Why Saudi Arabia Is Looking for Oil and Gas in the U.S.

[IsailedawayfromFR]

As Saudi Arabia prepares to sell a piece of its government-owned oil company Aramco to investors next year, the country is sniffing around for new energy assets. And it has its eye on the oil and gas production in the United States.

The kingdom, which has tentatively planned an IPO in 2018 for Aramco, is reportedly focusing on American shale country, according to the WSJ, which cited several unnamed sources. The IPO itself is momentous. Taking Aramco public would end 38 years of complete state control of the largest oil producer in the world.

The implications of an IPO, which is expected to beat out Apple and Microsoft to become the world’s most valuable company, will likely have far-reaching effects. And not just on the markets and Saudi Arabia.

It would likely reshape Aramco into a more diversified company with oil-and-gas production assets outside of Saudi Arabia.

And that’s where American shale country comes in. According to the WSJ, Aramco has had early talks with Tellurian, the Houston-based liquefied natural gas developer, about taking a stake in the company or buying some of its fuel. The state-owned oil producer has also looked into buying assets in the Permian and Eagle Ford oil and gas basins. Other U.S. companies have been approached about natural gas export deals, reported the WSJ.

These talks, as tentative and early as they might be, illustrates a dramatic shift for Aramco. It also points to how the booming shale-oil industry in the U.S. has weakened Aramco’s position.
http://fortune.com/2017/12/20/saudi-arabia-oil-aramaco-us/

[thackney]

... the CEO of Saudi Aramco, Amin Nasser...

...Nasser said the company plans to almost double its refining capacity. He did not say specifically that the Saudi state oil company is looking to buy other firms, but there is no other way it could achieve that level of growth....

https://realmoney.thestreet.com/articles/12/22/2017/putting-together-shopping-list-saudi-aramco

[IsailedawayfromFR]

What I found interesting in article is this

However, the country uses some of its oil reserves to produce electricity. If it can use more natural gas to produce electricity, Aramco can save its more valuable crude oil for export.

I guess SA has some crude-burning generators?

@thackney

[IsailedawayfromFR]

... the CEO of Saudi Aramco, Amin Nasser...

...Nasser said the company plans to almost double its refining capacity. He did not say specifically that the Saudi state oil company is looking to buy other firms, but there is no other way it could achieve that level of growth....

https://realmoney.thestreet.com/articles/12/22/2017/putting-together-shopping-list-saudi-aramco

Seems Citgo would be a easy target as it has a willing seller, right?

[thackney]

What I found interesting in article is this

However, the country uses some of its oil reserves to produce electricity. If it can use more natural gas to produce electricity, Aramco can save its more valuable crude oil for export.

I guess SA has some crude-burning generators?

@thackney

As of 2015, 44% of their electricity was from oil.  The rest is NatGas.

In 2000, it was 54% oil.

https://www.iea.org/statistics/statisticssearch/report/?country=SAUDIARABI&product=electricityandheat&year=2015

[Bigun]

What I found interesting in article is this

However, the country uses some of its oil reserves to produce electricity. If it can use more natural gas to produce electricity, Aramco can save its more valuable crude oil for export.

I guess SA has some crude-burning generators?

@thackney

@IsailedawayfromFR @thackney

Found this article https://www.eia.gov/todayinenergy/detail.php?id=18111

It does not say so but I doubt seriously that crude oil is directly firing turbines to drive generators.  I think it FAR more likely that it is being used to fire boilers which produce dry steam to power the turbines which drive the generators.  Just informed speculation on my part.

[thackney]

@IsailedawayfromFR @thackney

Found this article https://www.eia.gov/todayinenergy/detail.php?id=18111

It does not say so but I doubt seriously that crude oil is directly firing turbines to drive generators.  I think it FAR more likely that it is being used to fire boilers which produce dry steam to power the turbines which drive the generators.  Just informed speculation on my part.

Riyadh crude oil-fired power plant details
https://www.power-technology.com/projects/riyadh/
“The PP 9 construction, together with an expansion of the existing PP 8 facility, made Riyadh the largest crude oil-fired power plant in the world.”

At the start of 1994, the Riyadh site comprised twenty simple-cycle ABB gas turbines. PP 7, PP 8 and PP 9 commitments for a total of 2,000MW were made in stages, starting in early 1994 when GE reached an agreement for the supply of six gas turbines to expand PP 7 by 300MW.

In November 1994, GE signed a contract for a 350MW extension of PP 8 worth $164m. Each of the six gas turbines ordered has a capacity of 59MW, and is used in simple-cycle mode. The expansion took unit seven capacity up to 1,150MW. Crude oil is the primary fuel, with distillate as a backup.

[thackney]

@IsailedawayfromFR @thackney

Found this article https://www.eia.gov/todayinenergy/detail.php?id=18111

It does not say so but I doubt seriously that crude oil is directly firing turbines to drive generators.  I think it FAR more likely that it is being used to fire boilers which produce dry steam to power the turbines which drive the generators.  Just informed speculation on my part.

Note: they do have steam units as well.

http://www.powerengineeringint.com/articles/2016/05/saudi-arabia-starts-up-jeddah-south-oil-fired-power-plant.html

The first phase of Saudi Arabian state-owned utility Saudi Electricity Company’s (SEC) 2640 MW Jeddah South supercritical heavy oil-fired power plant came online this week, the company has announced.

“After three-and-a-half years of continuous work, Saudi Electricity Co has successfully operated and linked the first steam unit to the electricity grid with a capacity of 660 MW,” SEC said in a statement.

The announcement comes ahead of schedule as original projections were for operation to be achieved in 2017. A date for commissioning of the entire plant has not been announced.

The $3.12bn project has been in the works since 2012 and SEC said it uses supercritical boilers for the first time in Saudi Arabia.

[Bigun]

Riyadh crude oil-fired power plant details
https://www.power-technology.com/projects/riyadh/
“The PP 9 construction, together with an expansion of the existing PP 8 facility, made Riyadh the largest crude oil-fired power plant in the world.”

At the start of 1994, the Riyadh site comprised twenty simple-cycle ABB gas turbines. PP 7, PP 8 and PP 9 commitments for a total of 2,000MW were made in stages, starting in early 1994 when GE reached an agreement for the supply of six gas turbines to expand PP 7 by 300MW.

In November 1994, GE signed a contract for a 350MW extension of PP 8 worth $164m. Each of the six gas turbines ordered has a capacity of 59MW, and is used in simple-cycle mode. The expansion took unit seven capacity up to 1,150MW. Crude oil is the primary fuel, with distillate as a backup.

OK! Thanks!  My personal experience with SCECO is more than thirty years old now but I know for a fact that they had had least one very large steam facility under construction in the Eastern Province in 1979.  I also wonder what they mean when they say "The combined cycle plant (PP 9)..."  What do the words "Combined Cycle" mean in this case?

Never mind!  I found it.

PP 9 comprised four GE STAG 407EA combined-cycle units. Each unit consists of four MS7001EA gas turbines, each rated at 83.5MW at ISO conditions, four heat recovery units, one 100MW steam turbine, five generators and one air-cooled condenser. The gas turbines were manufactured in GE’s gas turbine plant in Greenville, South Carolina, while the steam turbines and generators were manufactured in GE’s Schenectady, New York, facility.

[IsailedawayfromFR]

It does make more sense to me that SA unearth the 300 tcf they are sitting on rather than spend the time and money to invest in natural gas here in US.

What am I missing?

[thackney]

It does make more sense to me that SA unearth the 300 tcf they are sitting on rather than spend the time and money to invest in natural gas here in US.

What am I missing?

They do not want to use up any gas pressurizing, or to be used to pressurize, Ghawar?

[IsailedawayfromFR]

They do not want to use up any gas pressurizing, or to be used to pressurize, Ghawar?

I see 300 tcf being way, way more gas than Ghawar could possibly utilize.

Besides, a lot of Ghawar is pressurized by water injection besides returning associated gas.

In time, CO2, not natural gas, will be the injection medium as recoveries will optimize from this giant field.

There are massive gas reservoirs such as the Khuff that are yet to be exploited underlying much of the ME including SA.  I analyzed exploration of these in Kuwait, Qatar and UAE.

[Joe Wooten]

Note: they do have steam units as well.

http://www.powerengineeringint.com/articles/2016/05/saudi-arabia-starts-up-jeddah-south-oil-fired-power-plant.html

The first phase of Saudi Arabian state-owned utility Saudi Electricity Company’s (SEC) 2640 MW Jeddah South supercritical heavy oil-fired power plant came online this week, the company has announced.

“After three-and-a-half years of continuous work, Saudi Electricity Co has successfully operated and linked the first steam unit to the electricity grid with a capacity of 660 MW,” SEC said in a statement.

The announcement comes ahead of schedule as original projections were for operation to be achieved in 2017. A date for commissioning of the entire plant has not been announced.

The $3.12bn project has been in the works since 2012 and SEC said it uses supercritical boilers for the first time in Saudi Arabia.

I have a friend who helped build/start-up several power plants in SA back in the 80's and 90's. He told me most of the operations staff were Americans, Europeans, Japanese, and S. Koreans. The titular shift supervisors were tribal guys picked for a cushy job and were scared to death about touching any controls. One told him he believed there were djinn living in the plant computer who did not like humans touching them. 

[thackney]

I have a friend who helped build/start-up several power plants in SA back in the 80's and 90's. He told me most of the operations staff were Americans, Europeans, Japanese, and S. Koreans. The titular shift supervisors were tribal guys picked for a cushy job and were scared to death about touching any controls. One told him he believed there were djinn living in the plant computer who did not like humans touching them.

Those are the one you don't want touching any controls.

[IsailedawayfromFR]

I have a friend who helped build/start-up several power plants in SA back in the 80's and 90's. He told me most of the operations staff were Americans, Europeans, Japanese, and S. Koreans. The titular shift supervisors were tribal guys picked for a cushy job and were scared to death about touching any controls. One told him he believed there were djinn living in the plant computer who did not like humans touching them.

Am shamed to admit it, but I felt kinda the same way in my EE class.  Electricity remains a mystery to me, even though I am an engineer for many years.

Glad to have guys like you and thackney there to do that type of work so I can play with my rocks and fluids.