RPT-Giant screen charts growing Saudi energy sector

(repeats story first published late Wednesday)

By Simon Webb

DHAHRAN, Nov 14 (Reuters) - On a panoramic screen longer than an Olympic swimming pool, the story of the world's largest oil exporting system plays out minute by minute in the nerve centre of state oil firm Saudi Aramco.

From the desert wells to the kingdom's huge export terminals, the 200-foot long screen links every part of the growing infrastructure that supplies over 10 percent of the world's oil.

In a peaceful garden retreat nearby among giant oil tanks and the hum of industry is the oil well that changed the fortunes of the Gulf Arab state.

In March 1938, oil was first discovered in drilling at what is now called the "Prosperity Well" near the Gulf coast at Damman. Oil flowed at a modest 1300 barrels per day (bpd).

Nearly three-quarters of a century later, Saudi Arabia's oil production capacity stands at 11.3 million bpd, and the kingdom is on schedule to boost capacity to 12.5 million bpd by 2009.

Saudi Arabia holds most of the world's spare capacity, and is spending billions of dollars to ensure it keeps a cushion of up to 2 million bpd to meet any surprise disruption in global supplies.

A 500,000 bpd slab of new capacity will soon be ready at the Khursaniyah oilfield, Saudi oil minister Ali al-Naimi said this week.

Inflation across the energy industry as producers strain to bring new capacity online has hit the megaprojects Aramco is undertaking across the kingdom to expand output of oil, refined products and petrochemicals.

The cost was last estimated at $70 billion.

"Everyone recognises investment has gone up, ... but the cost has not impacted the schedule of our plans," Naimi said.

Among 200-metre high sand dunes in the Rub al-Khali desert, some 5,000 workers are building a project to boost output at the Shaybah oilfield by 250,000 bpd to 750,000 bpd.

That plant was due to come on line in December 2008, said Ali al-Ajami, manager of Shaybah's production department.

The expansion will have taken two years to complete, and involves drilling 31 new wells to add to the 136 wells already there.

The field is so remote that a road from the facility stretches nearly 400 kilometres -- before it hits the nearest highway.

REFINING, PETROCHEMICALS

On the Red Sea coast north of Jeddah, another 38,000 workers were involved in the largest construction project in Saudi Arabia, the $10 billion PetroRabigh scheme to expand an existing refinery and build an integrated petrochemical plant.

The plant is a joint venture between Saudi Aramco and Japan's Sumitomo. Growing the petrochemical industry is part of Saudi plans to diversify the economy away from dependence on oil revenues, create new jobs and capitalise on cheap and abundant domestic energy supplies.

The kingdom plans to become the world's third largest petrochemical producer, up from it current ranking at tenth.

The world's largest chemical maker by sales, Dow Chemicals, signed up earlier this year to build one of the largest petrochemical and chemicals plants in the world at Ras Tanura, expected to cost upwards of $20 billion.

Saudi Arabia has also announced plans to build four new refineries to add up to 1.6 million bpd to domestic refining capacity, as it looks to play its part in easing constraints on global refining capacity that have played a role in taking oil prices to a record high near $100 this year.

Back in Aramco's headquarters in Dhahran, Aramco is looking to change its traditional role as a buyer of energy technology, said Mohammed al-Ansari, of intellectual asset management at Aramco's research and development centre.

The centre has filed 62 patents to date, and has licensed out some of its technology to oil service giants Halliburton and Schlumberger, Ansari said. (Additional reporting by Samira Kawar and Andrew Hammond)