A Young Professional’s Guide to Lucky No.7: A Tale of Oil in the Saudi Arabian Desert

Abstract

A Young Professional’s Guide Welcome to the Kingdom In March of 1938, on the heels of six commercial failures, wildcatters drilled a new well that heralded the arrival of the most prolific oil field yet discovered. The fabled Dammam No.7 well established the existence of the supergiant Ghawar field in the desert kingdom of Saudi Arabia and ushered in a new age of petroleum wealth and power for a land that had comprised mostly nomadic tribes. With 71 billion barrels of estimated oil in place, Ghawar takes the prize as the largest conventional oil field ever discovered. The American Association of Petroleum Geologists has identified more than 500 oil fields as world-class “giants” - those with proven oil reserves of 500 million barrels of oil or natural gas reserves exceeding 3 Tcf. A supergiant field is one containing more than 5 billion BOE in reserves. More than 200 of these giant oil and gas fields are concentrated in the Persian Gulf region - meaning that Saudi Arabia drew a lucky hand, indeed. Less than 10 miles south of the prolific Dammam Dome sits Dhahran, a city closely linked to the Saudi oil industry. Initially established as a camp for wildcatters, and then permanently settled after the delivery of commercial oil production, Dhahran has been Saudi Aramco’s headquarters for nearly 80 years. Weaving Together the Threads of Saudi Aramco Synonymous with the Saudi Arabian oil industry, the Saudi Arabian Oil Company (colloquially, Saudi Aramco or just Aramco) has emerged as a key player in the global petroleum scene. Saudi Aramco has exerted its hefty influence on the global crude supply several times in its long history. In the 1990s, the company quickly scaled up production to meet supply shortages caused by Iraq’s invasion of Kuwait. More recently, Saudi Aramco solicited support from the Organization of the Petroleum Exporting Countries to maintain production in an effort to reduce global oil prices, the reasons of which could be attributed to geopolitics and other strategic supply and demand initiatives, and is a topic for another article. Much of the history of Saudi Aramco can be found in Daniel Yergin’s award-winning book The Prize. The company originated in 1929 as the Bahrain Petroleum Company, a project backed by Chevron (then Standard Oil of California or Socal) to extend its reach outside of America. Socal was granted a 440,000-sq-mile oil concession in eastern Saudi Arabia, but after several years without a commercially viable well, half of the concession was given to Texaco in exchange for marketing infrastructure. Success came in 1938, when the company drilled the 1,500-B/D No. 7 well on the Dammam Dome. Six years later, the company’s name was changed to the Arabian-American Oil Company - Aramco, and oil production had risen to 20,000 B/D.