borrow and drill in a free and unregulated petroleum market is very understandable. Consumers to care or worry what happens to the people in the lands where oil comes from, when market prices fluctuate.

Consumers show jealousy when producers are making profit and apathy when producers are bankrupt.

At this time, both producers and consumers to show they honestly don''t care about each other.

Petroleum Market price regulation is an answer for both consumers and producers. Free Market economics always has winners and loosers. In energy, medicine, food and housing, the loosers always are deprived.

[ginahannon]

These Saudi scum like to take all the money from the oil they sell us and arm other ********** that want to kill us. Real Nice! www.theseriouspolice.com

[petro49l]

Why use dry, low quality Saudi oil fields? Central and South America offer the finest petroleum in the world. The Saudis demand a high price for oil and wars to defend the industry. They do not have the courage to admit that they charge $143 a barrel! American Oil Companies do not need the Saudis, military conflict, and high transport charges. Off shore crude in the Western Hemisphere is better business. Profits are more important than political affiliation with genocidal Egotists.

[vietnam21]

What did McCain do during the Bosnian war?


Posted by zoe2006

why dont u ask Clinton about Bosnian war I mean Sniper story..

[tootall10142]

Its a little dusty over there let them bring it to us.

[inventagod2]

More Oil?
(Bu$h licks his lips)
Cheney, git them troops over to Saaudi Arubia PRONTO!
Wees got to git us sum more oil!
Skrew our friendships, Lets Roll!
Wheres Karl, we need to come up with a reason to invade agin...

[hologram5]

This is a speculator issue, the saudis do not know why gas is so high, blame the stock market manipulators for that.

[patriot12436]

ndpindent-ru
I trust in our forefathers foresight. It has worked for over tqwoo hundred years and can still work. It might take a revolution to get rid of all the crooks. Another thing if they took you as a serious threat you would die mysteriously, disappear or have an accident. They don''t play by the rule book.

[samsel3]

Mcain & Bush want to give Big Oil more Federal land for oil drilling but continue to ignore the facts.

In March of 2008 a Cambridge, MA. oil & Gas consulting firm issued a report to Congress. In that report the Congress was told that the laws of supply & demand no longer apply to oil. Demand is constant with only small fluctuations at any given time. Although world demand will increase their is plenty of supply. BIG OIL currently leases 90 million acres of oil & gas land & offshore sites, 70 million are not in use. It is not in Big Oil''s economic interest to use these 70 million acres as they have enough supply at this time. Big oil does not want to loose profit by increasing supply , after all selling oil products is their business. Additional offshore and Alaskan wilderness leases are not necessary, Big Oil just wants additional control of these areas for future marketing.

The Saudi''s and Big Oil are very happy with the Bush & Cheney energy policy which eliminated Iraqi world oil market manipulation. Saddam kept prices down by selling cheap thus preventing the Saudi''s & Big Oil from getting the prices up. Bush & Cheney opened Pandora''s box & now things will never be the same.

[patriot12436]

flagship-usa
Excellent statement. I agree with what you are saying totally. I travel extensively. I like to see and learn different cultures. I talk with the people and all have said if we stop trying to be the world police and make everyone live like us we would have more friends, less enemies, and great respect. I meet Muslims every day. They are also a good God fearing people. I rather thing the term God fearing israther absurd. If you believe in God then why would you fear him. I am in Thailand now and they are also feelig the effects of a orild depression. Living here is much harder for these people than we have it in the states. No social programs to feed them if they can''t work.I really feel sorry for these people having a hard life here, but i also have a deep respect for them.

[drinuk]

Come January when the crooks ride off into the Sunset with their pockets full, watch the price of Oil Drop.
Get the vermin out of control and the Bush Cheney Cartel gone and we will see a difference. The problem then arises, How do we keep Obama Straight and out of the Control of the Crooks both in Washington and Wall Street. My idea would be get rid of their influence, top anyone with their hand in the American cash register, no trial, no mitigating circumstances, Top ''Em !

[whitemale08]

Hey... Republicans what happened to all your junkyard dogs like Sean Hannity and Rush Limbaugh who promised that "market forces" would quickly bring oil prices back down to earth?

I got news for you and John McCain; it ain''t gonna happen.

Ronald Reagan blew out our economy by borrowing trillions of dollars to fight the cold war hoax.

So don''t blame Hugo Chavez, don''t blame Iran don''t blame anybody except the Federal Reserve System and Standard & Poors.

Since 1913 folks have been trying to tell you to not allow these clowns to usurp constitutional authority set aside for Congress to utter currency.

Now look at us we are in the midst of a hyper-inflationary depression.

Thanks Ronny.

[tootall10142]

We as a nation I think should continue to explore other possibilties for fuel source and limit the use of our remaing crude to food producers and the industry that gets it to our tables .every one outside of these areas should be made to use solar generated electricity for our genral transportation.

[flagship-usa]

guy_hero at 02:12 AM : Good grief, man/dude! How do u come up with this line of thought?

I agree with u on one point: [God] may have did this on purpose. I would seem likely(?). We all seam to have something to offer and bring to the table. [God] divided up our resources and spread it across this great planet. Ideally, this seams to work very well.

My knowledge of the Arab oil producing nations is not greed. They have supplied the world with oil for a long time now, and have practiced good and fair business ethics, while producing all the oil the world needed. They would have nothing to gain, if they were to have the whole world angry with ''em. Most of these people have been educated here in the U.S. They are not ignorant people, and neither are we.

None of us, who has any understanding of what is involved here, is blaming the Arabs for this mess.

I take offense to your argument: you are simply wrong on this one. I''m American, and I don''t hate Arabs.

[samsel3]

It''s all about BIG OIL. The administration wants regime change in Iran & Venezuela. Conoco-Phillips, Mobil Exxon & Chevron would not accept new conditions for their oil leases. They wanted significant control in new areas of the gulf of Venezuela, but the Venezuelan''s are looking after their own interests and offered a diminished role in developing oil reserves or nothing. As a result all three companies were terminated. The owners of these companies are Richard Cheney''s friends and now look for the administrations strong arm tactics.

In 2006 & 2007 Iran & Venezuela vested oil deals and partnered to develop tracts in Venezuelas Orinoco Reserve. One tract Iran will help develop contains approximately 30 billion barrels of oil.
Venezuela''s total oil reserves are estimated at 265 billion barrels which could top the Saudi''''s Reserves.

Venezuela, has struck oil and natural gas deals with Iran & Malaysia , as well as China and Russia . China & Russia. will aid and protect Venezueala if needed .

[petro49l]

The conflict between Israel and Iran gives the Saudis another reason to raise the price of gasoline. Soon, oil will cost $200 a barrel. This new oil field is an old one that was reserved for this occasion. The Saudis will pump out poor quality petroleum to be sold at an extreme price. American Oil Companies are paying the Saudis too much money for a barrel, transporting from a difficult area, and funding an unnecessary war. Why so much cost? It would be far more profitable to drill for petroleum in Central and South America.

[shanev137]

Oil shortage......I''m still waiting....someone show me some pictures right now of -anyone- somewhere in the world standing in a huge line to buy gas.

Go ahead....it''s okay if you show them.