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Page added on July 23, 2012

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The Saudis are Going Green

Alternative Energy

Middle East governments are rolling out ambitious renewable energy programs, even as austerity measures hamper such development in Europe.

Among the latest signs of an apparent mass Arabian conversion to environmental activism is Saudi Aramco’s July 8 launch of a clean-energy venture capital arm.

“Saudi Aramco Energy Ventures (SAEV) represents a significant step forward in our corporate transformation to become the world’s leading integrated energy company with innovation as a key attribute,” Saudi Aramco CEO Khalid al-Falih said in a statement.

The OPEC kingpin is not the first Persian Gulf oil exporter to propose a strategic shift toward green technologies. That laurel goes to Abu Dhabi. In 2008, it started building a carbon-neutral community, Masdar City, set state renewable energy targets and created the $250 million Masdar Clean Tech Fund.

But when the CEO of the world’s biggest energy company makes an explicit strategy statement, the world needs to sit up and listen.

A glance through Saudi Aramco’s recent press releases show the powerful state oil company means environmental business.

In July alone it launched SAEV, pledged to plant 1.2 million mangrove trees along the Saudi coast and set aside land for the region’s first eco-park–at Ras Tanura, near its Persian Gulf oil export terminal. In June, the company announced a desert wild-life preserve. In March, it launched an oilfield water recycling program.

In February, Saudi Aramco sponsored the First Saudi Renewable Energy Conference and Exhibition at King Fahd University of Petroleum and Minerals, heralded as “a platform for a new start-up in the concept of renewable technology.”

“Not only does the company hope to utilize the best technologies to bolster its status as a key global competitor, but it intends to develop and produce such technologies as well,” said public affairs manager Nasser al-Nafisee.

This could all be green wash, but consider that the biggest buyers of Saudi crude are Asian countries which are not always squeamish about the environment.

An element of me-too-ism cannot be ruled out, as smaller Arab nations have led the region on environmental issues. The UAE, which includes Abu Dhabi, was the first Gulf Cooperative Council state to outlaw natural gas flaring at refineries and oil fields and to announce plans for commercial-scale carbon capture and storage; and the UAE hosts the secretariat of the UN International Renewable Energy Association (IRENA) at Masdar City.

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Meanwhile, Qatar was the first GCC state to join the World Bank’s international program to reduce flaring; the tiny emirate has done more than any other oil exporter to make natural gas, as LNG, an internationally available alternative to higher-carbon fuel oil and coal.

In May, Qatar’s deputy prime minister and long-time former oil minister,,Abdullah al-Attiya, took the chair of the next conference of Parties of the United Nations Convention on Climate change, to be held in Seoul at the end of the 2012. One of his recent acts was signing up Qatar as a founding member of the Seoul-based Global Green Growth Institute.

Oman, the smallest GCC oil exporter, has quietly taken notable steps to use renewable energy technology to power oil and gas production. As one example, state-controlled Petroleum Development Oman (PDO), a consortium that also includes Royal Dutch Shell as a major partner, is developing the world’s first commercial-scale solar-powered oil development with California’s GlassPoint.

Nonetheless, the scale of recent Saudi green initiatives is too large to be dismissed as copy-cat policy. In May, for instance, state-sponsored King Abdullah City for Atomic and Renewable Energy unveiled firm plans for a massive 41 GW of installed Saudi solar power capacity by 2032.

Much clean-energy development in the GCC is being driven by enlightened self-interest. All GCC states except for Qatar are short of natural gas for power generation and industry. They are urgently seeking viable alternatives to burning gas for steam-generation as they turn to exploiting heavier crude and re-injecting ever more associated gas into mature oil fields to enhance crude output.

Most GCC states are also striving to diversify their electricity supplies away from oil and gas-fired generation in order to maximize oil exports. In particular, Riyadh hopes to eliminate the need to burn as much as 800,000 b/d of Saudi crude in summer for power generation.

Sensible plans to integrate renewable energy with the region’s traditional oil business is a sign of the GCC energy sector coming of age.

In the long run, supplementing fossil fuels with energy from low-carbon sources could prove more effective in curbing global carbon emissions than stuttering Western policy drives that have failed to force a premature end to the petroleum age.

— Tamsin Carlisle in Dubai

Platts

 



10 Comments on "The Saudis are Going Green"

  1. Kenjamkov on Mon, 23rd Jul 2012 10:48 pm 

    The Saudis are finally admitting their oil will not last for ever. If they thought they had enough oil for 150 years like they always say they do, why waste the money now on expensive renewables, why not wait until the tech is cheaper 15-20 years down the road? Production is starting to slow down and they know they will not have enough for both export and domestic use.

  2. SOS on Tue, 24th Jul 2012 1:13 am 

    It will be the most expensive energy they can buy.

  3. BillT on Tue, 24th Jul 2012 1:56 am 

    There is no “renewable” energy except pure sunlight that is used to grow plants and heat water directly. ALL else depends on cheap plentiful energy to exist. It takes huge amounts of energy to make concrete and steel, the building blocks of cities and most any other commercial or industrial enterprise. There is a barrel of oil energy equivalent in every cubic yard of concrete poured in the world. When it is poured,that energy is lost forever. The steel locked inside is gone forever. Many cities will be colossal monuments to man’s stupidity in the next century as nature reclaims them for it’s own use.

  4. SOS on Tue, 24th Jul 2012 3:33 am 

    Yea, right. The oil wells in North Dakota and beyond, for at least the next 100 yrs, are going to perpetuate the status quo. The less government obstruction, the more cooperation will determine how much benefit the average citizen gets.

    Production figures dont lie. There are 625,000 barrels per day ready to come on line in North Dakota right now and thats only tha backlog. At least 5 wells/week producing around 2.000 barrels/day are coming on lilne with no end in sight.

    There is more oil in the Artic. Russa and Exxon are starting to deveope it. A lot of that oil will go down the Alaska pipeline. Good thing for us, too bad its not our jobs.

  5. DC on Tue, 24th Jul 2012 10:05 am 

    S.A better do it fast. How much fossil-fuel have they set fire to thus far in order to keep the desert AC’d? and build indoor skill hills? Billions at least. Did keeping all those pampered arabs cool have any value going forward? Well…no. Arabs survived millennia in the desert with no oil and no electricity, now, aside from a few of the tribes that stick to the old ways, hardly any arabs do. Any more than we fat North Americans know how to grow our own food or travel more then 50 feet to our cars to go any distance. S.A has what?…5years, maybe 10 tops to get all those panels in place, after that, its probably safe to say, the door will be shut, forever. And thats if, S.A. stops supporting terrorists in places like Syria and Iran, and stops wasting so much money on crappy amerikan weapons systems. I really doubt SA will ever achieve any of these goals. They are too lazy, un-skilled and infocused to get any complex task done. The Germans for examle, can , will and are doing it, now, not later. Arabs, not a chance.

  6. BillT on Tue, 24th Jul 2012 12:06 pm 

    Dream on SOS…that bubble is going to burst long before the oil is even partly gone. The decline of the economy is going to pull the plug on expensive alternate sources of energy including shale gas and oil and even the tar sands are probably going to fade out in the not too distant future.

    When the Age of Petro is over, there will still be billions of barrels of oil in the ground and trillions of CF of NG. Why? EROEI. If you do not understand that, then you will be blindsided by future events as your life slips into the past…lol.

  7. WhenTheEagleFlies on Tue, 24th Jul 2012 12:59 pm 

    SOS,

    Could you be more specific? What is the rock formation in the Arctic that has all this oil you’re anticipating?

    Former Petroleum Geophysicist

  8. Kenz300 on Tue, 24th Jul 2012 2:17 pm 

    Quote — ” Middle East governments are rolling out ambitious renewable energy programs, even as austerity measures hamper such development in Europe”
    ——————-

    The transition to safe, clean alternative energy sources is going on around the world. China has ramped up its latest 5 year plan for wind and solar power. The price of oil and coal keep increasing while prices for wind and solar are dropping. Clean energy is increasing its contribution to the worlds energy supply every day.

  9. BillT on Tue, 24th Jul 2012 2:37 pm 

    Kenz, the world has to downsize their total energy use to about 10% of today’s use before we come closer to being ‘sustainable’. Renewables are not really renewable without oil.

  10. Kenz300 on Tue, 24th Jul 2012 4:03 pm 

    Electricity from the wind, sun, waves and biomass drew $187 billion in 2011 compared with $157 billion for natural gas, oil and coal.

    Investing in renewable energy creates jobs, fosters economic growth, and improves energy security.

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