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With political upheaval spreading across North Africa and the Middle East, and oil prices continuing to rise since the unexpected demonstrations in Tunsia, the New York Times reported a jittery, oil-constrained world was looking to Saudi Arabia for reassurance. With the world's largest known reserves, its monarchy had always been a reliable source of market stability. Then the Saudis announced they had cut oil production by 800,000 barrels a day only weeks after they said they would meet any supply gap left by the Libyan civil war. Analysts started looking for answers-- many knee-jerk. Out came the Wikileaks cables.
But few TV news anchors or liberal bloggers bothered to mention the more prosaic problems contained in this early cable:
(SBU) Saudi officials in several ministries have explained their interest in developing renewable energy projects, which they expect to play a major role in meeting the Kingdom's future energy needs (electricity demand is growing at 8-10% per year). Developing renewables will reduce the need to divert increasing amounts of crude from exports to fuel domestic electricity generation.
That's right, the Saudi government had already been trying to get energy costs under control, chiefly by conserving petroleum. Authoritative and respected, the Petroleum Intelligence Weekly weighed in with the view that the new Saudi production cut was probably a short-term event:
"The kingdom's bigger and longer-term concern is over whether it needs to increase oil production capacity to meet likely future demand..."
Social Unrest always in the back of Saudi Royal Family's mind
Like many other governments, the Saudi Royal Family worries about a restive population--60% are under 40 years old. Many are very similar to the Tunsian and Egyptian street demonstrators--young, many well educated, and large numbers are struggling with unemployment and rising inflation. In 2009 the NY Times chronicled a bored generation's favorite pastime: drag racing (see video):
For Saudi Arabia's vast and underemployed generation of young people, these reckless...battles are a kind of collective scream of frustration, a rare outlet for exuberance in an ultraconservative country where the sexes are rigorously segregated and most public entertainment is illegal. They are, almost literally, bored out of their minds.
Add the unpredictable element of social media savvy--and you can't put a happy-Face(book) on that. (It's too threatening to an 78-year-old king who probably still relies on scented, handwritten courtesy notes.) By the time the Egyptian revolution reached its peak, Saudis had stopped downloading Jersey Shore and were watching a more compelling reality. Saudi Arabia's young population is also growing at 2.34% annually, according to official statistics. The Royal family has known for years it needs to conserve oil to pay for more electric power and fresh drinking water, and it recently promised social programs aimed at heading off the same political upheaval destabilizing many of its neighbors. Another Wikileaks cable reveals that the government had even considered nuclear energy to meet some of these problems:
(SBU) Saudi Arabia is actively considering the development of a civilian nuclear program, which a number of analysts believe is the only possibility the Kingdom has to generate sufficient electricity to meet projected demand from economic and population growth...
Converting oil-powered desalination plants to solar
Fortunately nuclear energy never got beyond the planning stages. Expensive energy used by desalination plants became the first target. Each day Saudis pump about 8 million barrels of oil out of the ground. Since the Kingdomuses 1.5 million barrels of oil per day providing power to the country's 30 water desalination plants, as oil prices rise, the cost of desalinated water comes a burden. It makes more sense to just sell the valuable oil on the open market. Just a year ago, the country, which already produces 24 million cubic meters of water per day from desalination, about half the world's total, announced they would begin building their first solar-powered desalination plant. The nearly completed plant is in the small city of Al-Khafji on the shores of the Persian Gulf. The Harvard international review reported:
Several harsh realities have forced the Saudis to make the change: the increasing price of oil coupled with a growing population.
The pilot plant, running exclusively on solar-powered electricity and pumping out about 30,000 cubic meters of drinking water per day, will free up oil for the global markets while supplying water to about 100,000 people, Cnet reported. IBM has joined forces with KACST (King Abdulaziz City for Science and Technology) to build the plant that will be powered by ultra-high concentrator photovoltaic (UHCPV) technology--a system with a concentration greater than 1,500 suns.
According to KACST scientists, the two most commonly used methods for seawater desalination are thermal technology and reverse osmosis, Gizmag wrote. Both methods are high energy users with costs (around US$1.50) per cubic meter. So the IBM-KACST team is also working to improve nanomembrane technology that filters out salts as well as potentially harmful toxins in water while using less energy than other methods. The two teams say that by combining solar power with the new nanomembrane, they will be able to significantly reduce the cost of desalinating seawater at these plants. Next a plant with a 300,000 cubic meter capacity will be built. Finally, all new Saudi plants will be solar-powered, liberating a lot of future oil. There is no information whether the older plants will be decommissioned. The combined technology should make desalination so inexpensive, it could become "economically feasible to produce water for agricultural purposes," according to IBM's Smarter Planet blog. IBM project scientists explain the new tecnology in the video above.
Moving to solar energy could save 3 million barrels of oil a day
Recently Saudi Arabia announced that construction of its largest solar power plant will be completed by September. "The solar market in the Gulf region is still in its infancy," said Klaus Friedl, general manager of Phoenix Solar, the firm building the new solar plant. Ironically, the plant will be built adjacent to the King Abdullah Petroleum Studies and Research Center on the outskirts of Saudi Arabia's capital, Riyadh. Most people involved with this pilot project say the next solar array will be even larger.
Saudi Arabia is also trying to tap a special UN fund for $40 billion to pay for their transition to solar energy. The Saudis say they need the money, since oil exports may be slashed if the rest of the world quickly switches to renewable energy, devastating a country where oil exports make up 90% of revenues. This request has angered many poorer developing nations who also are hoping to tap the same $100 billion fund. Since the rate of Saudi power consumption is predicted to triple over the next 20 years to 120 gigawatts, the Saudis could use all of their oil themselves. "It's really a preservation decision using solar for domestic consumption and keeping your oil for more lucrative export markets," Vahid Fotuhi, Middle East director of BP Solar, told Reuters. "Right now, out of the 8 million barrels per day they produce, over 3 million barrels per day are consumed domestically, mainly for power generation. That figure is growing 8 percent per annum," said Fotuhi. Unless it can develop renewables, Saudi Arabia could find itself with nothing to finance the national budget and with no spare capacity to be the world's supplier of last resort--a role that has long cemented its relationship with the biggest oil user, the United States.
Comments
yes ,i think they have good strategy
it always seems like necessity is the best source of invention. It's great when a business or culture recognizes a problem and then tries to make changes.