As the South Rub Al-Khali Company (SRAK) mobilizes its second rig, the Nabors 144, to drill the third well in its seven-well campaign in Saudi Arabia’s challenging Empty Quarter (Rub ’al Khali), ‘Shell in the Middle East’ meets the new Chairman of SRAK, Abdulaziz Al-Judaimi, a Saudi Aramco appointee. He talks about the progress the company has made in its drilling campaign to date, and SRAK’s importance to the future gas strategy of the Kingdom of Saudi Arabia. SRAK was established as a joint venture in December 2003 between Shell, with 40 per cent, and Saudi Aramco and Total, each with 30 per cent. The company was awarded a contract to explore for gas in two Contract Areas totalling 210,000 square kilometres

Abdulaziz Al-Judaimi is the Vice President of Northern Area Oil Operations for Saudi Aramco. As such, he has a responsibility for the production of four million barrels of oil per day (bopd) – around 5 per cent of the world’s daily oil production - out of the Kingdom’s total daily production of some 10 million bopd. He is responsible for the production facilities for all offshore oil fields, as well as the onshore oil fields of Shaybah, Fadhili, Khursaniyah and Abu Hadria. Abdulaziz is a petroleum engineer who has been with the company for 23 years and he has recently been made a Corporate Member of Saudi Aramco.

"I am very pleased to have been offered the opportunity to take on the role of Chairman of the Board of SRAK," he says.

"SRAK was born out of the negotiations surrounding the Natural Gas Initiative [NGI] – the Government of Saudi Arabia’s proposal to explore for new natural gas reserves within the Kingdom and to develop them to meet the growing demand for energy, as well as to expand the Kingdom’s industrial sector.

"I am very familiar with the developments which have led to the formation of four joint ventures, with IOCs [international oil companies] as shareholders, for the exploration of gas in the Rub ’al Khali as I was involved in the negotiation process for the NGI. I have also previously served as a Board Member of LUKSAR [Lukoil Saudi Arabia], one of the other three joint ventures – apart from SRAK – which were created from the NGI.

"Lukoil has an exploration Contract Area of some 17,000 square kilometres with a commitment to drill nine wells, whilst SRAK, with two Contract Areas covering 210,000 square kilometres in the Rub ’al Khali, has committed to a seven-well drilling campaign.

"My appointment to the Board of SRAK is an interesting role and I am looking forward not just to SRAK, but to all four joint ventures currently exploring for gas in the Rub ’al Khali, making substantial gas discoveries.

"SRAK is a very exciting exploration venture. The two Contract Areas covering over 210,000 square kilometres [roughly the size of Great Britain], the location and the nature of the acreage, the limited data availability and the relatively short period to complete initial assessment, all make for a unique challenge. However, the joint venture is determined to complete the remainder of its seven-well programme over the coming 18 months to reasonably evaluate the acreage.

"SRAK is exploring a large acreage that is relatively under-explored when compared to other mature exploration provinces of the world. Without doubt, the task is very demanding and we hope the rewards will be high because the acreage may hold great potential for gas discoveries.

"Detailed geological and geophysical studies conducted by SRAK, with full participation of the company’s shareholders, have resulted in an improved understanding of the petroleum systems in SRAK’s Contract Areas with positive indications about the prospectivity of the acreage. A world-class geological framework study covering the entire acreage was completed, integrating all available data, and was highly instrumental in guiding the joint venture’s exploration strategy.

"Saudi Aramco is firmly of the belief that one or more major hydrocarbon systems do exist within the Rub ’al Khali and have so far been undiscovered and untapped," he says.

When asked for his views on the progress of SRAK’s drilling campaign, Abdulaziz responds, "As SRAK’s First Exploration Phase is relatively short I am very pleased that the arrival of the second rig, the Nabors 144, has been accelerated by six months. The rig has been mobilised from the United Arab Emirates to the Kingdom and will, hopefully, spud the third well some time in July. This will go a long way to helping SRAK to complete its seven-well drilling commitment in a timely manner, and the results will enable the company to make well-informed exploration, delineation, development and relinquishment decisions in full accordance with the Upstream Project Agreement with the Saudi Arabian Government.

"Of course the drilling campaign will not be without its challenges. Working in the harsh and remote desert environment of the Rub ’al Khali requires extra care and attention to ensure that the operations are conducted in a safe manner. SRAK has shown its commitment to HSE [health, safety and environment] in the operations of both its seismic crews and its drilling rigs and it is a priority to ensure that this commitment to safety continues."

Abdulaziz then goes on to explain, "Due to commercial sensitivities, the results of the first well must remain confidential at this point in time. However, I can tell you that whilst there was no commercial hydrocarbon column, the experience that SRAK gained from drilling the first well was very important and will be used by our exploration team to help its members better understand the geology of the area.

"Furthermore, we collected some very encouraging data from the well which confirmed that all of the component elements of a working petroleum system are in place.

"The KCA Deutag T79 rig is now drilling the second well, Al-Mirtan, to test an independent petroleum basin which is different to the basin at the Isharat location, which is where we drilled the first well. The second well will also test an important type of play. The understanding of the dependencies of the different parts of the acreage is critical to assessing both the follow-up potential of any discoveries and the areas of potential relinquishment at the end of the First Exploration Period.

"If a significant discovery is made, then SRAK will need to consider mobilising another rig. This will be required to delineate and appraise the work which has been carried out so far in order that results can be made available as SRAK moves from its First Exploration Phase to the Second Exploration Phase.

"Although the schedule is tight, we believe that the seven wells can be drilled in time to impact on the company’s relinquishment decisions. According to the Upstream Project Agreement, the company is required to relinquish 50 per cent of the acreage at the end of the First Exploration Period."

So just how important is SRAK and its operations to the overall gas strategy of the Kingdom of Saudi Arabia and to Saudi Aramco? "The sheer size of SRAK’s two Contract Areas makes it very important to the Kingdom in view of the need to secure substantial gas supplies to satisfy the Kingdom’s projected gas demands for the future," he says.

"The SRAK venture is also very important to Saudi Aramco because of the compatibilities and synergies that have become apparent between the shareholders in their exploration strategies and technologies.

"The structure of the SRAK joint venture has been created so that the management team is made up of members of all three shareholder companies. The day-to-day management of the company was modelled on Shell management systems and procedures so that SRAK’s Chief Executive Officer, Patrick Allman-Ward, a Shell secondee, could use familiar and successful procedures which have been employed globally by Shell. This was agreed by all three shareholders.

"Secondees from each of the three shareholders play important and different roles in the management of the company. Secondees from Saudi Aramco are responsible for the geophysical aspects of the company’s business, whilst secondees from Total are responsible for drilling operations, and Shell secondees are responsible for exploration evaluation activities and the financial management of the company.

"The three shareholders are working very well together. Shell and Total have made substantial contributions both in terms of the provision of technology and their international exploration experience. Saudi Aramco’s contribution has been the provision of its home-grown technology and its local exploration experience and knowledge of Saudi Arabia.

"I believe that this is an excellent model and the venture has brought together three of the world’s leading oil companies. Not surprisingly, this has resulted in some great teamwork which I hope will lead to the first major gas discovery in the Rub ’al Khali.

"This will elevate SRAK to a much higher level in the Kingdom, whilst at the same time greatly improving our perception of the geological systems of the area," concludes Abdulaziz.

"A new Chairman has recently been appointed to the Board of Directors of SRAK as Khalid Al-Falih had to step down in view of his other business commitments," says Patrick Allman-Ward, Chief Executive Officer of SRAK.

"We are extremely grateful to Khalid for all the support that he has provided to SRAK during his tenure as Chairman and for his leadership and inspired guidance of the company in the early phase of its development.

"We are delighted to welcome Abdulaziz Al-Judaimi as his replacement. Abdulaziz brings a wealth of experience to the Chair as he was heavily involved with the negotiations for the Natural Gas Initiative [NGI] which led to the formation of SRAK.

"Abdulaziz also has a lot of experience in oil and gas operations and development, especially in the Shaybah oil field, which is close to SRAK’s two Contract Areas and very similar in environment and geology. So Abdulaziz brings a great deal of knowledge of working in remote and hostile environments and I look forward to working closely with him over the coming years.

"Another change on the Board of Directors is the replacement of Ibraheem Assaadan as Technical Director. Ibraheem is a founder member of the Board of Directors and has made a great contribution to the company’s development. He has been replaced by Mohammed Al-Saggaf who, as Director of Saudi Aramco’s Sub-Surface Research Centre will, I am sure, be able to make a strong contribution to SRAK’s performance as we move forward."

Patrick goes on to say, "In terms of activity planning I am pleased to report that we have been able to accelerate the mobilisation of a second rig six months ahead of schedule by accepting an offer from Nabors, who were able to supply us with a drilling rig six months earlier than expected.

"Following an upgrade in Dubai’s Jebel Ali Free Zone, the rig – the Nabors 144, which has a 3,000 horsepower top drive and a higher technical specification than our existing rig – is being mobilised from the UAE to the Kingdom as we speak.

"Our intent is to use this rig, in the future, to drill a deep test well in Block 82, which is located to the west of Shaybah in SRAK’s Contract Area 1, as part of SRAK’s seven-well exploration commitment in our Upstream Agreement. But for now, this rig will be committed to Contract Area 2 to drill SRAK’s third well, Seraj.

"This earlier mobilisation of the second rig has presented a number of challenges to SRAK, particularly in the area of HSE as we have had to fast-track the development of all HSE-related documentation, including the rig mobilisation plan, the rig safety case and all of the key interface documentation between SRAK and its contractors.

"In relation to this we are very pleased that Shell has been able to make available to us an experienced HSE well engineer who has come to us on a short-term assignment.

"It is key that we now verify that all our HSE procedures have been implemented in the field and that operations on location are proceeding in line with SRAK’s requirements. To this end, we have agreed with our shareholders to carry out a pre-start-up HSE audit at the rig site to satisfy ourselves that operations can start and proceed safely."

Patrick continues, "The KCA Deutag T79, our first rig, completed the first well and is currently drilling our second well, Al Mirtan, and so far we are making good progress against plan.

"We have seen a noticeable improvement in HSE standards and awareness on the T79 since the start-up of operations in July 2006, and this has been with the full support and commitment of the KCA Deutag management.

"However, there was a serious incident during the rig move from the first to the second well site, when a sub-contractor’s pick-up truck, which was following one of the convoys, was involved in a road traffic accident. This resulted in the vehicle rolling over several times, causing a double LTI [Lost Time Incident] as two of the three occupants in the vehicle were injured. The most disturbing issue arising from the accident investigation was that none of the occupants were wearing seat belts.

"We also discovered that, in general, there was a significant gap between the detailed rig mobilisation plans and the practical execution of these plans in the field, particularly with respect to the HSE standards and compliance of sub-contractors.

"The learning for SRAK has therefore been that we need to ensure that our HSE standards are being applied in the field, and not just being given lip service, through even more stringent in-field verification."

Patrick then says, "Whilst the first well in SRAK’s drilling campaign did not lead to a commercial hydrocarbon discovery, we did learn a lot about the hydrocarbon system in the basin.

"SRAK’s overall strategy is to examine other important and sizeable potential hydrocarbon bearing formations that could lead to major discoveries and the establishment of SRAK as a major player in the Kingdom of Saudi Arabia for the long term. We look forward to the challenges of the next 12 months," concludes Patrick.

"The Nabors rig 144 is being mobilised six months earlier than expected and will be used to drill SRAK’s third well, the Seraj," says Geoff Potter, SRAK’s Head of Logistics.

"The rig and accommodation camp have arrived at a staging post 181 kilometres west of the actual rig site. There, the camp will be transferred on to single ‘master skid’. A master skid is a prepared base, on to which three accommodation units can be fitted and is equipped with built-in plumbing, electrics and water supplies.

"These will then be loaded on to special 8x8 wheel desert vehicles to ship the units to the well site.

"We expect the rig to be on site in a few weeks and ready to spud its first well some time in July.

"This is yet another major logistical exercise, moving hundreds of tonnes of equipment and machinery over 1,680 kilometres, of which the last 181 kilometres is a desert skid road.

"We will be moving over 150 truck loads, the heaviest of which will weigh in at 50 tonnes.

"To prepare for drilling operations we have carried out a considerable amount of civil works, including the preparation of the rig site and the construction of a dedicated 1,200 metre air strip," says Geoff.