On Saudi Aramco’s campus at the edge of the Arabian Gulf, the vast scale of the world’s biggest oil producer is on stark display. In one building, a curved monitor 140 feet long wraps around a room, tracking the crude flowing through 25,000 miles of pipelines.
A short distance away, in the company’s “advanced exploration and petroleum engineering research center,” or EXPECArc, scientists fine-tune seismic drones that can analyze underground rock formations and transmit the data back to engineers within seconds—sparing Aramco the expense and risk of dispatching teams into the desert to drill for oil. Meanwhile, others test fast-curing cement injected with carbon and experiment with compounds built to suck carbon directly from the air—an attempt to build technology that could reduce the polluting effects of burning that oil.
During a rare two-day visit by Fortune in early May, Aramco lifted the curtain on dozens of research projects underway at its headquarters in Dhahran, in eastern Saudi Arabia, where about 20 engineers, specialists, and executives detailed their homegrown inventions. Some of these, the company believes, could someday be hugely lucrative exports, with significant impact on the oil-and-gas industry.
Aramco’s purpose in revealing its work to a few handpicked journalists was hardly subtle. With environmentalists pushing oil giants to phase out fossil fuels, the company was keen to present itself as a climate friend, not foe—deeply concerned about global warming, but intent on producing oil for generations to come. Projecting a green image is increasingly seen by oil producers as essential in quelling shareholder activism and appeasing regulators.
But Aramco execs stress that they see their climate commitments as in their own interest. “This is our environment. This is our country,” says Ashraf Al-Ghazzawi, executive vice president for strategy and corporate development, in a long interview. “This was not dictated on us.”
‘We don’t see any contradiction’
The message was simple: Aramco can tackle climate change, even while pumping a mammoth 9 million barrels or so of oil a day. (Exxon Mobil, the second-biggest oil company, pumps less than one-third that amount.) “We don’t see any contradiction,” Al-Ghazzawi says. “Combating emissions from these conventional energy sources is a very viable option.”
For the Saudi royals, conventional energy is also essential. Revenues from the country’s vast oil reserves comprise 50% of the Saudi economy. Profits from that oil—which costs Aramco less than $4 a barrel to produce—are crucial to supporting the government’s other economic-development endeavors. In May, the company reported free cash flow of nearly $23 billion for the first quarter of this year, and last year it brought in $440.8 in revenues.
The goal is to make that oil business last far into the future, regardless of the world’s green transition. Aramco claims its tech breakthroughs will cut carbon emissions from each barrel of oil it produces by 15% by 2035, a sum that engineers calculate to be equivalent to 51.1 million tons of carbon a year. The company aims to zero out its emissions by 2050 (its so-called net-zero target). That target excludes joint ventures, as well as Scope 3, or end-user, emissions. But Aramco predicts that even in 2050, millions of people will still be driving fuel-burning cars, flying on jet-fuel planes, and sending cargo on marine-fuel ships.
“We need all sources of energy to meet the growth in demand, which is just tremendous in the developing world,” says Ahmad Al-Khowaiter, executive vice president for technology and innovation. “The main pillar of our strategy and technology is efficiency and optimization of our existing production.”
The emphasis on efficiency, rather than reining in production, is pushed in every corner of the Dhahran headquarters, or “camp,” as the staff calls their American-style suburban complex. (There’s Starbucks and Tex-Mex food on offer, and Little League baseball.)
But to many climate scientists and environmentalists, squaring the circle—being an oil giant and a climate champion—seems impossible. The London-based financial NGO Carbon Tracker Initiative, which monitors companies’ environmental performance, last September ranked Aramco’s climate goals the weakest among 25 publicly traded oil and gas companies, and the only one that restricts its climate targets to wholly owned and operated facilities. In general, the NGO says, the industry “continues to put investors at risk by failing to plan for production cuts.”
The carbon-capture debate
Aramco is determined to far outlast that transition. Al-Khowaiter,…
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