Mahmoud M. Abdul BaqiNansen G. Saleri

Saudi Aramco

Mahmoud M. Abdul BaqiNansen G. Saleri

Saudi Aramco

Fifty-YearCrude Oil Supply Scenarios:Saudi Aramco’s Perspective

Fifty-YearCrude Oil Supply Scenarios:Saudi Aramco’s Perspective

February 24, 2004CSIS, Washington D.C.

February 24, 2004CSIS, Washington D.C.

World Oil Demand (Million Barrels / Day)World Oil Demand (Million Barrels / Day)

Source: OPEC OWEM (2002)Source: OPEC OWEM (2002)

0

25

50

75

100

125125

20002000 2010 20202005 2015

North America50 Billion BarrelsNorth America

50 Billion Barrels

2002 Year-End Conventional Oil Reserves((((1050 Billion Barrels)2002 Year-End Conventional Oil Reserves((((1050 Billion Barrels)

South & Central America99 Billion Barrels

South & Central America99 Billion Barrels

Europe19 Billion Barrels

Europe19 Billion Barrels

Africa77 Billion Barrels

Africa77 Billion Barrels

Middle East686 Billion Barrels

Middle East686 Billion Barrels

F. S. U77 Billion Barrels

F. S. U77 Billion Barrels

Asia Pacific39 Billions Barrels

Asia Pacific39 Billions Barrels

0 200 400 600 800

North AmericaAsia Pacific

Middle East

Europe

AfricaF. S. USouth & Central America

Source: BP Annual Statistical ReviewSource: BP Annual Statistical Review

Saudi Aramco’s PerspectiveSaudi Aramco’s Perspective

• Sustainable Performance • Maximum Hydrocarbon Recovery• Life-Cycle Economics • Prudent Reserves Management• Excellence in Safety and

Environmental Practices

• Sustainable Performance • Maximum Hydrocarbon Recovery• Life-Cycle Economics • Prudent Reserves Management• Excellence in Safety and

Environmental Practices

Reliable Supplier of OilReliable Supplier of OilReliable Supplier of OilReliable Supplier of OilReliable Supplier of OilReliable Supplier of OilReliable Supplier of OilReliable Supplier of Oil

Principles:Principles:Principles:Principles:Principles:Principles:Principles:Principles:

Current OperationsCurrent Operations

Area: 579,000 Square MilesFields: 85Reservoirs: 320Global Oil Reserves: 25%Current Capacity: 10 Million Barrels/Day &

9.6 Billion Cubic Feet/DaySeismic Crews: 9Rigs: 48Replace Annual Oil Prod: 3 Billion BarrelsAdd Annual Gas: 5 Trillion Cubic Feet

Area: 579,000 Square MilesFields: 85Reservoirs: 320Global Oil Reserves: 25%Current Capacity: 10 Million Barrels/Day &

9.6 Billion Cubic Feet/DaySeismic Crews: 9Rigs: 48Replace Annual Oil Prod: 3 Billion BarrelsAdd Annual Gas: 5 Trillion Cubic Feet

0 100 200

Miles

300

Exploration Wells in Saudi ArabiaExploration Wells in Saudi Arabia

Arabian Shield

A r a b i a n

S h i e l d

A r a b i a n A r a b i a n

S h i e l dS h i e l d

100 200 3000Miles

US Geological Survey 2000 Estimate of Top 8 Regions of Undiscovered Recoverable Oil Resources

US Geological Survey 2000 Estimate of Top 8 Regions of Undiscovered Recoverable Oil Resources

Mea

n O

il R

esou

rces

(Bill

ion

Bar

rels

)M

ean

Oil

Res

ourc

es(B

illio

n B

arre

ls)

00

1010

2020

3030

4040

5050

6060

7070

8080

9090

SaudiArabiaSaudiArabia RussiaRussia IranIran GreenlandGreenland BrazilBrazil IraqIraq NigeriaNigeria Kazakhstan

8787

7777

53534747 4747 4545

3838

2121

Source: USGS 2000Source: USGS 2000

Growth Of Oil Initially In PlaceGrowth Of Oil Initially In PlaceGrowth Of Oil Initially In PlaceGrowth Of Oil Initially In PlaceGrowth Of Oil Initially In PlaceGrowth Of Oil Initially In PlaceGrowth Of Oil Initially In PlaceGrowth Of Oil Initially In Place

500500

550550

600600

650650

700700

750750

19801980 19851985 19901990 19951995 20002000 20052005

Bill

ions

of B

arre

lsB

illio

ns o

f Bar

rels

Discovered & Undiscovered Oil Initially in Place by 2025 in Saudi ArabiaDiscovered & Undiscovered Oil Initially in Place by 2025 in Saudi Arabia

200200

700700

900900

00

200200

400400

600600

800800

10001000

DiscoveredDiscovered UndiscoveredUndiscovered TotalTotal

Bill

ions

of B

arre

lsB

illio

ns o

f Bar

rels

Proved Reserves(Saudi Aramco vs. Industry)Proved Reserves(Saudi Aramco vs. Industry)

Saudi Arabia’s Oil Reserves are ConservativeSaudi Arabia’s Oil Reserves are ConservativeSaudi Arabia’s Oil Reserves are ConservativeSaudi Arabia’s Oil Reserves are ConservativeSaudi Arabia’s Oil Reserves are ConservativeSaudi Arabia’s Oil Reserves are ConservativeSaudi Arabia’s Oil Reserves are ConservativeSaudi Arabia’s Oil Reserves are Conservative

SPE/WPC/AAPGSPE/WPC/AAPGSaudi

AramcoSaudi

AramcoCommercial (Current) Commercial (Current)

- Prices- Prices

- Operating Methods- Operating Methods

Areal ExtentAreal Extent- Hydrocarbon Water Contact- Hydrocarbon Water Contact

- Deepest Known Hydrocarbon Depth- Deepest Known Hydrocarbon Depth

Improved Recovery Improved Recovery - Pressure Maintenance- Pressure Maintenance

- All Other EOR Methods- All Other EOR Methods none none Degree of CertaintyDegree of Certainty 90%90% 90%90%

!!!!!!!!

!!!!!!!!

!!!!!!!!

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!!!!!!!!

!!!!!!!!!!!!!!!!

!!!!!!!!

!!!!!!!!

!!!!!!!!

!!!!!!!!

!!!!!!!!

!!!!!!!!

Extent of Proved Reserves DepletionSelect Fields (1/1/2004)Extent of Proved Reserves DepletionSelect Fields (1/1/2004)

% R

eser

ves

Prod

uced

% R

eser

ves

Prod

uced

551010 1313

16162121 2626

2828

4848

6060

7373

2828

00

2525

5050

7575

100100

HaradhMarjan Abu Sa’fah

Zuluf Safaniya GhawarTotalBerri ‘Ain Dar /

ShedgumTotal

Saudi Aramco

ShaybahShaybah

AbqaiqAbqaiq

Total Saudi

Aramco

Total Saudi

Aramco

ShaybahAbqaiq

Note: Haradh and ‘Ain Dar / Shedgum are part of GhawarNote: Haradh and ‘Ain Dar / Shedgum are part of Ghawar

Discovered Oil ReservesDevelopment Status (1/1/2004)

Discovered Oil ReservesDevelopment Status (1/1/2004)

260Billion Barrels

260Billion Barrels

ProvedProved

131 Billion Barrels (50%)

Developed

Saudi Aramco’s Reservoir Management “Learning Model”Saudi Aramco’s Reservoir Management “Learning Model”

• Maximum Hydrocarbon Recovery • Reservoir Monitoring• Low Depletion Rates• Advanced Diagnostics• Cutting Edge Technologies

• Maximum Hydrocarbon Recovery • Reservoir Monitoring• Low Depletion Rates• Advanced Diagnostics• Cutting Edge Technologies

EmphasisEmphasisEmphasisEmphasis::::EmphasisEmphasisEmphasisEmphasis::::

Continual ImprovementContinual ImprovementContinual ImprovementContinual ImprovementContinual ImprovementContinual ImprovementContinual ImprovementContinual Improvement

Maximum Annual Depletion Rates(% of Initial Proved Reserves)Maximum Annual Depletion Rates(% of Initial Proved Reserves)

9.69.6

ABSFABSF SFNY(S & K)SFNY

(S & K)ZULF

(K)ZULF

(K)ANDRANDR ABQQ

(D & H)ABQQ(D & H)

BRRI(H & H)BRRI

(H & H)Prudhoe

BayPrudhoe

BayYibalYibal East

TexasEast

TexasEkofiskEkofisk FortiesForties BrentBrent

Saudi AramcoSaudi Aramco Other MajorsOther Majors

7.47.46.56.5

4.54.54.34.34.24.24.14.12.82.8

2.22.21.81.81.51.511

Source: Saudi AramcoSource: Saudi Aramco Source: SPE PublicationsSource: SPE Publications

Shaybah FieldShaybah Field

Area Size: 38 Miles x 13 Miles

Production Start: July 1, 1998500,000 B/D

Production Start: July 1, 1998500,000 B/D

0

100

200

300

400

500

600

1998 1999 2000 2001 2002 2003

0

100

200

300

400

500

600

1998 1999 2000 2001 2002 2003

Production RateB/D x 1000

Production RateB/D x 1000

Depletion Rate: 1% per YearProduction Plateau: > 50 Years

Depletion Rate: 1% per YearProduction Plateau: > 50 Years

GasOil

Water

Evolution of Horizontal Drilling Technology(South Shaybah)

Evolution of Horizontal Drilling Technology(South Shaybah)

HorizontalHorizontal19961996199619963,000 B/D1 km

JPT (Dec. 2003)SPE 81487 (MEOS 2003)JPT (Dec. 2003)SPE 81487 (MEOS 2003)

Maximum Reservoir ContactMaximum Reservoir Contact200220022002200210,000 B/D12 km

Ghawar FieldThe Super GiantGhawar FieldThe Super Giant

HaradhHaradh

HawiyahHawiyah

‘Uthmaniyah‘Uthmaniyah

ShedgumShedgum‘Ain Dar‘Ain Dar

FazranFazran

• Largest Oil Field in the World

• Discovery (1948)

• Onstream (1951)

• Peripheral Water Injection (1965)

• Largest Oil Field in the World

• Discovery (1948)

• Onstream (1951)

• Peripheral Water Injection (1965)

Area Size: 174 Miles x 16 MilesArea Size: 174 Miles x 16 Miles

‘Ain Dar/Shedgum AreaArab D Production History‘Ain Dar/Shedgum AreaArab D Production History

Res

ervo

ir P

ress

ure

P S

IR

eser

voir

Pre

ssur

eP

S I

2 Million B/D2 Million B/D

PressurePressure

80008000

60006000

40004000

20002000

00

00

4040

8080

Wat

er -

Cut

%W

ater

-C

ut %

19511951 19611961 19711971 19811981 19911991 20012001

36% Water-Cut36% Water-Cut

Pro

duct

ion

Rat

e, B

/D X

100

0P

rodu

ctio

n R

ate,

B/D

X 1

000

30003000

20002000

10001000

00

Start-upWater Injection

(1965)

Start-upWater Injection

(1965)

Oil ProductionOil Production

‘‘‘‘Ain Dar/Shedgum Area / Arab DResources Depletion State (1/1/2004)Resources Depletion State (1/1/2004)Resources Depletion State (1/1/2004)Resources Depletion State (1/1/2004)‘‘‘‘Ain Dar/Shedgum Area / Arab DResources Depletion State (1/1/2004)Resources Depletion State (1/1/2004)Resources Depletion State (1/1/2004)Resources Depletion State (1/1/2004)

OIIP: 68.1 Billion BarrelsProved Reserves: 40.8 Billion Barrels (60% of OIIP)Estimated Ultimate Recovery: 51 Billion Barrels (75% of OIIP)

OIIP: 68.1 Billion BarrelsProved Reserves: 40.8 Billion Barrels (60% of OIIP)Estimated Ultimate Recovery: 51 Billion Barrels (75% of OIIP)

* Probable:3.4 Billion Barrels* Probable:3.4 Billion Barrels* Incremental* Incremental

10%

25%

5%20%

40%

10%

25%

5%20%

40%

Remaining Proved:13.9 Billion BarrelsRemaining Proved:13.9 Billion Barrels

Contingent Resources:17.1 Billion BarrelsContingent Resources:17.1 Billion Barrels

Produced:26.9 Billion BarrelsProduced:26.9 Billion Barrels

* Possible:6.8 Billion Barrels* Possible:6.8 Billion Barrels

Ghawar FieldWater ManagementGhawar FieldWater Management

Ave

rage

Oil

Rat

eM

illion

Bar

rels

per

Day

Ave

rage

Oil

Rat

eM

illion

Bar

rels

per

Day

Wat

er -

Cut

%W

ater

-C

ut %Water - CutWater - Cut

Oil RateOil Rate

33%33%36.5%36.5%

0.00.0

2.52.5

5.05.0

7.57.5

10.010.0

12.512.5

19931993 19951995 19971997 19991999 20012001 20032003 00

1010

2020

3030

4040

5050

e-Field/Smart WellsHaradh Increment IIIHaradh Increment IIIHaradh Increment IIIHaradh Increment IIIe-Field/Smart WellsHaradh Increment IIIHaradh Increment IIIHaradh Increment IIIHaradh Increment III

52

28

499735

703733

1701

1702

1703

1704

1700

1500

1501

1502

1503

1504

1505

1506

3

2728

36

38

39

40

41

43

47

1400

1401

1402

1403

1404

1406

1407

1408

1409

1410

1415

1416

1417

1418

1419

14431445 14241446

1441

1444

1436

1423

1422

1421

1420

1435

1442

1434

1433

1432

1431

1429

1428

1439

1437

1427

1425

14141412

1405

1430

1447

1426

1440

1413

1411

1427

1438

1430

1447

1426

1710

1711

1712

1713

1714

1715

1716

1717

1718

1719

1720

1721

1722

1723

1724

1725

1726

1727

1728

1729

1730

1731

1732

1733

1734

1735

1736

1737

667

651

52

28

499735

703733

1701

1702

1703

1704

1700

1500

1501

1502

1503

1504

1505

1506

3

2728

36

38

39

40

41

43

47

1400

1401

1402

1403

1404

1406

1407

1408

1409

1410

1415

1416

1417

1418

1419

14431445 14241446

1441

1444

1436

1423

1422

1421

1420

1435

1442

1434

1433

1432

1431

1429

1428

1439

1437

1427

1425

14141412

1405

1430

1447

1426

1440

1413

1411

1427

1438

1430

1447

1426

1710

1711

1712

1713

1714

1715

1716

1717

1718

1719

1720

1721

1722

1723

1724

1725

1726

1727

1728

1729

1730

1731

1732

1733

1734

1735

1736

1737

667

651

Quad-Lateral Smart CompletionQuad-Lateral Smart Completion

Onstream: July 2006Rate: 300,000 B/DPlateau: 30 YearsDepletion: 1.7% per Year

Onstream: July 2006Rate: 300,000 B/DPlateau: 30 YearsDepletion: 1.7% per Year

Haradh Increment III ForecastHaradh Increment III Forecast

00

100100

200200

300300

400400

20062006 20112011 20162016 20212021 20262026 20312031 203620360

2020

4040

6060Oil

Rat

e, B

/D x

100

0O

il R

ate,

B/D

x 1

000

Wat

er -

Cut

%W

ater

-C

ut %

Rate: 300,000 B/DRate: 300,000 B/D

22 % Water - Cut22 % Water - Cut

50-Year Crude Scenarios10 Million Barrels / Day 10 Million Barrels / Day 10 Million Barrels / Day 10 Million Barrels / Day Maximum Sustainable Capacity - MSC

50-Year Crude Scenarios10 Million Barrels / Day 10 Million Barrels / Day 10 Million Barrels / Day 10 Million Barrels / Day Maximum Sustainable Capacity - MSC

20002000 20102010 20202020 20302030 20402040 2050205000

22

44

66

88

1010

1212

20162016 2042204220042004

Reserves: 260 Billion BarrelsReserves: 260 Billion Barrels

Oil

Rat

eM

illio

n B

arre

ls p

er D

ayO

il R

ate

Mill

ion

Bar

rels

per

Day

Production Rate: Based on Market Outlook Until 2016Production Rate: Based on Market Outlook Until 2016

Reserves Replacement 15 Billion Barrels (15% of Prob. & Pos. Reserves)

MSC = Production RateMSC = Production Rate

M S CM S CM S CM S CM S CM S CM S CM S C

50-Year Crude Scenarios 12 Million Barrels / Day12 Million Barrels / Day12 Million Barrels / Day12 Million Barrels / DayMaximum Sustainable Capacity Maximum Sustainable Capacity Maximum Sustainable Capacity Maximum Sustainable Capacity ---- MSCMSCMSCMSC

50-Year Crude Scenarios 12 Million Barrels / Day12 Million Barrels / Day12 Million Barrels / Day12 Million Barrels / DayMaximum Sustainable Capacity Maximum Sustainable Capacity Maximum Sustainable Capacity Maximum Sustainable Capacity ---- MSCMSCMSCMSC

20002000 20102010 20202020 20302030 20402040 2050205000

2033203320162016

M S CM S CM S CM S CM S CM S CM S CM S C

Oil

Rat

eM

illio

n B

arre

ls p

er D

ayO

il R

ate

Mill

ion

Bar

rels

per

Day

22

44

66

88

1010

1212

1414

Reserves Replacement 35 Billion Barrels (34% of Prob. & Pos. Reserves)

Reserves: 260 Billion BarrelsReserves: 260 Billion Barrels

MSC = Production Rate in 2016MSC = Production Rate in 2016

Production Rate: Based on Market Outlook Until 2016Production Rate: Based on Market Outlook Until 2016

• Real-Time Reservoir Management• Intelligent Wells / e-Field• 100 Million Cell Models• Best-in-Class Practices

• Real-Time Reservoir Management• Intelligent Wells / e-Field• 100 Million Cell Models• Best-in-Class Practices

The FutureThe Future

Lower Unit CostsLower Unit CostsLower Unit CostsLower Unit CostsIncrease RecoveryIncrease RecoveryIncrease RecoveryIncrease RecoveryLower Unit CostsLower Unit CostsLower Unit CostsLower Unit CostsIncrease RecoveryIncrease RecoveryIncrease RecoveryIncrease Recovery

SynopsisSynopsis

• Conservative Reserves with Significant Upward Potential

• Capacity and Commitment to Continue as a Reliable and Cost-Effective Global Oil Supplier

• Sustained Production Levels at 10, 12 and 15 Million Barrels per Day, Well Beyond 2054

• Conservative Reserves with Significant Upward Potential

• Capacity and Commitment to Continue as a Reliable and Cost-Effective Global Oil Supplier

• Sustained Production Levels at 10, 12 and 15 Million Barrels per Day, Well Beyond 2054