168CONCLUSION: THE CLIMATE HEDGEcompetitive, with states vying with rivals for market share and to dif-
ferentiate themselves and their products based on climate criteria. My
discussions with Saudi energy executives in January and February 2018,
on condition of anonymity, revealed the outlines of Saudi Arabia’s
approach to the climate challenge.
A key component of this strategy is the one highlighted at the begin-
ning of the chapter: petrochemicals. Converting crude oil and natural
gas feedstocks into chemical form does not involve combusting those
feedstocks. The carbon is locked inside the polymers and the final plas-
tic goods produced. In this sense, petrochemicals are a “climate- proof ”
use of hydrocarbons, although lots of natural gas is combusted in the
energy- intense process of creating the chemicals. (Plastic has other prob-
lems, particularly in regards to proper disposal, but those are more eas-
ily overcome than stanching emissions of greenhouse gases.)
It also turns out that the crude oil produced in Saudi Arabia and the
Gulf is less damaging to the climate than competing grades. The climate
advantage is based on the simplicity of lifting Gulf crude oil to the sur-
face and transporting it to refiners. Carbon emitted in oil production is
lowest in prolific reservoirs, like Ghawar, which enjoy high levels of nat-
ural drive pressure and minimize the use of energy- intense recovery
techniques such as steam flooding or water injection. Saudi oil reservoirs
also produce low levels of water, which means that a larger portion of
the produced crude is usable. Low water content lightens the weight of
the crude pumped to the surface and reduces the energy expended in
surface processing and separation.^16 The Gulf monarchies have also
phased out almost all flaring of natural gas, which further reduces the
carbon footprint of their oil.
These advantages suggest that Saudi Aramco could position itself as
a “responsible” oil supplier by highlighting the differences in carbon
intensity between its crude and those of competitors, particularly heavy
crudes from Canada, California, and Venezuela, which require energy-
intensive extraction and processing. As countries begin to tax carbon, a
tax that differentiates among crude types could actually help Saudi Ara-
bia, by conferring its crude oil with a cost advantage over competing
grades. The higher the tax, the larger the discount for “clean” crudes.