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Aramco Plans Record Rig Count in 2013

Source: Reuters 1/22/2013, Location: Middle East

Saudi Aramco plans use a record number of rigs this year, more than 170, to search for unconventional gas while drilling for oil needed to maintain the world's biggest spare capacity cushion, three industry sources in Saudi Arabia said.

The world's biggest oil producer is to deploy an additional 30 rigs this year, taking its total to over 170, the sources said, to search for gas to meet rapidly rising demand at home while maintaining its oil production capacity at 12.5 million barrels per day (bpd) as flows from some older fields decline.

"The rigs will be for gas exploration and development and oil development," an industry source in Saudi Arabia said.

Saudi oil officials say they do not see any need to raise the country's oil production capacity beyond the current 12.5 million bpd as they have never come close to testing those levels and see oil production rising elsewhere.

Saudi Arabia has rarely needed to pump more than 10 million bpd, even while making up for supply losses from Libya and Iran over the last two years. A surge in North American and Iraqi production has also taken pressure off Riyadh to spend billions of dollars more on boosting its capacity further.

State-run Saudi Aramco declined to comment on its rigs plans. But industry sources in Saudi Arabia said the additional rigs would be deployed mostly in northwestern parts of the country where Aramco plans to explore for unconventional gas, drill deep offshore in the Red Sea, and develop oil prospects.

"They want to have the ability to produce more (oil) rather than producing more," one of the sources said.

Some of the additional rigs will be used for maintenance, or drilling for water to reinject into oilfields to boost production and because oil fields need to be repeatedly drilled to maintain healthy production levels.

"If Saudi production continues at its current high levels of output or rises further, the rig count will continue to go up based on technical factors, as has been the case in many other oil and gas basins in the world," said Sadad al-Husseini, a former top executive at Saudi Aramco.

Since completing a costly oil capacity expansion programme in 2009-2010, Saudi Aramco has focused on increasing gas production. It raised its conventional gas reserve estimate to 283 trillion cubic feet (tcf) in 2011. It has said unconventional gas resources may rival conventional gas reserves.

Oilfield Service Company Schlumberger said on Jan. 18 that Saudi Arabia's rig count could rise by about 25 rigs this year to 160, though global oil demand would grow at a similar pace to 2012 and spare capacity would be unchanged.

Saudi Arabia cut its crude oil production by around 700,000 barrels per day (bpd) over the last two months of 2012, with output falling to around 9 million bpd in December.

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