MIL OSI – Source: Breitling Energy – US fracking expert slams ‘desperate’ Saudi oil policy (Arabianbusiness.com)
One of the United States’ biggest advocates of a controversial gas extraction technique known as fracking has hit out at Saudi Arabia’s plans to keep up bullishly high oil production levels despite a worldwide drop in prices.
Chris Faulkner, founder, president and chief executive of Texas-based Breitling Energy Corporation, warned Saudi Arabia is rapidly depleting its vast foreign currency reserves in an aggressive bid to retain its powerful share of the global oil market.
Despite crude oil falling below $54 a barrel for the first time in more than five years earlier this month, Saudi continues to produce almost 10 million barrels a day and has signalled it has no intention of changing its policy while it has upwards of $700 billion in its coffers.
In an interview with Arabian Business, Faulkner said:
“Saudi Arabia’s social programs cannot be sustained at these oil prices. The kingdom needs upwards of $90 per barrel just to break even. How long will Saudi Arabians allow them to burn through all this money?”
He added: “There are a lot of dominoes falling the wrong way for Saudi. Is the country going to carry on depleting assets that took decades to amass, just to teach the world a lesson [that it will not give up its market share]?”
State-run oil company Saudi Aramco also announced plans in January to invest $7 billion on top of $3 billion earmarked last year to launch its own fracking operations, arguing the technique is crucial in helping it maintain its market share. Fracking describes the process of fracturing shale rocks in the ground, then injecting them with water, sand and chemicals at high pressure to release natural oil and gas inside.
But Faulkner told Arabian Business that Saudi Arabia’s persistent drive to increase production actually masks deep anxiety about what the future holds for a nation that generates up to 90 percent of its earnings from hydrocarbons.
“The reason they’re talking about fracking is because many of their wells are in their last phase of life.
“They are pumping saltwater, nitrogen, CO2 into these wells because the pressure’s so low and they can’t get the gas out of the ground without pushing all this liquid down there.
“They are trying desperately to suck out every last drop but it’s a tell-tale sign they have this level of concern. The oil won’t last forever.”
Written by: Sarah Townsend