Saudi Arabia is home to the world’s largest conventional oil field. The Ghawar field is roughly 160 miles long and about 16 miles wide, and it has solidified itself as a major indicator of the global economy.
It was first located in 1948 by geologists working for the Saudi Arabian state oil company Aramco. Years later, Saudi Arabia and oil would become synonymous.
The field has been pumping out 5 million barrels per day (bpd) for more than ten years now, reaching its peak in 1990 at 6.5 million bpd, according to Yahoo! Voices. No other oil field has ever generated more oil for a longer period of time; an important figure when the demand for oil worldwide continues to increase each year.
To sustain such production, in 1965 Aramco started to inject water into the reservoir. At present day, Aramco will blast 7 million gallons of sea water into the more than 300 active wells to maintain efficiency and add pressure for extraction. During this process a roughly 30% “cut” in the oil is formed, Yahoo! Voices reports.
The real question isn’t how pure the oil is, or how long it has been producing at such a remarkable level, but for how long this oil field can maintain its consistency of production.
This is a topic of much debate. Some experts believe the Ghawar has reached its peak and is in decline. Saudi Arabia will dispute that position every step of the way and assure the public that the Ghawar will continue to produce at current levels for years to come. The nation claims the field most likely has 50 billion barrels left to extract.
It’s hard to say if the world be able to depend on Saudi’s Ghawar oil field in the future. Aramco rarely releases data about its oil fields; when it has, the reports have always been wildly disproportionate to the facts.
But right now, Saudi Arabia is in the driver’s seat and still very much relied upon by the rest of the world.
Eurasia Review reported:
Saudi Arabia is the world’s largest exporter of petroleum liquids, and it is a key oil supplier to the United States, Europe, and Asia.
It goes on to say:
Saudi Arabia produced on average 11.6 million bbl/d of total petroleum liquids in 2012. In addition to 9.8 million bbl/d of crude oil, Saudi Arabia produced 1.8 million bbl/d of natural gas liquids (NGL) and other liquids. Saudi Arabia, a leading world producer of NGL, has experienced a rise in demand for NGL from developing countries, including India (the leading export destination), where it is used for cooking and transportation.
Saudi Arabia maintains the world’s largest crude oil production capacity, estimated at a little less than 12 million bbl/d at the end of 2012 (other petroleum liquids, which are not subject to OPEC quotas or production targets, are produced at full capacity). Saudi Arabia’s long-term goal is to further develop its lighter crude oil potential. Although the Ministry has not committed to increasing capacity, potential increases to 15 million bbl/d capacity were discussed at a summit in Jeddah in June 2008.
And Saudi Arabia most definitely has the means to process and refine its commodities. The nation controls the world’s largest oil processing facility, as well as a crude stabilization plant that is unmatched. It has many refineries both operational and in development.
But as strong and as in control as Saudi Arabia appears from the outside, it’s hard not to take into account the possibility that its natural resources could run out, and it may be sooner than later.
If worst comes to worst, Saudi Arabia could be facing a double edged sword down the line—a possible oil decline and also alternatives that are popping up globally.
The U.S. is one possible threat that could aid in toppling the oil dominance of Saudi Arabia. It may be a bit preconceived, but the Bakken Shale formation is being hailed as the next big thing to shake up the world economy, and it could vastly shuffle the players in the oil trade—namely Saudi Arabia.
The continued growth and output of the Bakken could see it producing 1 million bpd by August of 2013. The Bakken is similar to the Ghawar in size; the main difference is that the Ghawar is a conventional field, where oil is easier and cheaper to extract. The Bakken is an unconventional field, where resources are extracted through fracking, and its boundaries are unclear.
The Bakken currently has 5,000 wells in operation, but estimates are saying the region could support upwards of 52,000, Reuters confirms.
How this all will play out is still far, far away.