muse
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HONG KONG - Saudi Arabia signaled Monday that it intends to remain a world energy powerhouse for the foreseeable future, partly by exploiting new technology which has unlocked vast quantities of oil and natural gas in North America.
Mr. al-Naimi said, adding that his country "will not stint" in ensuring that its customers' oil needs are met.
"This year alone we are going to test seven wells for shale. We have rough estimates of 600 trillion cubic feet of unconventional shale gas. The potential is very huge and we plan to exploit it," he said during a Credit Suisse conference.
Mr. al-Naimi didn't offer a forecast of how quickly Saudi Arabia might achieve commercial production of shale gas or shale oil, or describe how it will supply the large amounts of water used in hydraulic fracturing, or "fracking," the process used to extract oil and gas from shale.
Saudi Arabia has seen its lead over the U.S. in crude-oil production narrow sharply in the past year, thanks to rising shale-oil output in the U.S., where crude production in November and December topped 7 million barrels a day for the first time in 20 years. Saudi output eased to 9.2 million barrels a day in December, from 9.6 million the previous month.
The U.S. Energy Information Administration recently forecast that U.S. crude output will swell to 7.5 million barrels a day within six months. The International Energy Agency, which represents key oil consumers, has predicted the U.S. will overtake Saudi Arabia as the world's largest oil producer by 2020.
Natural gas output from state giant Saudi Arabian Oil Co., or Aramco, averaged 9.9 billion cubic feet per day in 2011, up from 9.4 billion cubic feet per day in 2010.
Aramco Chief Executive Khalid al-Falih said in December that the company plans to drill seven natural gas exploration wells in deep and shallow water in the Red Sea, off the coast of the northwestern city of Tabuk.
On Monday, Mr. al-Naimi said that prospects for global production of shale gas and oil--including in China, Ukraine, Poland and Saudi Arabia--were so promising that the kingdom might not need to continue with its decades-long policy of maintaining an oil-output cushion for use in case of global supply disruptions.
"It is not a question whether Saudi Arabia has spare [oil] capacity. It is a question of whether we need to spend billions maintaining it at all," Mr. al-Naimi said.
"New commercial reserves such as shale oil are good news for the global economy" and "will ensure even greater stability of markets and prices," he said.
Mr. al-Naimi said that the hopes of "two or three" members of the Organization of Petroleum Exporting Countries that the pricing of crude oil in international trade will shift to a basket of currencies or the euro would not be realized.
"I don't think that is going to fly," he said.
Summer Said in Dubai contributed to this article.
OK, lets look at the article critically -- What are the key or important signals Mr. Naimi has sent, and who are his intended audience - and what is our take away from it -
The way I read it: - A shift towards Gas as opposed to spending billions to maintain spare capacity regarding oil, effects Whom??
Mr. Naimi is signaling that Aramco respects it's market share and is determined to maintain it, even if that means investing more in Gas exploration and delivery infrastructure (there's still money to make investing in Arabia)
And most importantly Mr. Naimi confirms that oil reserves in Arabia will continue to be tied directly to the US Dollar - for those who realize the meaning of Arabian crude in US dollars, this will be welcome.