Currently the Middle
Eastern nation only boasts 3 megawatts of solar power, less than Egypt, Morocco,
Tunisia, Algeria and the United Arab Emirates. In order to
avoid this fate Saudi Arabia
is seeking investors to back its $109 billion plan to create a solar sector
capable of providing 30 percent of its electricity by 2032. According to Maher
al- Odan, a consultant at the King
Abdullah City
for Atomic and Renewable Energy (Ka-care), the plan involves developing 41,000
megawatts of solar power within two decades. 25,000 MW will be from solar
thermal plants, using huge heliostatic mirrors to reflect the sun’s rays onto a
central tower that heats a fluid to drives a turbine; and 16,000 MW will be in
the form of photovoltaic panels. Al-Odan states we are not only looking for
building solar plants. We want to run a sustainable solar energy sector that
will become a driver for the domestic energy for years to come. Khalid
al-Suliman, vice president of Ka-care, said that an extra 21,000 megawatts of
power will be added in the form of nuclear, wind, and geothermal. Saudi Arabia
hope that their ambitious plans will help them to reduce their domestic oil
consumption by as much as 523,000 barrels a day over the next 20 years. Logan
Goldie-Scot, an analyst at New Energy Finance in London, said that, the Saudi Arabian government has a powerful
incentive to diversify its energy mix to reduce dependence on oil.
The state could generate an internal rate of return of approximately 12 percent if it built a PV plant and sold the displaced oil on the international markets. Top crude exporter Saudi Arabia wants an oil price of around $100 a barrel and would like to see global inventories rise before demand picks up in the second half of the year, Oil Minister Ali Al Naimi said on Sunday. International Brent crude settled at $112.26 on Friday, well off a peak of over $128 in March. Brent has mostly traded above $100 since early 2011, keeping fuel costs high and threatening to damage a fragile global economy. Saudi Arabia is working at bringing Brent crude prices to that level, he added. The kingdom, Opec’s biggest producer, said it pumped 10.1 million bpd in April, its highest for more than 30 years, as it bid to meet growing demand and curb oil prices. Prices have stayed high in 2012 due to concern about disruption to global supply from US and European sanctions aimed at hurting Iran’s crude export revenues and forcing Tehran to halt its nuclear programmed. The US and its allies suspect Iran is developing nuclear weapons, which Tehran denies. Al Naimi said last week that producers were pumping enough to deal with the impact of the sanctions on the oil market. He reiterated on Sunday that producers were pumping 1.3 million barrels per day (bpd) to 1.5 million bpd above demand, which is helping to build inventory. It would be nice to think that the Saudis were doing this for climate change reasons. But they’re doing it for more selfish objectives: jobs and efficiency. In that same speech, Al-Naimi explained the need to support new energy industries that can create more jobs than the oil sector we know that pumping oil out of the ground does not create many jobs.
It does not foster an
entrepreneurial spirit, nor does it sharpen critical faculties. According to
the Saudis, what fosters that entrepreneurial spirit? Renewable energy. In a
report from Bloomberg Businessweek on the recent announcement, a consultant
with the Saudi government, Maher al-Odan, explained the country’s strategy We
are not only looking for building solar plants….We want to run a sustainable
solar energy sector that will become a driver for the domestic energy for years
to come. The plan will also help the country save hundreds of thousands of
barrels of crude per day. With diplomats and energy experts privately
concerned that Saudi
Arabia has overstated its oil reserves by as
much as 40 percent, the country will need new resources to make up for declines
in production. This announcement shows the importance of renewable energy —
even for the world’s largest exporters of fossil fuels. This encounter was born
of a new dynamic: the age of extreme oil. Gone are the days of sweet Texas
crude and boundless Arabian oil fields, when petroleum lay so near the surface
that all a company had to do was prick the Earth's crust and let the black gold
gush. To the environmentalists who worry about reaching “peak oil” (and a
subsequent decline in fossil fuels), critics can point out accurately enough
that the world is flush with new hydrocarbon reserves.
They are less quick to
acknowledge the epic complexity and risks of most of these new finds. Alberta's
oil sands are the obvious example: Here, on average, two tonnes of earth must
be strip-mined and seven barrels of water heated to steam in order to produce a
barrel of oil. It takes a barrel's worth of energy to produce just three
barrels of oil; 30 years ago it would have been 100. The ifield that is
referred to in the article is simply a digital accumulation of all monitoring
instrument data such that the field behavior can be measured against the full
field model that was developed. This gives them the opportunity to intervene
quickly and hence maintain production and pressure as optimally as possible. I
can't qualify whether his assessment of new wells is correct as it comes down to
interpretation of satellite imagery that is not meant for the resolution needed
to determine where water lines, gas lines, separators etc go. He might be
right, but so what? The whole idea of the original plan they had was not that
this would be all they had to do...intervention is always assumed and given the
monitoring they have it becomes that much more efficient. How many of the wells
are producing currently or more importantly how many of the multi-laterals are
producing can't be determined from a satellite image. The point of SMART
completions is the ability to monitor individual laterals at surface and shut
them in when water production increases beyond a certain point. The field model
may be telling them that rather than drill another lateral from the main hole
with the use of expandable liner it might be more useful to drill an additional
well. This is all driven by cost benefit analysis and is not something new to
the industry....we have been downspacing for as long as I can remember.
I am not sure why you are
on this kick about whether Ghawar has peaked or not. There are a couple of SPE
articles that I quoted from years ago on this site that state current recovery
as being in excess of 50% and that full field models benefiting from the
understanding of MRC well production, mobility ratios and wettability changes
in the various reservoir units that ultimate recovery will be in the the area
of 73% from the northern part of Ghawar and somewhat less from the remainder.
The production rate is determined not by how much reserve is there anymore but
by economic factors coupled with reservoir management. After oil prices
moved upwards and settled at a higher level starting around 2005, a new wave of
exploration resulted in sanctions for developments of several new and known
discoveries that previously had been on hold due to lack of profitability. These new developments are expected to add up
to 350 kb/d of additional oil production, reaching a peak in 2016. This is by
itself impressive given the location of the discoveries (offshore, water
depth), their size and the total efforts required to bring these to fruition.
These 21 developments have been estimated to hold total recoverable reserves of
1 Gb crude oil, 140 Gcm (Gcm = Bcm: Billion cubic meters) of natural gas,
around 23 Mb condensates and around 164 Mb NGLs. of course thats the rub, it's
demand for what price of commodity. But costs have risen such that you will
never see $10 or even $20 a barrel oil for more than the time it takes for some
trader to smack himself in the forehead and say "what am I thinking".
The bottom of the fair price the Saudis speak to is based on a price that it
takes to make new oil projects economic. As an example a price somewhere
between $75 and $80 has been talked about as a price necessary to get new heavy
oil projects started in Canada.
The breakeven price of current production is, of course much lower. As a
consequence price can fall below the levels above but can't stay there very
long before many companies close up shop and start to shutin production, simply
because intervention becomes too costly. It was interesting to watch what
happened to costs throughout the last collapse in prices. Within a few months
on bottom we saw the price of steel drop which helped with respect to tubular
prices and the cost of consumables (mud etc) dropped somewhat. Rig prices
retracted some but labor costs remained high (and that is an important part of
the equation). And as you say over time oil has become more costly to extract
simply because it requires a higher level of technology. As a consequence costs
are now as high as they ever were although prices are somewhat lower than the
peak. What is important of course is how much demand there is for oil at $80
and then at $90 and then at $100 and so on. I remember reading an analysis of
the last collapse and even if you ignore all the other things going on (banks
and the mortgage scams being the biggest) and look to oil as being the primary
driver it wasn't until prices were up over $120 that the economy started to
retract. I'm sure there are other analyses on this. The oil-rich country
is planning to place more focus on renewable energy generation. In addition to
more solar power, it intends to add wind, geothermal, waste-to-energy and
nuclear plants to its energy mix in the future.
The program, said to be
worth tens of millions of dollars, aims to catapult Saudi Arabia
into the group of global leaders in renewable-energy development. Of the 41 GW
of solar, photovoltaics is expected to comprise 16 GW, while concentrated solar
power (CSP) will encompass 25 GW. “The CSP plants, with their higher capacity
factor than PV, are foreseen as a bridge between base-load technologies
(including geothermal, waste-to-energy and nuclear) and PV, which will provide
coverage for daytime demand,” explained Apricum, a strategy consulting and
transaction advisory firm specialized in renewable energy. There is a real,
practical limit to the amount of oil that can be recovered from a reservoir.
Depending on the availability and economic viability of different technical
approaches, that limit might be less than 25% of the total volume of oil
originally in place, or it can be more than 50%, as has been achieved in some
of the fields in the Kingdom of Saudi Arabia (KSA). But one cannot get out more
oil than is originally there, and in most cases it is difficult to reach even
half that value. However, where the volumes of oil that have been left by
conventional methods remains high, as it does in the KSA, then the use of advanced
technology, as I began to explain last time, become easier to justify. KSA is
now reaching the point where the easy production of oil, as in sink vertical
wells at kilometer intervals and watching an average of 10 kbd merrily bubble
to the surface, is now largely over.
The oilfields are moving increasingly into the more advanced and costly procedures to help sustain a production that would, under earlier production regimes, have long faded into memory. Ghawar, for example, is moving into CO2 injection and some steam assist (likely with the areas with heavier, tar-ier deposits) seeking to maintain an overall 5 mbd production. As for the non-experts like Simmons, he may have made mistakes, but he also made great contributions to the issue of PO and SA in particular. Like it or not, SA is critical to every assumption we make about world politics, economics, etc, bc of the role they play in oil production. The same can be said of Russia and a few others. His book was critical in getting many MSM economic types to ask critical questions about BAU, which always assumed the world GDP could grow indefinitely because it was assumed Opec could increase oil production indefinitely. BAU never foresaw any limits. He was right, and we are increasingly seem that there are limits, that oil production doesn't always just go up (our plateau) and that leads to consequences and change - Arab springs, falling GDPs, bankrupt countries, etc. A few months after Saudi Arabia’s oil minister called global warming “among humanity’s most pressing concerns,” the country is rolling out an ambitious plan to source 41,000 megawatts of solar projects over the next two decades — scaling up a domestic solar industry to support one third of electricity production by 2032. Solar electricity and petroleum serve completely different markets.
However, in this case, solar will be directly replacing the oil that Saudi Arabia uses for desalination plants. Officials are currently rolling out a competitive bidding process for 1,100 megawatts of solar photovoltaics and 900 megawatts of concentrating solar power in the first quarter of 2013. The plan is part of a larger strategy to scale up various sources of renewable energy, build a new domestic industry, and reduce oil consumption. Officials estimate that the solar plan will reduce domestic consumption of oil by 520,000 barrels per day. PV Magazine reported on the news from a solar conference in Saudi Arabia:
The state could generate an internal rate of return of approximately 12 percent if it built a PV plant and sold the displaced oil on the international markets. Top crude exporter Saudi Arabia wants an oil price of around $100 a barrel and would like to see global inventories rise before demand picks up in the second half of the year, Oil Minister Ali Al Naimi said on Sunday. International Brent crude settled at $112.26 on Friday, well off a peak of over $128 in March. Brent has mostly traded above $100 since early 2011, keeping fuel costs high and threatening to damage a fragile global economy. Saudi Arabia is working at bringing Brent crude prices to that level, he added. The kingdom, Opec’s biggest producer, said it pumped 10.1 million bpd in April, its highest for more than 30 years, as it bid to meet growing demand and curb oil prices. Prices have stayed high in 2012 due to concern about disruption to global supply from US and European sanctions aimed at hurting Iran’s crude export revenues and forcing Tehran to halt its nuclear programmed. The US and its allies suspect Iran is developing nuclear weapons, which Tehran denies. Al Naimi said last week that producers were pumping enough to deal with the impact of the sanctions on the oil market. He reiterated on Sunday that producers were pumping 1.3 million barrels per day (bpd) to 1.5 million bpd above demand, which is helping to build inventory. It would be nice to think that the Saudis were doing this for climate change reasons. But they’re doing it for more selfish objectives: jobs and efficiency. In that same speech, Al-Naimi explained the need to support new energy industries that can create more jobs than the oil sector we know that pumping oil out of the ground does not create many jobs.
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| Statics of oil in Saudi Arab |
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| Pipe of oil |
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| pipe line of oil |
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| Kingdom of Saudi Arabia |
The oilfields are moving increasingly into the more advanced and costly procedures to help sustain a production that would, under earlier production regimes, have long faded into memory. Ghawar, for example, is moving into CO2 injection and some steam assist (likely with the areas with heavier, tar-ier deposits) seeking to maintain an overall 5 mbd production. As for the non-experts like Simmons, he may have made mistakes, but he also made great contributions to the issue of PO and SA in particular. Like it or not, SA is critical to every assumption we make about world politics, economics, etc, bc of the role they play in oil production. The same can be said of Russia and a few others. His book was critical in getting many MSM economic types to ask critical questions about BAU, which always assumed the world GDP could grow indefinitely because it was assumed Opec could increase oil production indefinitely. BAU never foresaw any limits. He was right, and we are increasingly seem that there are limits, that oil production doesn't always just go up (our plateau) and that leads to consequences and change - Arab springs, falling GDPs, bankrupt countries, etc. A few months after Saudi Arabia’s oil minister called global warming “among humanity’s most pressing concerns,” the country is rolling out an ambitious plan to source 41,000 megawatts of solar projects over the next two decades — scaling up a domestic solar industry to support one third of electricity production by 2032. Solar electricity and petroleum serve completely different markets.
However, in this case, solar will be directly replacing the oil that Saudi Arabia uses for desalination plants. Officials are currently rolling out a competitive bidding process for 1,100 megawatts of solar photovoltaics and 900 megawatts of concentrating solar power in the first quarter of 2013. The plan is part of a larger strategy to scale up various sources of renewable energy, build a new domestic industry, and reduce oil consumption. Officials estimate that the solar plan will reduce domestic consumption of oil by 520,000 barrels per day. PV Magazine reported on the news from a solar conference in Saudi Arabia:
