Kashagan Field

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Kashagan Field
Location of Kashagan Field
Country Kazakhstan
Region Pre-Caspian Basin
Location Near Atyrau
Offshore/onshore Offshore
Coordinates 46°10′N 51°35′E / 46.167°N 51.583°E / 46.167; 51.583Coordinates: 46°10′N 51°35′E / 46.167°N 51.583°E / 46.167; 51.583
Operator North Caspian Operating Company (NCOC)
Partners Eni (16.81%)
KazMunayGas (16.81%)
Royal Dutch Shell (16.81%)
Total S.A. (16.81%)
ExxonMobil (16.81%)
ConocoPhillips (8.4%)
Inpex (7.56%)
Field history
Discovery 2000
Start of development 2001
Start of production 2013 (expected)
Abandonment after 2040
Production
Estimated oil in place 38,000 million barrels (~5.2×10^9 t)
Recoverable oil 13,000 million barrels (~1.8×10^9 t)
Producing formations Carboniferous limestones

Kashagan Field is an offshore oil field in the Kazakhstan's zone of the Caspian Sea.[1] The field, discovered in 2000, is located in the northern part of the Caspian Sea close to Atyrau and is considered the world's largest discovery in the last 30 years, combined with the Tengiz Field.[2]

It is estimated that the Kashagan Field has recoverable reserves about 13 billion barrels (2.1×10^9 m3) of crude oil. Harsh conditions as sea ice during the winter, temperature variation from −35 to 40 °C (−31 to 104 °F), extremely shallow water and high level of hydrogen sulphide, together with mismanagement and disputes, make it one of the most challenging oil megaprojects.[3][4] Commercial production is expected to start in the first half of 2013.[3] It has been designated as the main source of supply for the Kazakhstan-China oil pipeline.[5] CNN Money estimates it costs US$116 billion, which makes it the most expensive energy project in the world.[6] Other sources report the cost at up to $50 billion.[3][4]

A stake in the field was acquired by the Chinese government in September 2013 after Xi Jinping struck a deal with Kazakhstan for around $5 billion.[7]

History

Interest in the Caspian Sea first began in 1992 when an exploration program was announced by the Kazakhstan government. They sought the interest of over 30 companies to partake in the exploration. In 1993 the Kazakhstancaspiishelf was formed which consisted of Eni, BG Group, BP/Statoil, Mobil, Royal Dutch Shell and Total S.A., along with the Kazakhstan government. This consortium lasted 4 years until 1997 when the seismic exploration of the Caspian Sea was undertaken.

Upon completion of an initial 2D seismic survey in 1997, the company became Offshore Kazakhstan International Operating Company (OKIOC). In 1998 Phillips Petroleum Company and Inpex joined the consortium. Kashagan was discovered in 2000.[8]

The consortium changed when it was decided that one company was to operate the field instead of the joint operatorship as it had been agreed before. Eni was named a new operator in 2001. In 2001 BP/Statoil sold their stake in the project to the remaining partners. With Eni as the operator, the project was renamed Agip Kazakhstan North Caspian Operating Company NV (Agip KCO).

In 2003, BG Group attempted to sell their stake in the project to two Chinese companies CNOOC and Sinopec. However, the deal did not go through due to the partners exercised their pre-emptive privileges. Eventually, in 2004 the Kazakhstan government bought half of BG's stake in the contract with the other half shared out among other five Western partners in the consortium that had exercised their pre-emptive rights. The sale was worth approximately $1.2 billion. The Kazakhstan stake was transferred to the state-owned oil company KazMunayGas. On 27 September 2007, Kazakhstan parliament approved the law enabling Kazakhstan government to alter or cancel contracts with foreign oil companies if their actions were threatening the national interests.[9]

With Kazakhstan President Nursultan Nazarbayev appointing Maksat Idenov [10] to lead negotiations, [11] KazMunayGas further increased its stake in January 2008, after its six partners and Kazakhstan government agreed on a compensation for the probable five-year delay that was taken in developing the field. Eni operated this project under the JV company name of AgipKCO (Agip Kazakhstan North Caspian Operating Company N.V.).[12] Following the agreements reached on 31 October 2008 between Kazakhstan authorities and co-ventures under the North Caspian PSA (NCPSA), operatorship of the NCPSA was formally transferred from AGIP KCO to a new company - North Caspian Operating Company BV (NCOC) on 23 January 2009.[13]

In October 2008, Agip KCO handed a $31 million letter of intent for FEED work on phase two to a joint venture of Aker Solutions, WorleyParsons and CB&I. WorleyParsons and Aker Solutions are engaged also in the phase one, carrying out engineering services, fabrication and hook-up.[14]

In November 2012, ONGC Videsh agreed to buy ConocoPhillips' 8.4% stake. Kazakhstan government, however, decided in July 2013 to use its pre-emptive right to buy ConocoPhillips' stake which it sold to CNPC later that year.[3][6][15] The deal is already approved by Eni.[16]

On 11 September 2013, Kashagan began oil production after years of delay with ExxonMobil and ConocoPhillips increasing production over the next several years.[17] The Oil and Gas Minister of Kazakhstan has estimated the oil field will pump 8 million tonnes of oil in 2014.[18][19]

Geology

The Kashagan contract area covers an area of over 5,500 square kilometres (2,100 sq mi) and consists of five separate fields, producing formations from the Precaspian Basin. These fields are Kashgan, Kalamkas A, Kashagan Southwest, Aktote and the Kairan.[8]

Kashagan is a carbonate platform of Late Devonian to middle Carboniferous age. The "reef" is about 75 kilometres (47 mi) long and 35 kilometres (22 mi) across with a narrow neck joining two broader platforms (Kashagan East and Kashagan West). The top of the reservoir is about 4,500 metres (14,800 ft) below sea level and the oil column extends for over 1,000 metres (3,300 ft). The field is in very shallow water being 3 to 9 metres (9.8 to 29.5 ft) deep. The seal is middle Permian shale and late Permian salt. The reservoir consists of limestones with low porosities and permeabilities. The oil is a light oil with 45 API gravity with a high gas-oil ratio and hydrogen sulphide (H2S) content of 19%.[20] The field is heavily overpressured which presents a significant drilling challenge. The figures for oil in place range between 30 and 50 billion barrels (4.8 and 7.9 billion cubic metres) with a common publicly quoted figure of 38 billion barrels (6.0×10^9 m3). The recovery factor is relatively low (15-25%) due to reservoir complexity, with between 4 and 13 billion barrels (640 and 2,070 million cubic metres) being the estimated ultimate recoverable resource.[21]

Development

Three of the other fields in the contract area, Kashagan SW, Kairan, and Aktote, are also Carboniferous carbonate platforms. Kalamkas offshore has a Jurassic sandstone reservoir. The field is developed by the international consortium under the North Caspian Sea Production Sharing Agreement. The Agreement is made up of 7 companies consisting of Eni (16.81%), Royal Dutch Shell (16.81%), Total S.A. (16.81%), ExxonMobil (16.81%), KazMunayGas (16.81%), ConocoPhillips (8.4%), Inpex (7.56%).[15]

The main development for the field operation is a structure named Island D, connected with 12 oil wells. It consists of two trains of production, separating oil and gas, delivering them to the onshore plant and dehydrating and partly re-injecting the sour gas into the reservoir. At the moment about 5,000 workers are employed there. Oil is transported to onshore by 92-kilometre (57 mi) long pipeline.[4] Workers are accommodated on the living quarter barge Vivaldi delivered by Wagenborg Offshore in cooperation with Wagenborg Kazakhstan B.V. and Ersai Caspian Contractor LLC.[22]

The initial production is expected to be 370,000 barrels per day (59,000 m3/d).[3] It should reach a production rate of 1.5 million barrels per day (240,000 m3/d).[13]

See also

References

  1. ↑ Yenikeyeff, Shamil (November 2008). Kazakhstan's Gas: Export Markets and Export Routes (PDF). Oxford Institute for Energy Studies. Retrieved 17 November 2011. 
  2. ↑ Johnston, Daniel (2003). International Exploration. Economics, Risk, and Contract Analysis (1 ed.). PennWell Corporation. p. 199. ISBN 0-87814-887-6. 
  3. ↑ 3.0 3.1 3.2 3.3 3.4 Crooks, Ed; Chazan, Guy (26 November 2012). "Conoco sells stake in Kashagan field". Financial Times. Retrieved 8 December 2012. 
  4. ↑ 4.0 4.1 4.2 Demytrie, Rayhan (7 December 2012). "CDevelopment challenge of Kazakhstan's giant oilfield". BBC News. Retrieved 8 December 2012. 
  5. ↑ "Caspian oil exports heading east". Asia Times. 9 February 2005. Retrieved 20 May 2007. 
  6. ↑ 6.0 6.1 "Kazakhstan's Kashagan tagged world's most expensive energy project". Tengrinews.kz. 29 November 2012. Retrieved 8 December 2012. 
  7. ↑ Mariya Gordeyeva (7 September 2013). "China buys into giant Kazakh oilfield for $5 billion". Reuters. 
  8. ↑ 8.0 8.1 "Project: Kashagan". Rigzone. Archived from the original on 30 June 2006. Retrieved 26 April 2006. 
  9. ↑ "A New Oil Bully in the Caspian?". BusinessWeek. 18 July 2007. Retrieved 18 July 2008. 
  10. ↑ "The creation of a new operating company rules out operatorship in Kashagan". New Europe. Retrieved 24 March 2013. 
  11. ↑ "Kazakhstan, consortium agrees to new Kashagan terms". Oil and Gas Journal. Retrieved 24 March 2013. 
  12. ↑ "Eni to share Kashagan operator status with other consortium members". The Telegraph. AFX. 14 January 2008. Retrieved 8 December 2012. 
  13. ↑ 13.0 13.1 "Change of guard at Kashagan helm". Upstream Online (NHST Media Group). 23 January 2009. Retrieved 30 January 2009. 
  14. ↑ "Trio tuck in to Kashagan FEED". Upstream Online (NHST Media Group). 21 October 2008. Retrieved 26 October 2008. 
  15. ↑ 15.0 15.1 "ONGC Videsh buys Kashagan entry ticket". Upstream Online (NHST Media Group). 26 November 2012. Retrieved 8 December 2012. 
  16. ↑ "ONGC gets project operator's nod for $ 5-bn Kashagan stake buy". The Financial Express. 7 December 2012. Retrieved 8 December 2012. 
  17. ↑ Kazakhstan Oil Field Begins Production After Years of Delay. NY Times http://www.nytimes.com/2013/09/12/business/global/kazakhstan-oil-field-starts-production-after-years-of-delay.html?_r=0
  18. ↑ Kazakhs expect 8m tonnes of oil from Kashagan in 2014. Central Asia Online. http://centralasiaonline.com/en_GB/articles/caii/newsbriefs/2013/09/19/newsbrief-11
  19. ↑ "ENI cuts production guidance, cites Libya and Nigeria disruptions". Oil Patch Asia. Retrieved 7 January 2014. 
  20. ↑ Zempolich, W.; Negri, A.; Leo, C.; Van Ojik, K.; Verdel, A. (10 March 2002). "The Kashagan Discovery: An Example of the Successful Use of a Multi-disciplined Approach in Reducing Geologic Risk" (PDF). Annual Meeting. Houston, Texas: AAPG. Retrieved 8 December 2012. 
  21. ↑ Eytchison, Patrick (2003). "The Caspian Oil Myth". Synthesis/Regeneration (32). Retrieved 23 January 2008. 
  22. ↑ "Living quarter barge delivered to Kashagan oilfield". Heavy Lift & Project Forwarding International. 4 December 2012. Retrieved 8 December 2012. 

External links

Kazakhstan Resources in Kazakhstan Kazakhstan
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