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Saudi Arabia - Crude Oil Production Costs.

The cost of producing crude oil in Saudi Arabia is the lowest in the world. In the 1950s, the net well-head cost was less than 7 US cents/b. In early 1990, the cost from 14 operating fields, with the Ghawar fields taken as one unit, was put at 50-63 cents/b - calculated on the basis of output then ranging from 5.38m b/d, which was Saudi Arabia's OPEC quota for the first half of 1990, to 7.2m b/d.

Now the average of well-head costs is over $3/b (95 cents/b in 1997), and experts predict higher costs in the coming years in view of falling reservoir pressure in some fields. Well-head costs in Najd are relatively high in view of technical problems there in the past 16 years (see background in omt14SaudiFieldsOct5-09).

Dammam, Saudi Arabia's first oilfield and now known as "Prosperity Well", is being re-explored for development. Found in 1938, it produced 32m barrels from its Well 7 before Dammam was shut. The Ghawar fields produced over 65bn barrels from 1951.

SA's CEO Khaled al-Faleh in May 2011 said Well 7 was still able to produce crude oil and Dammam had 500m barrels of Saudi Arabia's proven oil reserves. He said: "There is a plan to drill trial wellsto assess the feasibility of the extended reach target. It is challenging to drill an extended reach well". Damman is rich in symbolism, being near SA's HQ and historically Dammam 7 is where everything began for the oil sector. The target is to pump 75,000 b/d of crude and 100 MCF/d of gas.
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Comment:Saudi Arabia - Crude Oil Production Costs.
Publication:APS Review Oil Market Trends
Geographic Code:7SAUD
Date:Oct 3, 2011
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