Manifa to Yield 500,000 b/d by 2013 and 900,000 b/d by 2014 -- Aramco

by David Rachovich

                                Source: Saudi Aramco via OffshoreEnergyToday.com Feb 23, 2011

                                                       Source: Saudi Aramco website 

                [Click on map to enlarge]

                                                                             Source: Saudi Aramco via EIA, here.

"Significant progress was achieved in 2010 on Manifa, the giant Arabian Gulf offshore field under development [emphasis mine and please see map and images above -- D.R.]," Saudi Aramco said in its 2010 annual review, published on Monday (June 6).

"Project elements completed during the year included all drilling islands, as well as the main and lateral causeways. Construction of the Manifa Central Processing complex has begun, with the main spine and process area pipe rack completed. The Manifa development will accommodate a Central Processing Facility with gas-oil separation, wet crude handling, crude stabilization, gas gathering and compression, produced water disposal, water injection and other related facilities. Field development includes 41 km [25 mi] of causeways and 3 km [1.9 mi] of bridges to support 27 [man-made] drilling islands for the shallow water wells, and 13 offshore platforms for deeper water producing and water injection wells. Onshore facilities include 15 drill sites, a Central Oil and Gas Processing Facility, water supply wells and injection facilities, and multiple gathering, water injection, and product transportation pipelines," it added.

"Manifa is designed to produce in staged increments --- 500,000 [barrels per day] bpd of Arabian Heavy crude oil by 2013 and 900,000 bpd by 2014," the report said. And output "will be used as feedstock for planned refineries in the Kingdom [i.e., for two new deep-conversion refineries at Jubail and Yanbu -- D.R.]."

The Manifa Drilling Team set a new record in December 2010 when it finished drilling the longest well in Saudi Arabia to a total depth of 32,136 ft (± 9.8 km) and completed a horizontal power water injector across the Lower Ratawi reservoir. Calgary Precision Drilling rig did the work on the Manifa well. The same drilling team set an earlier record while working on the 30,850 ft (+9.4 km) Manifa well.

Discovered in 1957, Manifa field is in shallow waters southeast of Tanajib, about 200 km (124 mi) northwest of Dhahran. The oil production started when the C reservoir came on stream in 1964, and the B reservoir was brought on production in 1974. Manifa produced heavy crude oil with about 27° API gravity. The field was shut in during January 1984, due to low demand with less than 1% of the reserves produced (Saudi Aramco Journal of Technology, Summer 2009).

Development strategy of Manifa, the world's fifth-largest oil field, is based on optimum use of onshore drilling. Instead of developing Manifa completely from offshore platforms, it is developed from 27 offshore man-made drilling islands connected by a causeway, in addition to onshore drill sites and offshore platforms. Extended-reach wells such as the two mentioned above are required for optimum field coverage. "Manifa field is located in shallow and environmentally sensitive waters, necessitating maximizing drilling from onshore sites while minimizing offshore platforms," the report argued. Actually, the state-of-the art extended reach drilling (ERD) technology reduces the high capital and operating costs of large offshore structures (jackup rigs or shallow water rigs, with legs that reach the bottom of the sea floor) and at the same time minimizes the environmental impact in this sensitive near-shore area.

"The Kingdom's longer-term concern is over whether it needs to increase oil production capacity to meet likely future demand. The Saudi view on oil markets has altered sharply from where it was a year ago, when a battered global economy was still limping out of recession. Riyadh thinks medium- to long-term oil demand growth may be higher than it had previously anticipated, driven by China, India and also Middle East itself, and discussions are now taking place on whether the Kingdom should raise oil output capacity beyond its current 12.5 million b/d," Petroleum Intelligence Weekly (PIW) said in its article "Saudis Consider Need to Raise Output Capacity." "Now, while no decisions have yet been made and while work is unlikely to start this year, expansions at Shaybah, Manifa and Khurais are back on the table," it maintained. "Aramco has already decided to bring forward the 10 billion- 14 billion bbl Manifa project, and could now expand its capacity from 900,000 b/d to 1.2 million b/d," the article said.

During the May 2010 Offshore Technology Conference, Zuhair Al-Hussain, Aramco vice-president, drilling and workovers, said production from Manifa will start in mid-2013 but will not ramp up quickly to the original target of 900,000 b/d of Arab heavy crude (Oil & Gas Journal via my post).

Saudi Aramco Annual Review 2010 is available for download on the Saudi Aramco website at: http://www.saudiaramco.com/content/www/en/home.html#news%257C%252Fen%252Fhome%252Fnews%252Fpublications-and-reports%252Fcorporate-reports0%252FAnnualreview.baseajax.html

(Update 1: Saudi Oil Minister Ali al-Naimi, chairman of the board of directors at Saudi Aramco toured oil and natural gas installations in the country on October 16, 2012, as part of a review of the country's long-term energy prospects. During the tour with the Board members, HE Naimi launched the Manifa Field’s reservoir water injection operations in preparation for first phase production of Arabian Heavy crude oil at an initial capacity of 500,000 barrels per day (bpd) in the first half of 2013, and which will gradually increase to 900,000 bpd by 2014. The crude oil from Manifa will feed local refineries that are currently under construction, namely the 400,000 b/d SATORP refinery in the easterm Saudi Arabian city of Jubail with France’s Total, and the 400,000 b/d YASREF in Yanbu' on the Red Sea, the joint venture with Sinopec of China (Aramco has said the new Yanbu refinery, which joins two existing refineries at Yanbu, will produce 90,000 b/d of gasoline, 263,000 b/d of ultralow sulfur diesel, and 6,300 tonnes/day (tpd) of petcoke as well as 1,200 tpd of sulfur--see OGJ Online, Dec 3, 2012), and the upcoming Jazan refinery, which has received Board approval for financing, and the project’s contracts are expected to be awarded in the coming weeks---please see Saudi Aramco website/Latest news, Dhahran, Oct 16, 2012 Update 2: Saudi Aramco has let a contract to Houston-based KBR for front-end engineering and design of an integrated gasification combined-cycle power plant in conjunction with a 400,000 bpd refinery under development at Jazan Economic City, Saudi Arabia, according to OGJ Online, Oct. 22, 2012. The IGCC plant, which KBR says will be the world’s largest such facility, will gasify vacuum residue to supply electricity to the refinery and make 2.4 Gw available to Jazan and the surrounding region---please OGJ Online, Nov 13, 2012. Update 3: Production has begun from the first phase of development of Manifa oil field offshore Saudi Arabia and is expected to reach 500,000 bpd by July [2013]. The start-up was 3 months ahead of schedule, according to Saudi Aramco---please see "Manifa oil flow starts offshore Saudi Arabia," OGJ Online, April 15, 2013 -- D.R.)

Indonesia to Fall Short of 2011 Oil Output Target - BPMigas

Platts, May 25, 2011
Indonesia's crude and condensate production this year will likely average between 933,000 b/d and 945,000 b/d, below its target of 970,000 b/d as a result of unplanned shutdowns, the chairman of upstream regulator BPMigas said Tuesday [please see remarks below -- D.R.].

"The average production this year is expected [to] reach 933,000 b/d in minimum or 945,000 b/d in maximum," R. Priyono said in a parliamentary hearing. [...]

Gas production is now expected to average 7.808 Bcf/d, exceeding its target this year of 7.769 Bcf/d, Priyono said. [...]

The country's oil and gas revenue in 2011 is now seen reaching $31.088 billion, well above the target of $26.554 billion, as crude and gas prices are expected to be higher than previously forecast. [...]

Indonesia's crude and condensate output has been steadily sliding for at least the last decade [also, please see my post "Top 8 Oil Producers in Asia & Oceania, 2006-2010," and please see remarks below -- D.R.] because of natural declines at aging fields. But the government hopes to be able to produce 1 million b/d of crude and condensate by 2013.

The country failed to achieve its 2010 crude target of 965,000 b/d, pumping only 947,000 b/d. However the country exceeded last year's gas production by 17.4% to 8.88 Bcf/d from a target of 7.56 Bcf/d [sic; target - 7.758 Bcf/d? -- D.R]. [Read full]

(According to BPMigas data, Indonesia's oil production was only 916,000 barrels per day as of the end of April 2011---please see The Jakarta Post, June 3, 2011, here.  Indonesia's crude oil production has been declining since 1997, due to the maturation of the country's largest oil fields and failure to develop new, comparable resources. In 1996 it produced 1,547,486 barrels of crude oil including lease condensate per day---please see EIA's data, here. Indonesia was a member of the Organization of Petroleum Exporting Countries/OPEC from 1962 to 2008. In 2004, the country became a net oil importer and in January 2009, suspended its OPEC membership. BPMigas and the Indonesian government have introduced policies aimed at increasing investment in the country's upstream sector - in particular via investment incentives and improving the flexibility of the production sharing contracts/PSC bidding process---read more U.S. EIA, Indonesia Country Analysis Brief, May 2011, here. According to the Oil & Gas Journal's Jan 1, 2011 estimate, Indonesia's proved oil reserves stand at 3.99 billion barrels. Indonesia was the third-largest exporter of liquefied natural gas/LNG in the world in 2009, following only Qatar and Malaysia. And in 2010, it was Japan's third-largest LNG supplier, after Malaysia and Australia---please see charts, here -- D.R.)

Shale Gas Revolution -- Shale Can Support [U.S.] LNG Exports: Chesapeake

Platts, May 26, 2011
Shale gas pioneer Chesapeake Energy is confident unconventional gas plays would support proposed US LNG export projects, and believes the US could produce more than 90 Bcf/d of gas at prices are "not that high," a company executive said Wednesday.

"We have a very strong mandate from our CEO to export (LNG from the US)," Bill Wince, vice president of transportation and business development at Chesapeake, said during a panel presentation at CWC’s Americas LNG Summit here. [...]

Chesapeake last year signed a preliminary agreement to supply as much as 500,000 Mcf/d to Cheniere Energy’s proposed LNG export project in Louisiana, which aims to start exporting in 2015. Chesapeake is also talking to the proposed LNG export project in Freeport, Texas, Wince told Platts on the sidelines of the conference, declining to comment on the relative merits of the two proposals.

Current US production stands at 64-65 Bcf/d, Wince said during his presentation. [Also, please see my post "Natural Gas Production/Consumption Retrospective 2010." -- D.R] [...]

The Marcellus play needs a price of only $2.45/Mcf to provide a 10% rate of return, according to a slide he [Wince] presented. The Haynesville play needs a $4.25/Mcf price to provide the same rate of return, while the Fayetteville play needs a price of $4.70/Mcf and the Barnett play needs a price of $5.05/Mcf, the slide showed. [...]

Current production from four major shale areas is 15 Bcf/d, he said, adding that the advent of low US gas prices in recent years coincided with shale production gains. [...]

US shale production is greatly reducing basis differentials in the US market, which historically have been caused by transportation costs between producing and consuming regions, Wince said.

"We crush the basis,” he said about Chesapeake, which ranks as the country’s second-largest gas producer [after ExxonMobil -- D.R.], producing 2.7 Bcf/d in the first quarter. [...]

A significant amount of LNG import infrastructure was built last decade before the shale boom was well understood, as industry players expected LNG to make up for projected decreases in domestic gas production.

Shale gas crowds out Yemen LNG 

Yemen LNG was primarily designed to sell significant LNG volumes to the US, but "the market disappeared,” Jean-Pierre Cave, head of commercial and shipping at Yemen LNG, said at the conference. [...]   

Based on last week’s ruling [May 20] by the US Department of Energy authorizing Cheniere to export US-produced LNG from Sabine Pass [please see my post "Cheniere Gets OK to Ship LNG Overseas," -- D.R.], Bill Cooper, president of the Center for LNG industry group, said he expects other proposed US export projects to get similar approval. [...] [Read full]

(According to the U.S. Energy Information Administration/EIA, in the past 10 years, U.S. shale gas production has increased more than 12-fold from 0.39 trillion cubic feet/tcf in 2000 to 4.87 tcf in 2010. In 2010, U.S. shale gas production constituted 23 percent of total U.S. natural gas production---please see here. In 2009, the U.S., with its big shale gas resources, even surpassed Russia as the world's largest natural gas producer---please see EIA's data, here. -- D.R.)

Top 6 Oil Producers in Central & South America, 2006-Feb. 2011 -- EIA

by Aaron and David Rachovich

Production of Crude Oil including Lease Condensate (Thousand Barrels Per Day), 2006-Feb.2011

Rank	Country	Feb 2011	Jan 2011	Full Year 2010	Full Year 2009	Full Year 2008	Full Year 2007	Full Year 2006
1.	Venezuela	2,240	2,240	2,146	2,239	2,394	2,433	2,511
2.	Brazil	2,062	2,122	2,055	1,950	1,812	1,748	1,723
3.	Colombia	862	840	786	671	588	531	531
4.	Argentina	631	627	642	654	661	679	696
5.	Ecuador	509	500	486	486	505	511	536
6.	Trinidad & Tobago	100	96	98	107	114	121	143
Top 6 countries		6,404	6,425	6,213	6,107	6,074	6,023	6,140
Central & South America total		6,598	6,622	6,414	6,300	6,281	6,236	6,355
All Countries (World*)		74,604	75,393	74,049	72,282	73,670	72,985	73,428

*Updated figures for June 1, 2011, i.e., at the time of writing this post.

Source: U.S. Energy Information Administration (EIA), International Energy Statistics, here and here.

(Figures above may be updated again at any time by EIA. Update: please see my post "Argentina's Senate Approves Bill to Expropriate YPF," Apr 27, 2012, including remarks and explanations for Argentina's decline in oil production since its peak in 1998. Also, please see our post "World's Top 22 Oil Producers, Full Year 2010 (including OPEC and plus 2009 production)," here coupled with our posts "Top 8 Oil Producers in Asia & Oceania, 2006-2010," and "Africa's Top 8 Oil Producers, 2006-2010." And our post "Top 25 World Oil Consumers, 2009-2010," here. -- D.R.)

German Government Plans Total Nuclear Shutdown by 2022

Deutsche Welle, May 30, 2011
As public opposition to nuclear power remains high, the German government has announced new plans to phase it out completely in the next 11 years. And the proposal may have a chance at support from the center-left.

The German government on Monday announced plans to completely phase out nuclear energy by 2022, a 14-year acceleration of its previous plans.

Environment Minister Norbert Röttgen announced the proposal in the early hours of Monday, after a 12-hour marathon meeting between Chancellor Angela Merkel's Christian Democrats (CDU) and the junior coalition partners, the Free Democrats (FDP).

"It's definite: the latest end of the last three nuclear power plants is 2022," Röttgen told reporters. "There will be no clause for revision."

Last October, the German parliament voted in favor of a much slower nuclear shutdown, lasting until 2036. The government said that it was necessary to ensure the supply of Germany's energy needs.

After the nuclear disaster at the Fukushima nuclear power plant in Japan [please see my March blog posts under the category/label "Japan." -- D.R.], public opposition to nuclear energy sharply increased. In March, Merkel announced a temporary shutdown of seven older nuclear plants [Chancellor Angela Merkel decreed that the country's nuclear power reactors which began operation in 1980 or earlier, i.e., Biblis-A, Neckarwestheim 1, Brunsbüttel, Biblis-B, Isar 1, Unterweser, Phillipsburg 1, should be immediately shut down---please see my post/remarks, here. Those units then closed and were joined by another unit/Krümmel already in long-term shutdown, despite having started up in 1984, making a total of 8336 MWe offline under her direction, about 6.4% of the country's generating capacity. -- D.R.]

The new timeline would keep those [...] [eight] plants offline permanently. Six more would be shut down in 2021, and three would stay on until 2022 to ensure no disruption to power supply [Thus, all 17 of the country's nuclear plants will be shut by 2022 -- D.R.]. [Read more]

(Before March's moratorium on the older power plants, nuclear power supplied 23% of Germany's electricity. The United States is the world's biggest nuclear-electricity producer, followed by France, Japan, Russia, South Korea and Germany, according to the 2009 data---please see here. -- D.R.)

Study: North America Dominates Global Shale Gas Market

by Jonathan Katz, IndustryWeek, May 26, 2011
North America will hold a 78% share of the global shale gas production in 10 years because of the region's technical expertise and availability of resources, according to a report released May 25 by Markets and Markets [please see remarks below -- D.R.].

In 2010 North America was the only region active with commercial shale gas production. But current exploration and production activities by major oil and gas companies in Europe and Asia Pacific are expected to lead to shale gas commercialization in these regions by 2016, the report says.

The markets representing high growth rate in shale gas production from 2016 to 2021 are China (6.2%), Poland (6%), France (5.4%) [regarding shale exploration in France, please see my post "Shale Gas Development in Europe" below -- D.R.], South Africa (5.1%) and the United States (5%).

Global shale gas production is expected to grow to 6,991 billion cubic feet in 2021 at a compound annual growth rate of 5.4% [sic; from 2011] through 2021. [Please see remarks below -- D.R.]

Rising shale gas production will likely boost ethylene production by 6.6% by 2021. Ethylene is a feedstock [that can also be] derived from natural gas that is used in petrochemicals. [Also, please see my post, including remarks, here -- D.R.]

Challenges that could hinder shale gas development include the capital-intensive nature of shale gas projects and environmental issues associated with hydraulic fracturing. [Full story]

(Please see a press release from Markets and Markets "MarketsandMarkets: Global Shale Gas Market to reach 6.9 tcf by 2021 and With 78% Market Share North America Continues to dominate the Shale Gas Market." According to the U.S. Energy Information Administration/EIA, in the past 10 years, U.S. shale gas production has increased more than 12-fold from 0.39 trillion cubic feet/tcf in 2000 to 4.87 tcf in 2010. In 2010, U.S. shale gas production constituted 23 percent of total U.S. natural gas production---please see here. For exploration of shale gas in Poland, please see my post "Marathon, Nexen to Jointly Explore Shale in Poland," here. For shale gas in Europe, please see my post "World Watch [Shale Gas Development in Europe]," here. For China's quest for unconventional gas, please see my post "China Plans to Exploit its Shale Gas Resources," here. For Mexico's first shale gas production, please see, inter alia, here. Also, please see Table: Estimated Shale Gas Technically Recoverable Resources for Select Basins in 32 Countries, Compared to Existing Reported Reserves, Production and Consumption during 2009 --- EIA, here. -- D.R.)