Saudi looks at restarting its first oilfield

State oil giant Saudi Aramco will study drilling again at its long mothballed, first oilfield, industry sources said on Tuesday.

Dammam, now known as the "Prosperity Well", is where the top crude exporter has made its first discovery in 1938.

Saudi Aramco's chief executive Khalid Al Falih has said the Number 7 well there produced 32 million barrels of oil before it was shut. The kingdom's oldest field, Ghawar, has pumped more than 65 billion barrels since 1951.

"The well remains capable of producing even today, and the Dammam Field as a whole still accounts for half-a billion barrels of our proven reserves," Falih said.

Saudi Arabia holds the world's largest oil reserves. State oil company Saudi Aramco had recoverable oil and condensate reserves of 260.1 billion barrels in 2009.

"There is a plan to drill trial wells, to try to assess the feasibility of the extended reach target," one source said. "It is challenging to drill an extended reach well."

The source did not give a timeline on when Aramco could start extended reach drilling. Damman is a relatively small field for the company, but rich in symbolism.

"It is very high profile, the location...it's near Aramco's offices and historically Dammam 7 is where everything started," a second source said.

Aramco cancelled plans in 2008 for restarting production from Dammam because of high costs. The project target was to pump 75,000 barrels per day (bpd) of crude and 100 million cubic feet per day (cfd) of gas, sources had said at the time.

The cost would have been around $1bn, one source estimated then.

Aramco drilled an extended-reach well in the giant Manifa oilfield and said in February that it was the longest well it had drilled in Saudi Arabia that reached a total measured depth of 32,136 feet.