[TheDude]

This seems to suggest as much:

From the Middle East Times: Walker's World: $200 oil is coming

The problem will come "not because of below-ground resource constraints but because of inadequate investment by international oil companies and national oil companies," argues Professor Paul Stevens, senior research fellow for energy at Chatham House, Britain's top think tank on international affairs.

Stevens argues that the constraints on skilled manpower and engineering capacity are so strong, he sees little prospect of the Organization of Petroleum Exporting Countries reaching its announced goal of investing $160 billion between now and 2012.

"Even Saudi Arabia, whose record on capacity expansion plans has been superb, is facing questions over its ability to deliver," he notes. "The Khursaniyah expansion, which was due on-stream at the end of 2007, is now expected in mid-2009. Furthermore, there have been 'widespread reports of delays on start-up targets for the majority of its upstream program.'"

Stevens, author of the Chatham House report "The Coming Oil Supply Crunch," has just retired after 15 years as professor of petroleum policy and economics at the Center for Energy, Petroleum and Mineral Law and Policy, based at the University of Dundee in Scotland. (The professorship was created by BP.)

[rockdoc123]

I haven't seen reference yet to mid-2009. The big hold up is the gas plant which has been stalled due to lack of necessary equipment and labor. Last offical note I saw was December 2008 commissioning for the facility which means start up not that far after that. Things may have slipped further though I suppose.

This is one of the problems with a rapid rise in oil prices. All of a sudden a lot of projects that had been mothballed are being revisited which means there is increasing stress on manpower, steel, etc.

Ironically it looks like higher prices have actually kept Aramco from meeting their spare capacity target on time. This is actually pretty unusual for the Saudis, their record is pretty good when it comes to project delivery.

[bkwillia]

I love how everyone has a reason for high oil prices that is an explicit downplay of geological limitations.

It's the petrodollar's decline.

Its underinvestment

Its lack of man power and materials

Its geopolitical

Its terrorism

Its the environmentalists

Its biofuels- yeah OPEC has used that one.

No one wants to admit it. Its the lack of giant pressurized light sweet oil deposits that require only a few dollars per barrel to exploit. If there were more of these, all of the above would not matter.

We are now steaming heavy crude out of truck loads of sand and then mixing it with gas condensate just to make it flow. This would be laughable back when oil sprayed out of well heads in a giant fountain.

This Khursaniyah project involves over 100 well heads for water injection and oil extraction. As I understand it, the oil production is ready, but the gas processing plant is not. The condensate is now too valuable to the heavy crude industry to be flared off.

[DantesPeak]

Oil & Gas Journal
July 14, 2008
Volume 106; Issue 26

Aramco to hike oil production capacity by 850,000 b/d

Watkins, Eric

Saudi Aramco, repeating long-announced plans, will increase production by yearend by a combined 850,000 b/d from its Khursaniyah , Nuayyim, and Shaybah fields, according to a senior official.

Amin Al Nasser, Aramco's senior vice-president for exploration and production, said the company will bring Khursaniyah on stream by yearend, adding 500,000 b/d of oil production, while boosting output at Shaybah to 750,000 b/d from 500,000 b/d, and bringing newly developed Nuayyim field to 100,000 b/d.

Looking farther ahead, Al Nasser said his country's output will increase by an additional 900,000 b/d in fourthquarter 2009 when Aramco will bring on stream its large-scale Manifa heavy oil field, where construction is now 55%) complete.

Last month, Saudi officials acknowledged that the Khursaniyah oil field expansion project, which it had planned to bring on stream last December, was still not producing oil, but that much of its 500,000 b/d capacity is ready.

According to Khalid al Falih, Aramco's executive vice-president of operations, the delayed start-up was due to problems in the construction of a gas processing plant in the field. While the Saudi national firm could bring on most of Khursaniyah's capacity if needed, according to Falih, he said the gas would have to be flared - something Aramco wanted to avoid.

"The gas plant is a major delay. It's really a disappointment," Falih said. "All of it will be ready in a few months."

Oil Daily
July 25, 2008
Volume 58; Issue 143

Saipem wins Manifa award.(International)(Saudi Arabian Oil Co.)(Brief article)

Saudi Aramco has awarded Italian oil services giant Saipem a lump sum turnkey contract for the 900,000 barrel per day Manifa project, Saipem said Thursday.

The Italian firm won the engineering, procurement and construction contract to build three gas/oil separation (Gosp) units, each with a capacity of 300,000 b/d. Saipem said it will also complete the gas dehydration, crude inlet manifolds and flare gas system.

Industry sources suggested Aramco was holding off because of the large number of oil and gas projects being carried out in the kingdom almost simultaneously, tying up available materials and labor.

Snamprogetti is trying to get the first of two trains for the 500,000 b/d Khursaniyah Gosp up and running by August. That would be 11 months behind the scheduled completion date. The Italian company is also building the Gosp and several other units for the 1.2 million b/d Khurais project, which Aramco steadfastly maintains will start on time by June 2009, in the face of skepticism among industry experts.

[no links]

[TheDude]

Megaprojects shows Khurais in 2010 and Manifa in 2011. Hmm...some hits on Google News for Aug 14th:

Halliburton confident oil's slide will not reduce orders

Halliburton, which opened an office in Dubai last year in a bid to win more international business, confirmed in April that it had won a large three-year contract in Saudi Aramco's offshore Manifa field, which has a production target of 900,000 barrels of oil per day.

"We're just in the ramp-up phase and are waiting for some of the drilling rigs to become available, so that project is more ahead of us at this point in time," Lesar told the agency.

"We'll probably get started at the latter part of this year, but certainly as we get into early next year," he said.

Heard yesterday about 3 ENSCO rigs leaving the GOM.

Halliburton confident oil's slide will not reduce orders

Khurais project

Khurais will produce 1.2 million barrels a day once completed and is state-run Saudi Aramco's biggest project to boost capacity 11 per cent to 12.5 million barrels a day in 2009.

"Khurais is going very well and is coming to an end," said Lesar. "It is on track and on time."

The Khurais field will operate by June 2009, and Manifa will add heavy crude from onshore and offshore fields from mid-2011, according to Aramco.

"Khurais Ahead of Schedule"? The 2010/11 dates use sources like BusinessWeek, after all. I'll post these at TOD with a linkback to this thread.

[ROCKMAN]

Were those shallow water rigs Dude? The shelf work has been drying up for years. A lot of the shallow water GOM activity the last couple of years has actually been focused on hurricane repairs. There so much of that work out there that someone built the biggest special purpose lift vessel just to recover GOM toppled platforms.

[TheDude]

Dunno, Nate mentioned it at TOD the other day. Looking at their website they only have the one deepwater rig operating in the GOM, but 6 more under construction.

[rockdoc123]

Persian Gulf water depth is pretty shallow in most places.
The existing fields in Saudi would only need normal jack-ups....not the deep jack-ups like Key Manhattan or Key Gibraltor (if memory serves these are capable of 600' water depths).
I need to look through my old clippings but it seems to me Aramco was out tendering a number of new jack-up builds. Delays in offshore rig and platform construction are fairly common right now which may be one of the pressures they are experiencing.

[copious.abundance]

Looks like it's started production.

--> Bloomberg <--

Saudi New Oil Field, Khursaniyah, Starts Production, MEES Says
By Maher Chmaytelli

Sept. 5 (Bloomberg) -- Saudi Arabia has begun production at the Khursaniyah oil field that will eventually pump 500,000 barrels a day, said the Middle East Economic Survey, citing an unnamed official at state-owned oil company Saudi Aramco.

The field was initially due to come on stream at the end of 2007, the Cyprus-based weekly newsletter said, attributing the delay to contractors' inability to deliver equipment on time.

Saudi Arabia pumped about 9.5 million barrels of crude a day last month and has a production capacity of about 10.8 million barrels a day, according to Bloomberg estimates.

Aramco is also working to add production capacity at its Shaybah, Manifa and Khurais oil fields and by 2009 aims to have boosted its production capacity to 12.5 million barrels a day.

[ROCKMAN]

I saw that too OF2. I wonder how much the upcoming OPEC meeting to discuss rates played in the timing of this press release. Seems like a big potential stick, if true, to use on the other members.

[copious.abundance]

^
Wouldn't it be funny if they went through all that effort and money to get this project up and running only to be told by the other members of OPEC that, in effect, it wasn't wanted or needed?

[rockdoc123]

Wouldn't it be funny if they went through all that effort and money to get this project up and running only to be told by the other members of OPEC that, in effect, it wasn't wanted or needed?

my impression is they wouldn't care. The whole point of this long term effort to increase spare capacity is that the Saudis realize we are running out of oil. As a consequence their ability to control the market is only as good as what they have in their back pocket at any given time to throw into the market, they don't immediately need the foloose, basically an investment in their future. They were extremely concerned about alternatives replacing oil....I suspect they are less concerned and hence will probably protect a higher floor price.

[Tanada]

I see it repeated in several places that 500,000 bbl/d is the ultimate goal, but how much can it pump right now if need be?

[TheDude]

I see it repeated in several places that 500,000 bbl/d is the ultimate goal, but how much can it pump right now if need be?

Ask a Sheik!

AFK Ph 2 (Abu Hadriya; Fadhili; Khursaniyah) is supposed to come online early next year; Ph 1 is what's up and running now, if I have this straight. Ph 1 is 300 kb/d, Ph 2 200 kb/d, according to the Wiki Megaprojects page, which is all sourced from Aramco press releases and the like.

Living on the edge: OPEC spare capacity | Energy Bulletin

Year old piece from Dave Cohen, who in June told the crowd at TOD they were a bunch of uninformed dillrods and hasn't blogged much since. Think he's having a time out; hope he publishes more since his stuff is excellent copy.

[Tanada]

I see it repeated in several places that 500,000 bbl/d is the ultimate goal, but how much can it pump right now if need be?

Ask a Sheik!

AFK Ph 2 (Abu Hadriya; Fadhili; Khursaniyah) is supposed to come online early next year; Ph 1 is what's up and running now, if I have this straight. Ph 1 is 300 kb/d, Ph 2 200 kb/d, according to the Wiki Megaprojects page, which is all sourced from Aramco press releases and the like.

Living on the edge: OPEC spare capacity | Energy Bulletin

Year old piece from Dave Cohen, who in June told the crowd at TOD they were a bunch of uninformed dillrods and hasn't blogged much since. Think he's having a time out; hope he publishes more since his stuff is excellent copy.

Thanks for the data and the link, both are appreciated!

My understanding is when the newly built very large refinery in India goes online later this quarter it will suck up heavy sour crude now on the market from KSA which is not being currently sold due to lack of world refining capacity for it. IMO that will allow KSA to add .5Mbbl/d to exports and releive some pressure on the world market for refined products.

Mumbai-based Reliance group's petroleum unit expects to commission the new refinery at its Jamnagar complex by December. Completion of the refinery, in which Chevron Corp. owns 5 percent, will increase Reliance's ability to process crude oil to 1.24 million barrels per day, equivalent to about 2 percent of global capacity.

Complexity, Flexibility

The refinery has the scale, complexity and flexibility to supply any market that offers the highest price. It can process lower-cost, high-sulfur and heavy-crude grades into premium, low- sulfur fuels and ship them at lower transport costs because of its location close to the Arabian Peninsula, Bernstein Research said in a report in June.

Reliance may export gasoline and alkylate to the U.S. West Coast in summer and to Asia in the winter, while supplying low- sulfur, less-polluting diesel to Europe, the report said.

Alkylate is a gasoline-blending component that improves fuel quality and cuts emissions of carcinogenic hydrocarbons.

from Bloomberg Aug 8 2008

[TheDude]

Subscription - $1100/year to be precise:

Aramco delays Khursaniyah output rise

Problems at associated gas plant stall plans for field to start full production of 500,000 barrels a day.

Commentary at same site (MEED):

Riyadh should welcome oil production delays

There certainly seems to be much less anxiety in Saudi Aramco's ranks now than earlier in the year over its failure to hit deadlines for the 500,000-b/d Khursaniyah oil increment, the largest field due to come on line in the world this year.

Missing the original completion date of December 2007 was largely due to labour and material shortages. But the fact that the delay will now reach a full year is a serious blow to Aramco's reputation as one of the most efficient companies in the sector.

There are further potential delays for Aramco. The new, high-profile 1.2 million-b/d Khurais field looks set to face delays of more than six months, while expansion projects at fields including Shaybah and Nuayyim also look set to be put back.

With analysts expecting prices to weaken further, Riyadh may take heart from the fact that its new production is not all coming on line while prices are staying below the $110 mark.

Any further price drop, however, and the kingdom may yet regret its decision to chase capacity jumps in an overheated oil market.

[frankthetank]

With analysts expecting prices to weaken further, Riyadh may take heart from the fact that its new production is not all coming on line while prices are staying below the $110 mark.

Any further price drop, however, and the kingdom may yet regret its decision to chase capacity jumps in an overheated oil market.

Give me a break. "Overheated"? What about Mexico falling off a cliff? People are still driving cars in my neighborhood. I don't think the Saudis have anything to worry about...

"Only" $110 oil... the horror!

[yesplease]

"Only" $110 oil... the horror!

Iran's oil minister said a continued fall in crude prices would harm producers, the Oil Ministry website Shana reported on Saturday

[Tanada]

"Only" $110 oil... the horror!

Iran's oil minister said a continued fall in crude prices would harm producers, the Oil Ministry website Shana reported on Saturday

And in 2005 the same people said $50.00 was too high!

[yesplease]

I bet if I waved enough of Mr. Grant and his buddies under anyone's nose they would suddenly start to worry when the pack looked like they may leave the party.

Those poor guys in Iran who benefit from oil the most are loosing out on 60+billion/year since oil backed off from ~$150/bbl.