SLCO, Saudi Light Crude Oil

According to the Oil and Gas Journal, Saudi Arabia contains 261.9 billion barrels of proven oil reserves (including 2.5 billion barrels in the Saudi-Kuwaiti Divided, aka "Neutral" Zone), around one-fourth of proven, conventional world oil reserves. Around two-thirds of Saudi reserves are considered "light" or "extra light" grades of oil, with the rest either "medium" or "heavy." Although Saudi Arabia has around 80 oil and gas fields (and over 1,000 wells), more than half of its oil reserves are contained in only eight fields, including Ghawar (the world's largest oil field, with estimated remaining reserves of 70 billion barrels) and Safaniya (the world's largest offshore oilfield, with estimated reserves of 35 billion barrels). Ghawar's main producing structures are, from north to south: Ain Dar, Shedgum, Uthmaniyah, Hawiyah, and Haradh. Ghawar alone accounts for about half of Saudi Arabia's total oil production capacity.

Saudi Arabia is the world's leading oil producer and exporter, and its location in the politically volatile Gulf region adds an element of concern for its major customers, including the United States. Saudi Arabia maintains crude oil production capacity of around 10.5-11.0 million bbl/d, and claims that it is "easily capable" of producing up to 15 million bbl/d in the future and maintaining that production level for 50 years. In June 2005, Saudi Aramco's senior vice president of gas operations, Khalid al-Falih, stated that Saudi Arabia would raise production capacity to more than 12 million bbl/d by 2009, and then possibly to 15 million bbl/d "if the market situation justifies it." Falih added that by 2006, Saudi Arabia would have 90 drilling rigs in the Kingdom, more than double the number of rigs operating in 2004.

Aramco estimates that the average total depletion for Saudi oil fields is 28 percent, with the giant Ghawar field having produced 48 percent of its proved reserves. Aramco also claims that, if anything, Saudi oil reserves are underestimated, not overestimated. Some outside analysts, notably Matthew Simmons of Houston-based Simmons and Company International, have disputed Aramco's optimistic assessments of Saudi oil reserves and future production, pointing to - among other things - more rapid depletion rates and a higher "water cut" than the Saudis report.