Roundtable Discussion with Khalid al-Falih, President & CEO of Saudi Aramco
On Wednesday, May 6, the Energy and National Security Program hosted the new President and CEO of Saudi Aramco, Khalid al-Falih, to discuss global energy security and the approach Saudi Aramco is taking to address this and other challenges.
Mr. al-Falih discussed features of the current market - weakening demand, filled inventories, and markedly lower prices for crude and products - but emphasized that market fundamentals, supported by rising worldwide demand as a result of population growth and increasing wealth in developing countries, indicate an important role for oil in the long-term. Even though we are presently witnessing a low price, low demand environment, he noted the importance of maintaining investment in petroleum development and infrastructure projects with an eye to the future. Industry must continue to invest not only to deliver new supplies, he said, but also just to maintain current production and an adequate cushion of spare production capacity to temper market volatility.
Because of the interconnected nature of markets, Mr. al-Falih stated that we must collectively develop a pragmatic approach to energy and oil that accounts for the goals of energy security and environmental stewardship. Such an approach, he argued, would support continued investments in proven technologies and fossil fuels while concurrently supporting the development of a number of alternatives to a reasonable level of maturity, and then exposing the most promising ones to the rigors of market competition. Mr. al-Falih acknowledged the need to address environmental concerns, particularly carbon emissions, as we continue use of fossil fuels and cited the importance of the political environment and advances in technology in determining our success in managing these issues over the long-term.
Mr. al-Falih outlined several key steps Saudi Aramco is taking in its investment strategy that will make important contributions to an energy system that supports economic growth and better protects the environment. The company is investing in infrastructure in all segments of the petroleum value chain: exploration for crude oil and natural gas, expansion of production capacity, refining, and petrochemical ventures. Saudi Aramco will soon possess 12 million barrels per day of crude oil production capacity with the completion of its Khurais oil field program. Saudi Aramco is also investing in advanced technology and applied research, including the first giga-cell reservoir simulators, Intelligent Field systems, and res-bots. Such innovations, said Mr. al-Falih, will allow the company to optimize field production strategies and improve efficiency of operations to lower costs. Further, these and other technology improvements allow Saudi Aramco to do more with less of an environmental footprint.
In closing, Mr. al-Falih mentioned four key points to relating to Saudi Aramco's interaction with the U.S. market. First, he stated that energy security is a two-way street involving security of supply forboth consumers and producers. Second, alternative energy sources should be complimentary to a proven fossil fuels base, and integrated at a steady pace as their technical and commercial limitations are resolved. Third, there must be more collaboration to develop measures that protect the environment while also enabling economic growth, in particular to enhance the environmental performance of fossil fuels. And finally, Mr. al-Falih submitted that he believes the U.S. will adopt a pragmatic, realistic and balanced approach to energy issues that integrates a portfolio of solutions to meet economic, security and environmental goals.
