Saudi oilfield attack recovery: Making sense of the numbers

LONDON (Bloomberg) - A blizzard of data on Saudi Arabia’s oil production, production capacity and exports has painted a picture of an industry that is almost back to normal after the Sept. 14 attacks. That view may be too simplistic, though. Here’s my take on how the numbers might be reconciled and what that means for Saudi oil flows.

The Numbers We’ve Been Given

Production:

• Immediately before the attack, Aramco was pumping 9.8 MMbpd, in line with its average production level in August.
• Saudi Arabia lost 5.7 MMbpd of production, with 4.5 MMbpd coming from the Abqaiq processing plant and 1.2 MMbpd from the Khurais field, taking output down to 4.1 MMbpd immediately after the attack.
• Crude production has been restored to more than 8 MMbpd.
• Aramco plans to pump 9.89 MMbpd on average in October, that’s the same number that Energy Minister Abdulaziz Bin Salman gave when speaking at a gathering of OPEC oil ministers two days before the attack.
• Ethane and natural gas liquid production has largely been restored.

Production Capacity:

• Aramco has increased total production capacity to 11.3 MMbpd and will restore its previous maximum sustainable capacity of 12 MMbpd by the end of November.
• Abqaiq has 4.92 MMbbl of capacity available, Khurais 1.3 MMbbl.

Exports:

• Observed Saudi crude loadings dropped to about 5.86 MMbpd from Sept. 14 through Sept. 25, preliminary tanker-tracking data compiled by Bloomberg show. That compares with 6.74 MMbpd in the 13 days prior to the incident.
• Crude loadings fell to an average 6.054 MMbpd in the 10 days after the attack, from 7.739 MMbpd in the 10 days before, according to data intelligence company Kpler.

Abqaiq:

The Abqaiq plant treats crude produced from the Ghawar and Abqaiq fields. Production from the Shaybah field, 360 miles away in the desert of the Empty Quarter, is stabilized at the field and pumped to Abqaiq where it is blended with output from other fields. Shaybah doesn’t appear to depend on the parts of the Abqaiq plant that were damaged in the attack and output from the field, which pumps about 1 MMbpd, is likely to have been restored quite quickly after the situation at Abqaiq was stabilized.

Photographs released the day after the attack suggest that all 11 of the spheroids used for pressure reduction and hydrogen sulphide removal were hit, while a more detailed image of four of those tanks shows all of them to have been punctured. Photos taken during the media tour of Abqaiq on Sept. 20 show the edges around those holes bend inwards, not outwards, indicating that the spheroids do not operate under high pressure. Other pictures taken on that same tour appear to show at least five out of a line of 10 stabilization towers were damaged.

Abqaiq has 18 stabilization towers in total and processing capacity of 7 MMbpd, according to Hydrocarbons Technology. Aramco gave a lower figure for capacity under normal circumstances at Abqaiq of 5.5 million barrels of crude daily. The lower figure probably represents the stabilization capacity (18 trains each with a capacity of about 300,000 bpd would give a capacity of 5.4 MMbpd), while the 7 MMbpd probably includes the blending capacity.

An engineer who has worked on refinery projects in Saudi Arabia and oil and gas processing projects in other parts of the world, but who doesn’t have specific first-hand knowledge of the situation at Abqaiq, thinks that the spheroids could be patched and brought back into operation, at least on a temporary basis. The undamaged stabilization towers could also be brought back into operation while the others are repaired, or replaced, they said. That would allow Abqaiq to be brought back into partial operation quite quickly and for capacity to be built up as more units are repaired.

Khurais:

Oil produced at Khurais is stabilized at the field through one of five processing trains, each of which has a capacity to treat 300,000 bpd of crude. Stabilized crude from Khurais is pumped to the East-West pipeline, which runs about 3 miles from the plant. The fact that the field was pumping 1.2 MMbpd before the attack suggests that one of the trains was idle.

Two of the oil processing trains were reported to have been damaged in the attack and the one shown to reporters on a tour of the site six days after the attack did not look like it would be restored to operation in a matter of days. That would suggest there are three trains at Khurais that could be brought into operation quickly, assuming the idle train wasn’t undergoing some form of work. That would give Khurais an output capacity of 900,000 bpd, which could increase to 1.2 MMbpd if the less damaged of the two trains hit in the attack has been repaired.

The nearby Abu Jifan and Mazilij oil fields, with a combined capacity of about 200,000 bpd, are part of the greater Khurais project and may be included in capacity figures given by Aramco for Khurais, according to consultant Genscape.

Making Sense of the Numbers

The capacity figure of 11.3 MMbpd is more difficult to explain. Aramco defines its maximum sustainable capacity as the amount of crude it can bring into production within three months and sustain for at least a year. So it may all come down to how quickly that capacity can be brought online.

But that still leaves the question of why output is running 1.8 MMbpd below the pre-attack level if the kingdom’s capacity to produce is now only 700,000 bbl below its maximum.

If Saudi production is back at 8 MMbpd, it could break down as follows:

4.1 MMbbl of unaffected pre-attack output

2.0 MMbbl of restored Abqaiq throughput, including 1 million from Shaybah

1.2 MMbbl from Khurais

0.7 MMbbl from spare capacity elsewhere brought into production

The kingdom has probably boosted output from the offshore Safaniyah, Zuluf and Manifa fields where possible and will continue to do so in the coming weeks. Safaniyah has a maximum sustainable capacity of 1.3 MMbpd and Zuluf 825,000 bpd, according to the prospectus published in May for Aramco’s first foreign bond, while Manifa can pump 900,000 bpd.

Raising flow rates from these fields is the most likely way of getting output up to its target level of 9.89 MMbpd next month. But that will create its own problems.

All three fields produce heavier grades of crude than the streams that have been temporarily reduced from Abqaiq and Khurais. Until those two plants are able to operate at their per-attack levels Saudi Arabia’s crude export slate will remain heavier, on average, than it was last month and the kingdom will likely continue to ask its customers to accept heavier alternatives to the grades they initially sought.