Aramco acknowledges oil revolution

LONDON: In a landmark speech given in Riyadh on Monday, the head of Saudi Arabia's national oil company acknowledged that new technology has transformed the world energy outlook from scarcity to plenty.

Worries about peaking oil and gas supplies have been replaced by news of increasingly abundant resources, as conventional production pushes into new frontiers and hydraulic fracturing unlocks unconventional supplies from tight rock formations, according to Saudi Aramco's Chief Executive Khalid Al-Falih.

"Abundance isn't limited to gas reserves, but is also the new headline when it comes to oil. Rather than supply scarcity, oil supplies remain at comfortable levels, even given rising demand from fast-growing nations like China and India," Falih said.

"Well-established conventional resources will continue to account for most production, but there is also a great deal of excitement around untapped conventional resources in frontier areas like deep offshore and the Arctic."

"Last year, even as the world consumed nearly 30 billion barrels of oil, not only was the industry able to replace this production, but global petroleum reserves actually increased by nearly seven billion barrels, as companies increasingly turned toward higher risk areas."

Falih singled out the revolutionary potential of frocking and horizontal drilling technologies being employed in North Dakota's oil-bearing Bakken formation.

"There is a new emphasis in the industry on unconventional liquids, and shale gas technologies are also being applied to shale oil. The massive heavy oil potential in both North and South America is drawing greater attention, and the future development of kerosene-based oil shales remains an enormous target," he said.

"Some are even talking about an era of energy independence for the Americas

While that might be stretching the point, it is clear that the abundance of resources and the more balanced geographical distribution of unconventional have reduced the much-hyped concerns over energy security."

Falih's candid assessment, from the top official charged with developing the world's largest conventional resources, went much further than other big oil-exporting nations, in admitting technology is profoundly altering both the price outlook and the balance of power in the market over the medium term.