Global Insight Perspective | |
Significance | The initial tests suggest that steam recovery can be applied to Saudi heavy oil, potentially enabling a significant increase in recovery factors in the Wafra field in the Partitioned Neutral Zone (PNZ) with Kuwait. |
Implications | The tests also have implications for other heavy oil formations in the country, including the giant Manifa field, where any increase in recoverable reserves could have a significant impact on total Saudi reserve figures. |
Outlook | Enhanced recovery techniques represent another weapon in Saudi Aramco’s arsenal in the fight to combat peak oil claims. However, new exploration and development work will continue to represent the company’s principle line of defence, given the lower costs involved and the plentiful resources on offer. |
Reservations Denied
Saudi Aramco and Chevron have had some early success in applying steam recovery techniques to the Wafra oilfield in the Partitioned Neutral Zone between Saudi Arabia and Kuwait, opening up a new front in the battle to discredit peak oil theorists.
The Wall Street Journal (WSJ) quoted Chevron sources as saying that the tests had been promising so far, involving the injection of steam to loosen up sludge-like heavy-oil reserves in Wafra. It now plans to expand the pilot test to a further 16 injection wells and 25 producing wells in the field.
Saudi Oil Minister Ali al-Nuaimi told the WSJ that many heavy-oil fields aren't included in official recoverable reserve figures of 260 billion barrels. However, if steam injection works in these fields, it would add "tens of billion of barrels" to Saudi reserves. For Wafra alone, steam recovery could increase recoverable reserves to 40% of the total, from just 3% with conventional development.
The technique has entered into commercial application in the region, most notably at Oman’s Mukhaizna oilfield, where Occidental is undertaking a US$2-billion steam injection programme with the aim of unlocking some 150,000 b/d of heavy oil.
Outlook and Implications
Rather than extending the life of a dwindling supply source, the Saudi tests are undoubtedly aimed at helping the country to increase its recovery rates and bookable reserves, as part of long-term efforts to discredit "peak oil" claims propounded by former Saudi oil consultant, Matt Simmons, and others (see Saudi Arabia: 18 May 2006: Saudi Aramco Aims at 25% Reserve Lift by 2025).
However, although proving the applicability of enhanced recovery techniques like steam injection to Saudi’s carbonite plays is a useful addition in the reserve debate, commercial application of these techniques looks unlikely in the near term given the wealth of existing undeveloped resources, which can be tapped at a far lower cost. This means that new exploration and development of existing reserves is likely to remain the principal focus of Aramco’s investment attentions going forward, particularly since current demand is very much focused on light oil, rather than heavy crude, which continues to sell at a significant discount.
Indeed, the WSJ’s previous Saudi scoop concerned the reduction of Saudi heavy oil sales earlier this year as a result of limited demand, a point which should not be lost in the expected forthcoming publicity round trumpeting the "revolutionary" potential of EOR (see China-Saudi Arabia: 21 June 2006: Saudi Crude Proving Too Sour for Chinese Tastes; Imports Cut Back).