[rockdoc123]

I am sure the oil experts around here will pipe up if I messed up that explanation of why reservoirs in KSA are not likely to flow better from Fracking technology in the future.

You got most of it correct, however, the devil is often in the details. Fracking for many years was mainly used in conventional reservoirs to get past damage zones (the area closest to the well bore that for one reason or another had it's permeability adversely affected). It is still done today although operators tend to be a lot more careful with mud weights when drilling, checking for reservoir compatible fluids etc. So my guess is that Aramco has already fracked a number of wells to clean up damage.

The nature of the reservoirs in Saudi are such that, as you say, there are lots of porous and permeable carbonates and sandstones that are largely responsible for production. That being said, there are areas where those same reservoirs were deposited in a different facies and are tighter. Those zones would be the subject of investigation with fracks at some point in time.

Currently Aramco is ramping up their unconventional gas E&P with a plan to begin fracking tighter reservoirs (mainly tight sandstones and carbonates and to a much lesser extent shales). To date they have fracked a number of wells successfully and are trying out all sorts of new technologies. This is a method by which SA plans to increase its available oil for export given they currently consume large quantities of oil for fuel useage and that can be supplanted with natural gas. I described all of this in the Saudi Arabia thread a couple of weeks ago.

[Newfie]

Tandas writing makes me jealous!

[Hawkcreek]

re:
I think the Saudi measures to deal with the current glut will create a successful, to one degree or another, private sector in Saudi Arabia.

How? ME culture women do all the work while men sit around, smoke, and drink mint tea. Saudi Culture, Saudis sit around and collect Govt stipends while a few highly paid, but mostly exploited and under-paid foreigners do all the work.

Too many people, and no resources but oil will soon equal violent unrest, crackdowns, and ultimate upheaval. I think they're screwed.

I agree with you, P1. The comments on the technical side of this thread have been excellent, but I believe that the culture of a country has much to do with the direction that they eventually go. I think they're screwed.

[onlooker]

I think also you cannot separate the socio-religious factors at play either in that whole region. The Middle East is now a tinder box waiting for more fuel to set in on fire. The sheiks and royalty of KSA are not very esteemed by the common people and they are I believe universally regarded as hypocrites, preaching religious doctrines and enacting tough measures while they themselves live lavish lives and consort with the devils of the West. Of course the other problem is they have been late to make provisions for reality when the oil dwindles significantly.

[Revi]

I read an interesting article in which the author argued that the Saudi's are pumping as much as possible so that they can turn their reserves into Swiss Bank Accounts for their relatives and friends before the while country goes cracker dog and kicks them out. It makes sense to me when viewed in that light. They have to pump into a down market because they have no idea how long they will be in power. They already have problems with the Shia in the east and their border with Iraq in the west. It's only a matter of time before the insurgents want to grab Mecca. What do you think?

[ROCKMAN]

Can anyone honestly beleive those at the top of the KSA food chain haven't been burying nuts in foreign accounts from the day of their first oil sale decades ago? This has never been an elected govt with any form of inderpendent oversight. No congress or SEC...just the co-chairmen of the "mob". LOL.

Why anyone would bother to run out such obvious old news right now is uncertain. Except perhaps as a rather weak attempt to explain efforts to max govt revenue by selling as much oil as possible instead of the obvious: to maintain civil stability by keeping their citizens' feed trough as full as possible.

[rockdoc123]

I read an interesting article in which the author argued that the Saudi's are pumping as much as possible so that they can turn their reserves into Swiss Bank Accounts for their relatives and friends before the while country goes cracker dog and kicks them out. It makes sense to me when viewed in that light. They have to pump into a down market because they have no idea how long they will be in power. They already have problems with the Shia in the east and their border with Iraq in the west. It's only a matter of time before the insurgents want to grab Mecca. What do you think?

I think....dios mia, another conspiracy theory.
They continued to pump and increase production because they were trying to regain market share. That makes perfect sense. The problem was they did not anticipate the resiliency of the US shale industry. IN the past when they opened the taps it only took less than a year to shut down high cost producers...this time the supply picture has been much steadier than in the past. Not sure why there is a desire to make the Saudis out as evil other than an overdose of Schadenfreude. Their job isn't an easy one given they are the keepers of the holy sites in Mecca and Medina.

As Rockman and others point out the Saudis are heavily invested in the US, UK and parts of Europe and Far East. You just have to take a stroll down Curzon Street in Mayfair during the summer and count the number of limos sitting out in front of small walkups worth millions of pounds to get a sense of their reach. My guess is the Dorchester is booked solid throughout the summer by folks from the Middle East.

[SeaGypsy]

"isil aim to take Mecca", google that if in doubt, for a 'conspiracy theory' it has a pretty wide following.

Personally I have been similarly disgusted with the Saudi ruling classes as with ISIL for years. I have a brother in law working in Saudi for 10 years, he would be called a slave if treated the same here.

[Tanada]

People have been predicting revolution and overthrow of the KSA sultans since at least the early 1980's. I can remember reading in ?National Geographic? that KSA was ripe for revolution and that it would send world oil prices up to unprecedented levels because the oil fields would be badly damaged in the fighting.

[Widdles3]

I don't how Saudi Arabia will weather the low oil prices. However, this paper looks at the potential of coal-fired power generation in the Saudi power mix. Of course, it's in the context of all power generation, not in isolation.

http://papers.ssrn.com/abstract=2749596

[Hawkcreek]

I read an interesting article in which the author argued that the Saudi's are pumping as much as possible so that they can turn their reserves into Swiss Bank Accounts for their relatives and friends before the while country goes cracker dog and kicks them out. It makes sense to me when viewed in that light. They have to pump into a down market because they have no idea how long they will be in power. They already have problems with the Shia in the east and their border with Iraq in the west. It's only a matter of time before the insurgents want to grab Mecca. What do you think?

I think....dios mia, another conspiracy theory.
They continued to pump and increase production because they were trying to regain market share. That makes perfect sense. The problem was they did not anticipate the resiliency of the US shale industry. IN the past when they opened the taps it only took less than a year to shut down high cost producers...this time the supply picture has been much steadier than in the past. Not sure why there is a desire to make the Saudis out as evil other than an overdose of Schadenfreude. Their job isn't an easy one given they are the keepers of the holy sites in Mecca and Medina.

Doesn't look like a conspiracy theory to me. Just another possible explanation for their actions. When you state that there is only one possible explanation--- yours, it makes it look like you are trying to misdirect the conversation --- ?
Or is that another conspiracy theory?

[ROCKMAN]

T - "...that KSA was ripe for revolution." Hell, lots of places have been "ripe for revolution" for quit a while: Venezuela, Transnistria, West Papua, Texas, etc. LOL.

[careinke]

People have been predicting revolution and overthrow of the KSA sultans since at least the early 1980's. I can remember reading in ?National Geographic? that KSA was ripe for revolution and that it would send world oil prices up to unprecedented levels because the oil fields would be badly damaged in the fighting.

I've started predicting that, after my first deployment there in 1979. Thirty seven years later, the Royal Family is still in charge. The House of Saud are masters in balancing the powers of the Military, National Guard and Religious Police. This deters a takeover by force of the house of Saud by any one of the three powers. As the other two powers, would be in opposition of the attempted takeover.

Since my first deployment I have watched the slow loss of the little freedom they enjoyed, as the Wahhabi Sunni sect expands their influence, not just in KSA but worldwide. Covering women's hair was a custom not mandatory, there were movie theaters in Dhahran, and the country was aggressively trying to enter the 20th century.

Today, the only country I can think of that has less freedom for their population is maybe North Korea. Honestly, I think Bush should have included the KSA in his Axes of Evil.

That said, I think it will be hard to displace the Royal Family anytime soon, even though I hold out hope for an "Arab Spring" for the country.

[ROCKMAN]

"...think Bush should have included the KSA in his Axes of Evil." Unfortunately the US has a long history of siding with one different axis or or another if it APPEARS to suit our goals. Like France: we should have sided with the Vietnamese and bitchslapped the Frogs. LOL.

Seriously...Vietnam would have made a great Asian ally for the US.

[rockdoc123]

Doesn't look like a conspiracy theory to me. Just another possible explanation for their actions. When you state that there is only one possible explanation--- yours, it makes it look like you are trying to misdirect the conversation --- ?
Or is that another conspiracy theory?

You would have to have never picked up a newspaper to not understand the fight for market share that was going on. Why would they make up a story that would just piss off the rest of OPEC?
There is a clear economic argument for what they did and they did not anticipate the pain lasting as long as it has.
Reason 1 why that proposal is from out of left field is that by increasing production and dropping prices the Saudis threw away any chance they had of a balanced budget (a miss by about $50 billion in 2015). That money was earmarked for social programs and internal investments that create jobs for Saudis. Having to back off on those investments is a clear way to risk rebellion of the masses. If they were interested in only feathering their nests and keeping the hoy paloy at ease they would have kept prices high at the expense of market share over the short term.

[Synapsid]

Widdles3,

Thanks for this.

As you say, they're looking at various possible mixes of energy sources. It interests me that nuclear is mentioned, as I've come across mention of a plan (when they have the money) for building a fleet of nuclear plants, 10 eventually. I wish I'd kept the links; one described a canal system for supplying cooling water to plants built along it.

Not this fiscal year, I expect.

[Widdles3]

There were plans in 2012 for 17.6 GW of nuclear capacity, but they have been scrapped due to technical and political obstacles. There was no political will to move on it.

[ROCKMAN]

Speaking a potential ME coal market:

Platts)--3 Jun 2016 - In a rare move, a Capesize vessel laden with Colombian thermal coal has made its way to the Persian Gulf, according to S&P Global Platts cFlow trade-flow software and trade sources this week. The MV Pioneer, a 171,681 dwt Capesize ship, reached the outside port limits of Mina Saqr in the United Arab Emirates on May 25, after it sailed from the Colombian port of Puerto Bolivar on April 17.

Shipowner-cum-operator Oldendorff's transloader is currently unloading the cargo and that will be completed in about a week, according to market sources. Coal trading sources pointed out that this was a rare fixture, however, there can be similar shipments, depending on FOB Colombia versus FOB South Africa coal prices as well as freight rates. "There was an arbitrage opportunity as the freight [rates were low}, and also the South African coal prices were higher [at that time]," said a coal trader. Market sources said it would be difficult to see sustained imports of Colombian coal into the Asia Pacific and Middle East region, given the freight advantage of other origins.

"Currently, the global coal market is strongly oversupplied, mainly due to the slowdown in Chinese demand and imports into developed countries. So it's very simple to find very cheap coal on the market. Honestly, I think Middle East countries could find more easily better deals from Indonesia, South Africa or rather from the Russian Federation," said Luigi Bruzzone, an analyst at Banchero Costa. "Columbia has to rely on the [Asia Pacific] as a market in five years from now as demand from Europe is set to drop even further," said Mercuria Energy Trading's Director for Dry Bulk and Energy Fabio Gabrieli at the recently concluded Coaltrans Asia conference in Bali.

Most of the coal imports into Mina Saqr are mainly used in cement and steel production. The cement industry in the UAE has taken advantage of an increase in the number of building permits issued, which was an average of 19% per annum from 2009 to 2014. Crude steel output had increased by an average of 48% per annum from 2006 to 2015. The first four months of 2016 had registered a 10% increase year on year, according to data from Banchero Costa.