September 10, 2006	Sunday	Sha'aban 16, 1427

RIYADH, Sept 9: Not withstanding the counter arguments, ‘peak oil’ school is recruiting new adherents. On a sweltering Tuesday (from European standards) in mid-July, in the fields outside Pisa, Italy, a relatively good crowd had assembled to discuss and debate the geological theory, commonly known as peak oil. Many out there predicted the imminent end of the ‘Oil Age’.

The peak oil movement -- an unlikely alliance of geologists, physicists, oil industry consultants and environmental activists -– seemed to be gaining momentum and winning new converts. For the first time, some say, they have begun to grab the attention of Washington and Wall Street. The US energy secretary has now asked his advisory body, the National Petroleum Council, to investigate if oil supplies could keep pace with (the rising global) demand. The US government accountability office, a non-partisan congressional watchdog, is due to release a study on peak oil this November. Interestingly, a congressional peak oil caucus has also been formed in the meantime, too.

Naturally with the theory of peak oil coming increasingly under discussion, the focus is bound to shift on the Saudi super giant well – Ghawar, often termed as the world’s major gas station, accounting for more than six per cent of the global oil needs and almost 52 per cent of the total Saudi output.

There are definite question marks in the global energy fraternity about the ability of the old field Ghawar, which went into commercial production in the 1960s, if it could continue producing at current levels and if yes until when. Hence when Saudi Arabia says it is endeavouring to enhance its output capacity to above 12 million barrels a day, there are indeed sceptics to be found and in increasing numbers -– all around.

Saudi Arabia, however, has reasons to be confident about its continued capability in meeting the global needs. Indeed being the world’s largest gas station, Saudi Arabia has onerous responsibilities to fulfil, Riyadh fully realises.

Analysts concur with Saudi Aramco when it says that there are still lot of acreage yet to be explored in the kingdom and this in itself is interestingly important. Countering the question marks about Ghawar, an Aramco spokesperson told the weekly MEED, “The Ghawar field is doing exceptionally well and is in a development stage, with decades of steady production to come at current or higher levels.

Even in North Uthmaniya, the most mature area of Ghawar, the average well production rates have remained unchanged.”

Along with maintaining production potential, average water cuts in the super giant field have also been harnessed. At Ain-Dar and Shedgum -– two strategic areas in Ghawar -– water cuts have remained steady at 37 per cent. “If we look at the overall Ghawar field, water cuts showed a moderate increase until 1999, approaching 36.5 per cent. But our three-pronged efforts have since lowered the (water cut) level to below 35 per cent, something that is not commonly seen in the industry,” the spokesperson emphasised.

Aramco’s efforts have been production optimisation through the use of horizontal drilling, multilateral wells and re-entries, application of advanced diagnostics and extensive field surveillance. Consequently, Ghawar continues to be the Saudi kingpin and would continue to do so, as “an extensive observation and drilling plan is in place at Ghawar and is supplemented with permanent down-hole monitoring and intelligent well completions.”

Aramco has reportedly two main targets, stemming the rate of decline in production and increasing the reserves recovery period. “Drilling in mature fields and development of new fields with long plateau lives will lower the composite decline rate of producing fields to about two per cent,” the spokesman added.

As part of efforts to maintain reservoir pressure and increase oil recovery rates, Aramco has increased its under-balanced drilling activities. Ten water injectors have been drilled in the Haiwyah and South Uthmainyah areas of Ghawar.

No one argues that Ghawar is an ageing field. However, cutting edge technology is now offering new solutions for such fields. Intelligent field concept could significantly improve recovery factors, reduce capital expenditures and downtime and operation costs, analysts now strongly feel.