Saudi Aramco Inks Major Contracts for Shaybah Expansion

Saudi Aramco's program to increase crude oil production received a significant boost April 9 with the signing of all five major contracts for the expansion of crude-oil production at the remote Shaybah field.

A signing ceremony was held in Dhahran, attended by members of Saudi Aramco executive and general management, and representatives of local and international contractors.

Contracts were signed with SNC-Lavalin of Canada for the main engineering, procurement and construction portion of the Central Producing Facilities and with Hyundai Heavy Industries for power generation. Local contractors, Energy and Power Contracting Co., Haif Co. and Ahmad Al-Binali and Sons, were awarded power transmission, residential-complex and site-development contracts, respectively.

Ali A. Al Ajmi, vice president of Project Management, opened the ceremony, noting that Saudi Aramco and its business partners have been chartered to undertake a program of monumental importance and weight. He discussed program goals, including achievement of schedule milestones, use of locally manufactured materials and increased employment for Saudi workers.

Al-Ajmi welcomed the integrated-team approach that sees employees from operations and other organizations assigned to the project management teams. Finally, Al-Ajmi noted that he would be following the project's progress through periodic assessments.

The program marks the expansion of an oil field that is among the most remote in Saudi Arabia, in the Rub' al-Khali, about 600 kilometers from Abqaiq and 145 km south of the Arabian Gulf. Shaybah field is about 13 km wide and 64 km long.

Those who have been there agree that location, topography and climate make the area both challenging and interesting. Salt flats called sabkhas of about two square km each are interspersed among sand dunes up to 200 meters high. In summer, temperatures can reach 52 degrees Centigrade (125 degrees Fahrenheit).

The field was discovered in 1968. Construction of the first increment began in 1995 and the facilities went on-stream in 1998. Production is a high quality Arab Extra Light (AXL) crude oil with a density of 42 on the American Petroleum Institute's scale and a sulfur content of less than 0.7 percent.

Existing facilities consist of wells, flowlines, trunklines, crude transfer pipelines, and plant facilities to separate the gas from the oil and transport it to Abqaiq. The expansion provides a grassroots facility for gas and oil separation; gas gathering, compression and injection; crude-oil-handling, air and water utilities to support the process; and increased pipeline capacity. Additional permanent housing also will be constructed at the existing residential and industrial complex to accommodate workers operating the new facilities.

When the plant goes on-stream at the end of 2008, production from the Shaybah field will be boosted by 250,000 barrels per day. Future plant expansions have been provided for so that additional increments can be carried out without major disruptions.

Geographic and climatic conditions make the work in Shaybah interesting enough, but economic factors have created their own set of challenges for the mega project.

Increasing crude oil prices have provided the stimulus for new investment in the oil industry worldwide. That, in turn, has placed heavy demands on suppliers of construction commodities such as pipe and steel, and equipment such as pumps and vessels. The Arabian Gulf area in particular has seen a tightening of supply for construction resources.

These conditions and the sheer size of the project required Saudi Aramco to innovate a strategy for the front-end planning, contracting and execution of the work. Preliminary engineering concentrated on the production of key drawings and was put on a fast track. Early approval was given for project funding for detailed design, procurement of long-lead items, and substantial early construction.

Lessons learned from the company's database were compiled, disseminated and employed so that the Shaybah project could benefit from the ideas developed on earlier projects. Value engineering, scope control and change management; and constructability reviews were undertaken to improve project performance.