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"It is not possible to continue infinite consumption and infinite population growth on a finite planet.”
-- Michael Ruppert, WSJ, 4/11/09


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Page added on September 10, 2011

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Saudi Arabia’s Energy Problem

Saudi Arabia’s Energy Problem thumbnail

Saudi Arabia, home to more proven oil reserves than any other nation, has an energy problem. HSBC estimates that this year the kingdom will burn 1.2 million barrels of oil a day to generate electricity, double the amount burned in 2010. With the amount of crude oil burned domestically climbing sharply, it is leaving less and less oil (NYSE:USO) for exports.

The solution for the desert kingdom? Use natural gas, both conventional and unconventional, to meet domestic energy needs.

About a year ago Khalid al-Falih, head of Saudi Aramco – the world’s biggest oil company – announced that the kingdom could hold trillions of cubic feet of unconventional natural gas (NYSE:UNG). If so, this easily outpaces the country’s current proven gas reserves of 7.461 trillion cubic meters.

That estimate from the Aramco CEO though is just a guess. In a recent report, the Energy Information Agency said only 15% of the kingdom has been “adequately explored” for gas.

Saudi efforts to exploit this resource have been slow off the mark.

In its latest annual report, Saudi Aramco said it plans to boost natural gas output by more than 50% to 15.5 billion cubic feet of gas a day by 2015. The U.S. produced more than 21 trillion cubic feet of natural gas in 2010.

Meanwhile, almost 15% of Saudi Arabia’s current natural gas production is lost to venting, flaring and re-injection, the EIA found.

Progress is finally being made. The $10 billion Karan offshore gas field is now operating after four years of development. Production is expected to reach 1.8 billion cubic feet of gas a year when it is fully operational in 2013. By that time, Saudi Aramco also plans to bring online two other gas sources – Wasit and Shaybah – adding another 5 billion cubic feet of capacity.

The Saudis still face difficulties in bringing more natural gas production onstream.

One problem is that about 55% of its gas is associated with oil fields, which means it is linked to oil production and OPEC quotas. Of the rest, only about 25% is free from sulfur and thus easily recoverable.

Much of the new natural gas production is already slated to be used in the kingdom’s efforts to diversify the economy. A key part of that effort is a $20 billion joint venture between Saudi Aramco and Dow Chemical (DOW) that focuses on natural-gas intensive petrochemicals.

One prediction is that Saudi Arabia will only have 6 million barrels a day of oil available for export by 2030, compared with 7.4 million barrels a day in June.

“The country’s domestic consumption of energy, especially oil, at very cheap prices, is likely to continue to rise rapidly, sharply reducing the amount of oil available for export,” Jadwa Investment said in a report.

the etf daily news



6 Comments on "Saudi Arabia’s Energy Problem"

  1. dorlomin on Sat, 10th Sep 2011 12:34 pm 

    Export land a go go

  2. Kenz300 on Sat, 10th Sep 2011 7:33 pm 

    Domestic consumption of oil is subsidized and growing rapidly because of the cheap price and growing population. They live in a desert. Solar power should be at the top of the list for energy generation.

  3. pike on Sat, 10th Sep 2011 8:58 pm 

    They run out of oil they can all die as martyrs like they all want down there in the middle of nowhere.

    Crazy bustards.

  4. BillT on Sun, 11th Sep 2011 3:33 am 

    They will stop exporting oil long before 2030. Maybe by 2020. The same can be said for most of the oil exporting countries today. But, you never hear that mentioned in the news.

  5. SilentRunning on Sun, 11th Sep 2011 5:23 am 

    An exponentially increasing population will outstrip any finite resource. It is simple math – but too complicated for the vast numbers of uneducated humans.

  6. Gale Whitaker on Tue, 13th Sep 2011 4:44 am 

    When the oil is gone they can go back to wandering through the desert and pretending to be Kings and princes. They will have to do without the Chevas Regal, cocain and european women. Oh what will the Talaban do with out the millions of dollars donated to their cause.