Saudi Arabia is beginning an oil exploration push that it says is expected to turn up 100 billion barrels of new oil in existing fields in the Kingdom and in unexplored regions including in the Red Sea. The effort is also expected to increase the company's natural gas production by 40 percent by 2014. Saudi Aramco executive said Tuesday the company plans to drill its first deepwater exploratory well in the Red Sea by year-end. “We are optimistic about the potential for significant discoveries,” said Amin Nasser, Saudi Aramco senior vice president upstream, at the IHS CERA conference in Houston. “We expect to start drilling in the deepwater by the end of this year.” Deepwater and shallow water drilling are key components of Saudi Aramco's long-term goal of finding at least 100 million barrels of energy resources within the Saudi Arabian kingdom in the next several decades, Nasser said. The company is also working on increasing its rate of oil recovery from fields to 70 percent from 50 percent in coming years. “The program was designed to ensure that we continue to have ample spare capacity to meet underestimated energy demand,” he said. Saudi Arabia has 267 billion of so-called proven reserves, about one-fifth of the world's total. “Proven reserves” is an industry term that means oil or gas that has been discovered and could be produced with today's technology. The world consumes about 89 million barrels of oil per day, or 32.5 billion barrels per year. The industry describes a field as giant if it has 500 million barrels of oil or more. He said geological surveys suggest that the oil will be found in “frontier” areas in the Kingdom, including in the shallow and deep waters of the Red Sea. Nasser said shallow water drilling has begun already and that deep water drilling will begin later this year. “We are very optimistic about the potential for significant discoveries,” he said. He also said improved oil extraction techniques will allow the country to pull 70 percent of the oil from its existing fields, up from 50 percent. The natural gas push is being made to handle strong growth in Saudi Arabian power demand. Nasser said power demand is rising 7 percent a year. He also said that Saudi Aramco will improve its research and development capabilities by doubling the number of scientists who work for the company and opening research centers around the world. The first new research center will be in Houston, he added, though he did not say when it would be established. Oil prices rose above $105 a barrel Wednesday amid expectations that an improving US economy will eventually boost crude demand. By early afternoon in Europe, benchmark oil for April delivery was up 40 cents to $105.10 in electronic trading on the New York Mercantile Exchange. The contract fell $2.02 to settle at $104.70 per barrel in New York Tuesday. In London, Brent crude was up 78 cents at $122.76 per barrel on the ICE Futures exchange. Crude has jumped from $75 in October because of diplomatic tensions with Iran, a major oil producer, and as US economic indicators including employment have slowly improved over the last few months.
