SAUDI ARABIA - OIL, GAS, PETROLEUM - GOOD OVERVIEW

Benefits, burdens of Saudi oil and gas First Posted: 3:15 am - August 9th, 2015 - 666 Views By Wolf D. Fuhrig Since 1938, the 30 million inhabitants of the Arabian peninsula have richly benefited from their second-largest underground petroleum deposits and their fourth-largest gas reserves in the world. At present, these holdings rank second only to the United States, which also is the most important buyer of Saudi oil. After six years of exploration, the Saudis began to produce and export their oil in 1944. When Saudi Aramco grew into the biggest private petroleum producer, the government promptly nationalized the company. By the year 2000, 12.3 percent of all oil produced worldwide came from Saudi Arabia, according to official data. At present, the country’s oil reserves are estimated to amount to 262.7 billion barrels. Available data give the Saudis eighth place worldwide in refining capacity. That enables them to produce heating oil, gasoline, kerosene and diesel, mostly for countries without refineries. The Saudis have been a reliable supplier of oil for the Western world, except during the Yom Kippur War between Israel and Egypt in 1973 and the Islamic revolution in Iran. During the Second Gulf War in 1991, they exported all of their production to fill Iraq’s and Kuwait’s capacity and thus stabilize the market.  [Iran Revolution: 1979] Until 2006, the kingdom of Saudi Arabia produced 9 million barrels daily when worldwide the annual total was 3,942 billion tons. By 2007, however, the Soviet Union bypassed the Saudis’ daily output. Some experts theorize that they intentionally curtailed their production to increase the price of oil. Recently, dealers in the United States asked the Saudis to raise their production quotas. At a conference in 2008, Saudi King Abdullah urged oil producers and consumers to cooperate more in order to avoid what he called “damaging speculation.” His country remains the industry’s leader with 16 per cent of the world’s petroleum output and 49 known oil and 16 gas fields. Since 2002, over 90 percent of the Saudis’ production has come from only seven giant fields, of which six have pumped over 300,000 barrels daily. Recently it appeared that the productivity of those seven fields has been declining. In 2006 Aramco announced that all of the Saudis’ oil fields have reached a “phase of stagnation” and that the rate of production was going to decline by 8 percent annually. This estimate has since been confirmed by the American investment banker and oil expert Matthew Simmons. At present, oil and gold are going through a selling panic due to the strong dollar and China’s economic slowdown. The pending nuclear agreement between the United States and Iran may soon bring millions of more gallons of oil into world markets. In the meantime, new technologies, especially horizontal drilling, have created an oil glut in the United States. If President Obama succeeds with his proposal for severe restrictions on carbon emissions, that also could lower American coal and oil production. Saudi petroleum minister Ali al-Naimi explained his veto of increases in OPEC’s output last year that it was “crooked logic” for low cost producers to sacrifice market share in support of crude oil prices. Saudi commentators looking for motives beyond maintaining market share have given three strategic reasons: King Salman’s accession to the Saudi throne on Jan. 23; the growing geopolitical unrest surrounding Saudi Arabia; and the accelerating progress of North American shale operators. The Saudis claim that they can produce as much as 12 million barrels a day. The CIA lists the kingdom as the second largest source of proven crude oil reserves after Venezuela. Ironically, Saudi Arabia is currently a net importer of gasoline and diesel. It also continues to burn a large amount of crude oil to produce electricity. At present, Saudi Arabia still remains the largest exporter of petroleum based on its possession of 18 percent of the world’s proven reserves. Its oil and gas sector comprises about 50 percent of its gross domestic product and about 85 percent of its exports. Wolf D. Fuhrig of Jacksonville holds a doctorate in public law and government from Columbia University in New York City. http://myjournalcourier.com/news/84500/benefits-burdens-of-saudi-oil-and-gas --------------------- COMMENT How much they burn up producing electricity explains their desire to set up nuclear power stations. Iranian oil coming onto the market can't be too good for the Russians right now? I don't really understand the concept of 'maintaining market share' and its relationship with slowing production.   They're increasing the price by slowing the production?  Yes, a veto of increasing production.  Means the price is up because it's scarce ... but I've forgotten how this impacts on Russian oil.   Also, I thought prices were DOWN and that this wasn't good for the Russians, who are under sanctions pressure etc.  Don't know.  I've obviously missed something somewhere.  Might have to think about it some other time.  lol Just some trivia, I'll probably never remember. *Good Article

US - UNPRECEDENTED REVIVAL OF US OIL PRODUCTION - CRUDE OIL EXPORTS SURGED JUNE, TOPPING 1957 SUEZ CRISIS EXPORTS - THANKS SHALE OIL DRILLING TECHNOLOGY

U.S. oil exports reach milestone: June shipments highest since 1957 By Reuters Media on Aug 7, 2014 at 11:47 p.m. NEW YORK — News this week that U.S. crude oil exports had surged in June to reach the highest since 1957 raised a question not often asked: Why did U.S. exports suddenly surge, then just as quickly drop, nearly six decades ago? In March 1957, the United States exported a record 455,000 bpd of crude, up from just 40,000 bpd in the same month a year earlier, data from the U.S. Energy Information Administration showed. A year later, exports were back to just 27,000 bpd. Unlike the current export boom, fueled by new shale oil drilling technology that has unleashed an unprecedented revival in U.S. production, the abrupt rise and fall in the 1950s was the result of political turmoil in the Middle East. In July 1956, Egyptian President Gamal Abdel Nasser nationalized the Suez Canal, the waterway constructed some 90 years earlier connecting the Mediterranean Sea to the Red Sea. The 101-mile seaway was a crucial link between big oil producers and European refiners, ferrying some 1.2 million bpd to Western Europe, particularly to Britain and France. The move was seen as punishment for the United States and Britain withdrawing funding for the Aswan High Dam, but it also stung European nations who were losing sway over former colonies and led to a global struggle known as the Suez Crisis. Israel, France and Britain moved troops into the region to assert their control, bringing commercial oil flows through the canal to a halt — with dire consequences for Europe. Alternative routes were far too long to compensate. “(The oil) could go around the Cape Horn, but that was difficult and there was limited shipping capacity,” said Dr. Philip K. Verleger Jr., president of consultancy PKVerleger LLC and a former advisor to President Carter. At the time of the nationalization, Britain had around six weeks’ worth of supply of oil on hand, and France had only slightly more, according to Rose McDermott’s book Risk Tasking in International Politics. Amid pressure from Washington and growing economic strain, oil-starved nations in Europe removed their troops from territory and the United States started pushing crude oil across the Atlantic. By November 1956, oil exports jumped to 285,000 bpd from 47,000 bpd a month prior, according to the EIA data. The Canal reopened in April 1957, allowing Europe to resume direct shipments and bringing a quick halt to U.S. exports.  ... The current rise in exports has been more measured and is likely to be much longer-lasting. Shipments from U.S. shores in June rose to 389,000 bpd, a 35 percent increase from May, with most of that oil going to Canada. But while the exports have recently reached modern-day highs, they are still a much smaller fraction of U.S. supply. “Back then, a couple thousand barrels a day would be a big deal. But now, we’ve got a story of the North Dakota and Texas boom and a production figure of some 8.5 million barrels a day.” http://www.thedickinsonpress.com/content/us-oil-exports-reach-milestone-june-shipments-highest-1957

Yellow is current market.
Pink is some interesting history re Suez Canal Crisis and small peak in US oil export.

Current news:  US crude oil export SURGED ... and here's why:

current export boom, fueled by new shale oil drilling technology that has unleashed an unprecedented revival in U.S. production,

I'm new to looking at this stuff and thought that shale was only connected with gas/LNG.

I'm unclear how crude oil and shale drilling are connected.

Is crude oil the same as 'shale oil'?   No idea.  Random site has this to say about 'oil shale':

Oil shale is unevenly distributed around the world.  The United States possesses roughly 70% of world oil shale deposits, with the vast majority located in the Green River shale regions in Colorado, Utah and Wyoming. 

Fears over domestic energy supplies sparked small oil shale booms in the 1950’s due to Cold War energy concerns, and again in the 1970’s as a result of the Arab oil embargo.  But by 1980, the federal government had assembled a pot of subsidies, price supports, loans, and other incentives luring major oil companies to make substantial investments in the Piceance Basin area of western Colorado.  This boom would be short lived.  On May 2, 1982 -- “Black Sunday” -- ExxonMobil pulled out of oil shale due to falling oil prices and vanishing federal subsidies.  The economy of western Colorado collapsed and the entire state of Colorado entered an economic slump as a result.
Reemergence of oil shale

Oil shale has returned to the world stage due to rising oil prices and concerns about national energy independence.  What has not changed is the lack of a technology capable of turning oil shale rocks into transportation fuels in a commercially viable manner.    [SOURCE]

Not sure about that last point.  Couldn't see a date on the page, so I don't know how current the info is.

As I understand there's a shale boom, so the 'lack of technology' part doesn't sound right.

There's three types of shale energy deposits - here - Liquid (shale oil), Gas (shale gas) and Solid (oil shale).  The first two are good; the solid form is crap commercially because it's not easy to break down for fuel. 

I think I need to go to shale school, because I'm still not really clear on how 'crude oil' relates to shale.

Anyway, thanks to current technology, there's a boom in crude oil production and export in USA!!!

HELLO, EUROPE!!!