Saudi Arabian Oil Co., the world’s largest crude exporter, is set to add more drilling rigs than expected this year and hire more in 2014 as new fields are drilled to counter dwindling output from aging deposits.
The state-owned company, known as Saudi Aramco, will use a record 170 rigs by the end of 2013, according to estimates from Schlumberger Ltd. (SLB:US) and Halliburton Co. (HAL:US) That exceeds the total number forecast by the oil-service companies earlier this year.
The expansion in rigs reflects the increasing difficulty of extracting crude from mature fields. To maintain output, Aramco is now drilling new deposits such as Manifa, while expanding projects including Khurais and Shaybah to ensure there’s enough spare capacity to counter any disruptions in global supply.
Aramco will use 170 rigs by end of this year or early 2014, Schlumberger Chief Executive Officer Paal Kibsgaard said July 19 on a conference call. That’s more than the 160 he estimated in January. Houston-based Schlumberger, the largest oil-services provider, has rigs on land and offshore in Saudi Arabia. Halliburton, which operates at Manifa, said in May it also expects Saudi Arabia to have 170 rigs by the end of this year.
Aramco is adding wells to maintain output capacity at 12 million barrels a day while protecting the 1.5 million-barrel-a-day buffer of spare production, the biggest surplus among nations in the 12-member Organization of Petroleum Exporting Countries. Saudi Arabia pumped 9.47 million barrels a day in June, according to data compiled by Bloomberg.
Aramco used only 60 rigs a decade ago to produce the same volume, which shows there’s no more “easy oil” from Saudi fields, Nansen Saleri, CEO of Houston-based consulting firm Quantum Reservoir Impact, said in June. If the company employed more advanced drilling methods it could boost Saudi production capacity to 15 million barrels a day, according to Saleri, a former head of reservoir management at Aramco.
The oil producer will raise its rig count to 200 next year, according to estimates from Husseini Energy, a Saudi consulting firm in Dhahran founded by Aramco’s former Executive Vice President for Exploration and Development Sadad al-Husseini.
“This is necessary if they are to support both the oil and gas production by completing Manifa, upgrading offshore capacity, and expanding Khurais and Shaybah,” al-Husseini said.
Aramco plans to increase output capacity at the Khurais field to 1.5 million barrels a day by 2017 from 1.2 million now, while boosting the Shaybah field to 1 million barrels a day from 750,000 barrels, CEO Khalid Al-Falih said in May.
Aramco declined to comment on the rig forecasts when contacted yesterday.
The increase in rigs will also help the country find new deposits and pump more hydrocarbons offshore, al-Husseini said. Aramco plans to raise gas output in the Red Sea and Persian Gulf to reduce domestic use of crude oil and retain more for export. It will also drill seven wells to test shale-gas deposits in the northwest this year, Oil Minister Ali Al-Naimi said in March.
Halliburton and Schlumberger both operate Saudi research centers to develop technology to help the country unlock its unconventional hydrocarbon resources.
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