22/12/2011 00:00 AST
Saudi Aramco plans to raise the number of drilling rigs it operates to pre-crisis levels of at least 130 by the second quarter of 2012 as it strives to maintain production capacity levels, industry sources said.
Aramco had seen a sharp decline in rig count from 130 to 104 after the global economic crisis hit demand in 2009.
Half of the addition will be for Manifa, an industry source who declined to be identified told Reuters, as Aramco expedited plans to bring the 900,000 barrels per day (bpd) oil field on line by 2014.
“The plan is to increase rigs by the second quarter, whether they make it or not is a different story,” said one source, adding the plan is to have 135 rigs in operation.
Industry sources had expected Aramco to keep the level of rigs it operates little changed from 2010 but following disruptions to Libya’s output earlier this year, Saudi Arabia increased output.
In March, Simmons & Co analyst Bill Herbert said Aramco met leading oil service companies including Halliburton to discuss plans to boost the country’s rig count in 2011 and next year to 118, from around 92 then.
“The number of rigs has increased since we want to increase the maintenance of our fields,” said a Saudi industry source. The rig count is already above 118 now, sources said.
Aramco is pumping oil at the highest rate for decades. Saudi Oil Minister Ali Al-Naimi said recently the Kingdom’s output in November was 10.047 million barrels per day (bpd).
It exported 8.1 million bpd of oil in November, 1.2 million more than its average daily exports during the first nine months of 2011.
“They want to maintain potential, primarily in oil drilling, what they are looking at is to be able to move production up or down depending on what is happening in the world market, they want to have capacity to be able to have flexibility in production,” said a source, who declined to be identified. Aramco declined to comment.
The number of rigs Aramco operates fluctuates depending on oil market needs. “It is certainly going to be high, it is a moving target,” said a third source. “For a sustainability point of view they want to replace reserves...and there is a lot of focus on gas,” he added.
Oil prices rose more than one percent Wednesday after a government report showed a dramatic drop in US crude supplies.
Benchmark crude rose $1.15 to $98.39 a barrel in midday trading in New York. Brent crude was up 48 cents at $107.21 a barrel in London.
Oil inventories typically fall at the end of the year because refiners draw down their inventories for tax reasons, but Wednesday’s drop was far larger than analysts expected.
The Energy Information Administration said Wednesday that inventories fell by 10.6 million barrels. Analysts on average forecast a drop of 2.3 million barrels, according to Platts, the energy information arm of McGraw-Hill.
Saudi Gazette
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