Houston, USA

Inauguration of Aramco Research Center-Houston

Remarks by Khalid A. Al-Falih, President & CEO of Saudi Aramco

Your Excellency, distinguished guests, ladies and gentlemen: good afternoon. It is great to be back in Houston among so many good friends. It’s great to see the Honorable Bill White here: I will never forget your warm reception back in 2009, when you declared that May 1st was “Khalid Al-Falih Day” in Houston. I also met Mayor Parker a few weeks ago in Norway, and she told me that she would have liked to join us as well, had she been in town. I would also like to welcome Council Member Brenda Stardig to this inauguration, and extend my appreciation for the support we have received from the City in establishing this important center.

It is great to be back in Texas any time of the year, but September has always been special because of the great football rivalries in this state. When I went to school at A&M, the Southwest Conference was thriving and I enjoyed seeing the Aggies rampaging over Houston-area teams. Once we were in the SEC, I thought we had lost that joy forever—but this year we had both Rice and Lamar up in College Station!

My friends, when it came to selecting a location for this new R&D Center, where else could we go but Houston? Here you find great universities, great research institutions and great oil and gas firms alike; petroleum runs through Houston’s veins; and the city is synonymous with energy. Spindletop blew in just up the road back in 1901, and two years later the Port Arthur Refinery—now this country’s largest refinery and the flagship of our Motiva joint venture—began operations.

Of course, Houston has been a familiar stomping ground for many of us Aramcons over the years, and our roots in the city run deep. In fact, this year we are marking the fortieth anniversary of the transfer of the Aramco Services Company headquarters from New York to Houston. As a result of that move, ASC is ideally placed to work with the best of the best in the oil and gas industry, including leading engineering and services companies. We are able to recruit top notch energy professionals. And we can guide our company-sponsored students enrolled at some of the world’s finest universities found all across this great state. Simply put, when it comes to energy, Houston is the place to be and we are proud to be a part of it.

Together, the city and the industry have weathered booms and busts, riding high with the advent of substantial Gulf of Mexico production in the 1980s, and a generation later booming again with the shale oil and gas revolution we are experiencing today. But Houston was no mere passenger on the industry’s roller coaster—if I can use that metaphor. Instead, Houston was the engine with its unique mix of inventiveness, entrepreneurship, grit, and can-do attitude. And whether it was the original oil boom or the successive offshore step outs that have kept Houston in the forefront of our industry, technology has always been the key.

Consider the latest game changer. A number of facilitating factors, both below the surface and above the ground, have encouraged the growth of this country’s unconventional hydrocarbon production, and again at the heart of that growth lies technology. Actually, it is the story of an innovative combination of two existing technologies—horizontal drilling and hydraulic fracturing, or fracking—and it is a story where Houston plays a starring role. Once George Mitchell—a native of Galveston and, I might add, a fellow Aggie—joined those two technologies together, vast hydrocarbon resources became economically viable. The net result has been the production of billions of barrels of crude oil and trillions of cubic feet of natural gas. Those contributions are welcome, because they expand the world’s total reserves of oil and gas, both of which are essential to the continued economic development and prosperity of a planet that by 2050 will be home to an additional two billion people aspiring for prosperity.

Of course, when we talk about the State of Texas, we know it has always been on the frontier: whether the literal frontier in the 19th century, the frontier of the oil industry and the space race in the 20th, or the frontier of advanced science, information technology, and corporate innovation in the 21st. That capacity to continually grow and reinvent oneself which we see in Texas is shared by Saudi Aramco, which grew from a speculative search for oil in the 1930s to the world’s leading petroleum enterprise.

Furthermore, Houston is not only a renowned center of innovation in the energy sector alone; it is a place that generates step changes and game-changing technologies far beyond the realm of petroleum—notably in space and the health sciences. That may seem beyond the scope of our work and unrelated to our areas of interest as an energy enterprise—but being in the midst of an ecosystem of multifaceted research and innovation is extremely important to us. Not only does it set the stage for our own technological endeavors, but there could also be tremendous synergies and opportunities for cross-fertilization among these sectors.

In fact, when I listened to Mayor Parker’s speech in Norway, I was intrigued by the “Pumps and Pipes” conference which brings together this city’s healthcare, aerospace, and petroleum sectors to exchange ideas and best practices. For example, we have seen medical CT scanners being re-purposed to map the tiniest pores and the flow of fluids in reservoir rocks. We have also witnessed the remote sensing technologies originally developed for the space program helping engineers and scientists measure previously unmeasurable properties.

In turn, the oil industry has given back in the form of techniques and technologies originally developed to find and extract hydrocarbons that have been adopted and adapted in unexpected ways across a broad range of industries. Looking ahead, the computational might and remote sensing capabilities of the petroleum industry could also contribute to advances in healthcare and space exploration.

These are just a few exciting examples of cross-fertilization—and I believe other examples of collaboration between the different fields, produced by this city’s scientists and engineers, will be even more exciting. We are delighted to be part of this excitement, and in fact we’ve held our own “TechQuest” upstream technology events here in Houston, inviting delegates to come and share their ideas and insights—and the results have been nothing short of spectacular.

So it is only fitting that today we inaugurate our company’s latest and largest out-of-Kingdom research center here in Houston, as we explore the frontier of upstream oil and gas technologies and bring their benefits not just to our company and our industry but to the wider societies that Saudi Aramco serves.

As Mustafa noted earlier, this magnificent new facility is only one node—admittedly, a large one—in a global network of new research & development centers which we are building. Because of our belief that innovation and cutting-edge technology are the key strategic enablers to addressing the industry’s challenges and to meeting future energy demand, we are tripling our R&D manpower and increasing our global R&D funding five-fold.

Of course, for Saudi Aramco, upstream advances are particularly important given our preeminent position as a reliable producer of exceptional volumes of oil and gas, and as the supplier of roughly one out of every eight barrels of crude oil being produced in the world today. Despite our upstream achievements to date, we are not content to rest on our laurels—as the opening of this new research center demonstrates. The Houston center stands out in the crowd, because as you saw during the tour, it will be addressing the entire range of upstream opportunities and challenges, including production and drilling technologies, reservoir engineering, geology, geophysics technologies, and advances related to subsurface sensing and control.

That means we are looking at both exploration and production, and targeting both conventional and unconventional resources. So while our average oil recovery rate stands at about 50 percent, we want to increase our ultimate recovery rate to 70 percent. We are also looking to produce oil and gas more efficiently and cost-effectively, and given that 60 percent of our non-capital budget goes toward drilling activities, even incremental improvements can have a major impact on our bottom line. So we are tackling things like Smart Fluids to significantly improve well recovery and productivity; nano, polymer, surfactant, and cement technologies related to drilling operations; Quantitative Geology; and Continuous Seismic Land Reservoir Monitoring. And we want to continue raising the bar when it comes to safety and environmental responsibility, in keeping with our corporate values and the importance we place on our commitments to our stakeholders.

Ladies and gentlemen, today we are inaugurating a research center housed in a splendid building equipped with the latest analytical and diagnostic instruments. But for all of the high tech tools, it is the men and women who work here that provide our real competitive advantage and are the source of the breakthroughs we are targeting. These inspired and inspiring professionals are engaged in cross-disciplinary projects, so that they can bring different perspectives, different areas of expertise, and different professional experiences to bear on some of the most important—and most exciting—challenges and opportunities in the upstream space. Let me pause here for a moment, and thank them for their efforts to date, and to express my encouragement for their future endeavors and advances.

But just as it is important to integrate different scientific and engineering disciplines and varied professional fields, at Saudi Aramco we believe the way to research success lies in cooperating and collaborating with other leading institutions, whose strengths are complementary to our own. That is why we have adopted an open network model of innovation, integrating capabilities and ideas from around the world through strategic research alliances, investing venture capital in startup companies pursuing cutting-edge energy technologies, and of course through our network of global satellite research centers, including right here as a major hub.

Our list of collaborators in the US includes not only top firms from within the oil and gas industry, including a number of prominent service companies, but also some of this country’s outstanding academic institutions: MIT, Stanford, Caltech, Cornell, and closer to home, Rice, the University of Houston, the University of Texas at Austin, and of course Texas A&M University! I would have to say that any facility that brings Aggies and Longhorns together in a spirit of collaboration, in addition to attracting both Cougars and Owls, must be something special!

Ladies and gentlemen, we have set ambitious goals for this new research and development center, and reaching them will not be easy. But we are taking on those immense challenges in a city that gave birth to the American petroleum industry, put a man on the moon, and has extended the quality of life for countless men and women through pioneering breakthroughs in health techniques and technologies. So when it comes for shooting for the stars, exploring new frontiers, and doing it in tandem with the best in the business, I know we’re in the right place.

Thank you for being with us this morning, ladies and gentlemen, and for helping us get this center off to wonderful, world-class start.

Inspired and inspiring professionals in cross-disciplinary projects bringing different perspectives, different areas of expertise and different professional experiences.