In the waters off Safaniya a skeletal tower looms against the Persian Gulf sunset. As twilight dies over the northern desert of Saudi Arabia, pinpoints of light begin to wink on the spare frame of the offshore drilling rig and worklights flood the derrick floor. The light spills onto the galleries of drill-pipe along the deck of the adjacent tender. The gritty clank of the rotary drill continues as stars gather overhead. On through the night the voices of the drilling crew call out, and the drill hollows a deepening wellshaft into the oil-hearing geologic strata under the waters of the world's largest offshore oil field....
This was a familiar scene at Safaniya during 1962. The heavy Safaniya crude oil is a prime source of the fuel oil that powers the growing industry of Europe and the Far East. Last year, the Arabian American Oil Company (Aramco) added ten new wells to the field and boosted Safaniya capacity to 360,000 barrels a day. When the Safaniya field was put into production in 1957, its daily capacity was only 50,000 barrels. Besides reflecting the continued growth in demand for oil throughout the world, the high level of activity at Safaniya symbolized a year or record achievement for Aramco, a company that is wholly owned by four American corporations: Standard Oil Company of California, thirty per cent; Standard Oil Company (New Jersey), thirty per cent; Texaco Inc., thirty per cent; and Socony Mobil Oil Company, Inc., ten per cent.
The year 1962 was the twenty-fourth anniversary of Aramco's discovery of commercial quantities of oil in Saudi Arabia. It was a year highlighted by a wide range of accomplishments, some of which were:
Record crude oil production for a single year: 555,056,388 barrels, an increase of more than nine per cent over 1961.
Throughout the company the year was a good one. The Aramco refinery at Ras Tanura processed 90,886,021 barrels of crude oil, a slight increase over the previous year. Exports of crude oil and refined products reached a new high level: 544,656,660 barrels compared to 497,690,167 in 1961.
In addition to the ten new wells drilled at Safaniya, twenty-one miles of submarine trunk lines were laid last year to boost the field's capacity. Additional storage and transport facilities were completed onshore. Work was also started that will result during 1963 in a further increase in the field's capacity to 425,000 barrels a day.
South of Safaniya in the Persian Gulf, another Aramco offshore field—Manifa—was being readied in 1962 to begin production next year. It will go onstream early in 1964 with an initial capacity of 125,000 barrels of production a day. It will be the ninth oil field in Saudi Arabia.
The seventh field, Abu Hadriya, was put into production by Aramco last December. The facilities at Abu Hadriya include a combination gas-oil separator (50,000 barrels a day) and stabilizer (90,000 barrels a day). It is the first unit of its type to be built by Aramco. The natu ral gas produced with the field's oil is removed in the separator, and the oil is then processed in the stabilizer where its hydrogen sulfide, a poisonous gas which is highly corrosive, is taken out. The Abu Hadriya crude is then delivered through pipelines northwest to Qaisumah, where it is turned over to the Trans-Arabian Pipe Line for transport to the Mediterranean Sea.
During 1962 still another field—the Fadhili field, the eighth in Saudi Arabia—was being prepared to add its output to world production. It will be put onstream this year. Fadhili is only thirty-one miles south of Abu Hadriya. A pipeline will carry 30,000 barrels of Fadhili crude oil a day to the stabilizer at Abu Hadriya.
While production increased, the search for new oil fields continued. Four exploration parties covered widely separated areas in the Saudi Arabian concession. Two carried out seismic refraction surveys, and two drilled stratigraphic structure wells. The exploratory work ranged from the Rub' al-Khali (The Empty Quarter) in the south to sand and gravel plains in the west, offshore waters in the east, and border areas in the north.
Seismograph parties surveyed 2,468 miles of seismic lines. Offshore seismic surveys covered 242 miles. Electronic computation played a part in the exploration programs. It permitted faster seismic calculations and rapid revision of earlier data as new information was gathered.
Aramco virtually completed its work on the co-operative mapping of Saudi Arabia established by the company and the United States Geological Survey in 1954 under the joint sponsorship of Saudi Arabia and the United States. Saudi Arabia is now one of the best mapped areas of the world.
The efficient recovery of oil from the earth is based in large measure upon knowledge of the nature of oil reservoirs and the ability to predict the behavior of a reservoir under production. Last year Aramco's major programs in reservoir research included determinations of reservoir rock properties, predictions of reservoir behavior, and several other special studies of Saudi Arabian oil fields.
Tests of reservoir rock properties provided new data on fluid flow in the reservoirs. Research engineers devoted special attention to the effects of water displacement of oil in the reservoir. Earlier Aramco research had indicated that water flooding of a reservoir to maintain the production pressure will probably be the most efficient recovery method in Saudi Arabia.
Laboratory predictions are checked against data from observation wells. The oil content of reservoir rocks is determined by analyzing electronic, sonic, and radioactivity logs of surveys made in these wells.
Drilling activity increased during 1962. Six rotary drilling rigs were used in oil field development and exploration. Three heavy Aramco rigs drilled 154,727 feet, compared to 147,950 feet a year earlier. Twenty-two development and delineation wells were completed in the Safaniya, Manifa, Khursaniyah, Abu Hadriya, Fadhili, and Oatif fields.
The combined exploration, development, and research programs of the company brought an increase of more than nine billion barrels in Saudi Arabia's proved liquid hydrocarbon reserves. Proved gas reserves were more than twenty-three trillion standard cubic feet, another significant increase over the previous year.
Water and gas are injected by Aramco into the oil fields of Saudi Arabia to maintain pressure in the oil reservoirs and assure the maximum efficient recovery of the country's crude oil. Last year the rates of injection were increased.
An average of 163,446,000 cubic feet of gas was injected daily into the Abqaiq field—and an average of 143,950,000 cubic feet was injected daily into the 'Ain Dar area of the vast Ghawar field. Both fields use gas that is processed at a new plant at Abqaiq. Limited amounts of excess gas production from the plant were sent to the Ras Tanura refinery for processing starting in December. The gas was transported as liquefied-petroleum-gas condensate.
At Abqaiq field water injection into the reservoir averaged 277,601 barrels daily. In the Ghawar field a test begun in 1960 was continued at a nearly tripled rate. In this test undrinkable water flows by gravity from one layer in the field to the water-bearing section of the oil reservoir. Pressure in the reservoir is thus increased.
A significant gain was made during the year in the use of the natural gas that is produced in association with Saudi Arabia's crude oil. Aramco utilized 48.2 per cent of the gas. This was a 17.5 per cent increase by volume over 1961. At the same time, more gas was injected into oil reservoirs, and sales to Saudi Arabian industry increased.
In keeping with the upward trend of Aramco activities, the company refinery at Ras Tanura posted a slight gain in throughput to reach a daily average of 249,003 barrels.
The marine terminal delivered a record 348,761,965 barrels of crude oil and refined products into the holds of 2,242 ships during the year.
In mid-year the company began construction of facilities at the Ras Tanura Marine Terminal designed to more than triple the export capacity of its refrigerated LP Gas (liquefied petroleum gas) plant. When the $14,500,000 project is completed late this year, the expanded plant will have an export capacity of 12,000 barrels a day.
By the end of 1962, Aramco had greatly reduced the number of its American and other foreign employees. It had 13,573 regular employees in Saudi Arabia at the close of the year—10,852, or eighty per cent, were Saudi Arabs. The average income of the Saudi Arab employee had been more than doubled since 1955. More than half of the Saudi employees had been with Aramco for at least ten years, and forty-one of them had worked for the company twenty-five, or more, years.
As in past years, employee training was emphasized in 1962. About one fourth of the company's Saudi Arab employees were given instruction at Aramco's three Industrial Training Centers or three Industrial Training Shops. This instruction was a part of the normal work day. Many employees attended classes voluntarily after working hours.
Ninety-three Saudi Arab employees were given educational and training assignments outside Saudi Arabia. This special training enabled them to gain additional knowledge and skills to do a better job and to meet the requirements for higher positions.
Thirteen were given practical work assignments. Some studied the latest oil field techniques in the United States. Others worked with companies that manufacture, market or service specialized equipment used by Aramco.
Ten attended technical schools and received training in building crafts, drilling and production technology, television photography and various branches of industrial safety.
The remaining seventy studied courses at high school or university levels. Graduate training was given in education, geology and medicine.
During 1962, Aramco paid $2,411,000 to Saudi Arab employees for various benefits and services. In 1960 the company established an Annuity and Death Benefit plan for Saudi Arab employees. Two hundred and eighty-seven Saudi employees have retired under the plan. By the close of 1962 they had received $1,053,000 in lump sum severance benefits, employee Thrift Plan savings and rewards, monthly pension payments, and special benefits.
More than ninety-six per cent of the Saudi Arab employees participated in the Thrift Plan. Their savings reached $5,478,000. If an employee resigns, retires, or has his service terminated after fifteen years of service, Aramco matches his savings. Such thrift rewards are provided on a graduated scale for service of less than fifteen years.
During the year, Aramco sponsored a maternal and child care program. Under this program individual instruction was given to 1,500 pregnant wives of Saudi Arab employees and to 2,000 mothers. As a result, there was a significant improvement in family health. In many instances, diseases were prevented, or they were detected early enough to permit effective treatment. The company Medical Department sponsored family health classes for wives of Aramco employees in various communities.
More than 159,000 immunizations against twelve diseases were given employees and dependents. Last year great emphasis was placed on industrial hygiene to assure employees a work environment free of gases, excessive noise, and eye and other irritants.
The diagnosis and treatment of tuberculosis among Aramco employees and their dependents was continued during 1962, and the company's inoculation program using BCG anti-tuberculosis vaccine was accelerated.
Aramco spent $4,983,000 on the medical treatment of employees and their eligible dependents, and $995,000 on the treatment of others.
ARAMCO AND THE COMMUNITY
The continued growth of Saudi Arabia's economy was reflected in the increased use of petroleum products. Aramco supplied 4,373,047 barrels of products to industrial and domestic consumers. This was a 9.5 per cent increase over 1961.
Sales of liquefied petroleum gas and natural gas rose to record levels. Jet air travel affected sales; aviation jet fuel volume almost doubled over 1961, while the sale of aviation gasoline declined sharply.
Aramco's Products Distribution Department made a survey during 1962 that showed 383 service stations were operating in Saudi Arabia. The service stations are built and owned by independent operators.
The company's expenditures were higher than ever in Saudi Arabia. In addition to the money paid to the Saudi Arab Government in royalties and income taxes on oil operations, the company and its employees spent about $76,000,000 in the country during 1962.
This included payments to local industry for goods and services, income taxes paid by non-Saudi Arab employees, public welfare expenditures, customs payments, and freight and miscellaneous payments to the Saudi Arab Government. It also included all payments to, or on behalf of, Saudi Arab employees, and estimated expenditures by non-Saudi Arab employees in the various local markets.
Payments to Saudi Arab companies for services increased to $11,957,000 from $10,560,000 in 1961. One hundred and ninety-seven new contracts were made with firms that paved roads, developed residential land areas, printed the company's Arabic and English weekly publications, constructed schools for Saudi Arab children, installed pipelines, and provided other services. They also participated to an increasing extent in the testing, overhaul, and inspection of refinery and other units.
A total of $15,107,000 was spent on purchases made through Saudi Arab merchants. This was a thirty-four per cent increase over 1961. These purchases included complex industrial equipment. The services of the Aramco Overseas Company and Aramco's New York office were used to coordinate purchases between Saudi Arab firms and overseas suppliers, to analyze price quotations, and to make inspections needed to meet Aramco requirements.
For the first time, Saudi Arab firms undertook both the supply and processing of all the pipe needed to place an oil field in production.
Also for the first time, Aramco bought frozen and chilled foods from locally-owned cold storage plants.
Under an agreement with the Saudi Arab Government, the company has built eleven elementary and four intermediate schools for boys. Two of the intermediate schools were completed last year at a cost of $632,000. Upon completion the schools are turned over to the Ministry of Education, and the company maintains them and provides the funds for the teachers' salaries.
Construction of two girls' schools got under way during the year. The company also made available to the government forty-four portable buildings for use as additions to present schools or for use as temporary schools.
The Aramco scholarship program for Saudi Arab students awarded thirty-four scholarships for the 1962-1963 academic year. These are for advanced study in the Middle East. During the previous academic year twenty-two scholarships were awarded. Aramco plans to boost the number to sixty next year. The final selection of scholarship students is made by the participating schools: Alexandria University, the American University of Beirut, the American University in Cairo, and the Beirut College for Women.
Last year an Aramco medical team, with the approval of the Ministry of Health, inoculated more than 1,200 infants and children against trachoma using a vaccine developed in the Harvard University-Aramco Trachoma Research Program. Reinoculations were given in the fall to 750. Careful records and controls were maintained to insure accurate analysis of the results. However, long and extensive inoculation trials and further research must be carried out before the vaccine can be proved effective.
Aramco made an initial grant of $500,000 to Harvard in 1955 for a five-year research program. In 1960, the company made a further grant of $585,000 for an additional five-year period. In 1958 the strains of the trachoma virus found in Saudi Arabia were isolated. The vaccine was developed in 1959. The progress made to date in controlling this disease, which impairs vision, has been very encouraging.
In another field of medicine, an elementary health book was prepared by Aramco in co-operation with the Ministry of Education. Almost 8,000 copies were distributed within the company and in Saudi Arab schools. Leaflets, posters, and movies were also used by the company in its health education programs.
Aramco in 1962 assisted local utility companies in their efforts to provide electric power at lower cost to home and industrial consumers. The company guaranteed payments by the Dhahran Electric Supply Company of about $2,089,000 for the purchase of heavy equipment. Aramco also agreed to make interest-free loans to the utility to assist in the financing of other facilities.
The Rahimah Power Company at Rahimah was given technical assistance and a guaranteed loan for new generators.
A new hospital completed from plans prepared by Aramco was opened in al-Khobar, and the company guaranteed to pay for services to 65 patients for a ten-year period.
In cooperation with the Ministry of Agriculture, the company provided technical advice to farmers and poultry dealers. The 46 farms assisted had a yield of more than 1,800,000 pounds of produce—a record.
In oil operations, employee relations, and community relations, 1962 was an outstanding year for Aramco. For the twenty-first consecutive year the company increased crude oil production. Saudi Arabia thus strengthened its position as one of the great oil countries of the world.