FIRST GAS FROM SHAH DENIZ TO COME TO TURKEY IN LATE 2006
During the first half of the year the Shah Deniz gas condensate development project spent $693 million of the $1081 planned capital expenditure for 2004. BP Azerbaijan president David Woodword said that project is progressing according to schedule to meet the target of delivering first gas to the market before winter 2006.
Construction activities
The completed hull sections of TPG500 platform were loaded out in late July from Singapore. A ceremony was held on July 26, in the fabrication yard of Keppel Fels, the Shah Deniz contractor for the out of country fabrication of the platform hull strips, to celebrate this important milestone. The platform strips' are now on a two-month journey from Singapore to the Black Sea where they will be offloaded and towed through the Russian canal system to their final destination - Baku. The hull sections will be transported by a heavy-lift vessel (Mighty Servant III) operated by Dockwise.
The platform hull comprises 15 000 tonnes of steel and is formed of 12 block sections and over 680 steel panels. The hull strips have been completed within the 12-month timeframe, and with a safety achievement of more than four million man-hours without a lost time incident.
The fabrication of the accommodation block for 120 personnel has also been completed by Keppel Fels safely and on schedule, and will be shipped separately using a heavy lift vessel. Under the Stage-1 of the Shah Deniz development - in the 4th Q 2004 it is expected to commence linking TPG sections in the floating Dry dock and start SCP construction.
The TPG500 will be deployed in the Shah Deniz gas-condensate field in the Caspian Sea, approximately 100 km to the south of Baku, Azerbaijan. Delivery of first gas to Turkey, the primary sales market for the Shah Deniz project, is targeted for the fourth quarter of 2006.
The civil works for the Shah Deniz section in the expanded Sangachal are now 35% complete. The construction of underground piping including fire water piping is well underway and the hot oil heater erection is ongoing.
Most of the large equipment pieces including the power turbines and the condensate metering skid have already been delivered and assembled on the foundation. Buildings construction has also commenced. The pipe fabrication work is expected to start in the near future. Overall the construction of the Shah Deniz section at STEP is progressing on schedule.
At the Zykh yard the upgrade of the Zykh 3 yard to accommodate the fabrication of the TPG-500 leg sections is complete. The lower three leg sections are fully fabricated and relocated to the temporary leg outfitting area. The middle leg section fabrication is progressing well and will be completed ready for outfitting in August this year. Overall leg fabrication is ahead of the planned schedule. Final preparations for the Zykh 3 quay for offloading of vessels is now complete and ready for the first delivery of materials from Antwerp.
The upgrade of the Zykh 4 yard is now well under way and the refurbishment of the various buildings, including warehousing/storage facilities, changing rooms, fabrication shops and other facilities that will be required to build the TPG-500 are nearing completion. The construction of the new project office facility has commenced. The upgrade of access roadways is still ongoing.
The main feature on Zykh 4 is to build a quay wall to enable access to the TPG-500 platform for the erection of legs, living quarters modules, vent tower, drilling modules and other topsides components. The quay wall piling materials and equipment are on the site and ready for piling, which commenced at the end of July.
Before commencing the quay wall construction and in order to prepare the ground to be suitable to support heavy lifts, over 100,000 m3 of graded aggregate was delivered to the site in May and June.
For the next few months the yard upgrade works remain critical to the Project such that everything is in place to accept the delivery of the drilling modules in September 2004. Fabrication of the temporary spud cans, which will enable the trial elevation of the TPG-500 Platform at the yard prior to transportation to the field location, is in progress and on schedule.
Offshore activities
The third Shah Deniz pre-drill well was successfully suspended on July 15. This completed the Shah Deniz Stage 1 Pre-drilling Programme, which began with the Istiglal semi-submersible drilling-rig sail away in March 2003. Since that time the Shah Deniz drilling team has successfully set the 15 slot seafloor drilling template, drilled and suspended the three planned pre-drilling wells and have discovered an additional gas reservoir below previously mapped horizons.
The pre-drill programme also included installation and use of 15 x 42" conductors, the industry's first installation for a semi-submersible rig. Drilling operations of all the three pre-drill wells were conducted with these large-diameter conductor sleeves through the drilling template slots. The setting of these conductors was conducted by the Shah Deniz Partners' drilling contractor, Caspian Drilling Company (CDC), and specialist company Seacore, of Cornwall, UK.
These three wells have been some of the most challenging BP has drilled globally. The drilling team has been able to achieve some 436 rig days without a serious accident and the entire Stage 1 pre-drilling campaign been completed within 15 months, which is about three months ahead of the original plan.
The pre-drilling programme included the coring of all reservoirs and the three wells reached the base of the Fasila interval. The appraisal resulted in discovery of additional gas-bearing reservoir section in lower horizons. This is a significant achievement and the first major completion milestone in the Shah Deniz Stage 1 development.
To determine the incremental reserve volumes and production capacity available from the lower sections of the reservoir, the analysis of the data will keep on and this will provide additional information on the quality and productivity of the entire reservoir. This will also enable to better plan for future drilling operations from the platform after TPG500 is commissioned in the middle of 2006.
The third well was spudded on the 21st of February this year and was drilled from the existing drilling template to a location that is near the fields crest, with a drilling step-out of 2.3 km. The water depth at the template location was approximately 101 metres. The total depth of the well was 6460 metres and it took approximately 151 days to drill and suspend.
UK's BP, the operator of Shah Deniz gas condensate field in Azerbaijan, is conducting tender procedure for a semi submersible rig for spudding the fourth exploration well at the field. The company cancelled the contract for Istiglal rig that spudded pre-drill wells at the field, as it considered inexpedient its further rent for drilling the fourth well, said Shah Deniz project manager for commercial affairs Michael Lutz. There could be selected one of the two rigs, the Istiglal and Heydar Aliyev (former Lider) ones.
According to Lutz, the fourth well will be located in south-west wing to define gas reserves in this part of the field. Moreover, when spudding the company plans to expose deeper formation - Above-Kirmakin Sandy Suite.
This well drilling is scheduled for next August. Its design depth is 6,800 metres with water depth of 392 m. The well will be spudded with deviation in direction to the structure crest to avoid getting out of structure area.
Spudding of three pre-drill wells in north-east of Shah Deniz allowed to increase reserve volume at the field by 100 bn cu.m. Under company's previous estimate, field's reserves made 625 bn cu.m. of gas and 101 million tons of condensate.
Currently the company is also negotiating with BTC Co about purchase of gas from Shah Deniz field for its use at pump stations of the pipeline. Lutz emphasized that negotiations will finish before pipeline commissioning. It is expected that up to 300 million c.m. of Shah Deniz gas will be purchased annually.
The SCP Co. funding shareholders are: BP (technical operator - 25.5%), Statoil (commercial operator - 25.5%), the State Oil Company of Azerbaijan Republic (Socar - 10%), LUKAgip(10%), NICO (10%), Total (10%), and TPAO (9%).
Export
To date some 62% of the total linepipe quantities has already been delivered for the Azerbaijan section of SCP. Approximately 38 000 joints of pipe will be needed for the Azerbaijan section, which is 442 kilometres long. Transportation of pipe shipments will continue until the end of this year. The pipe is 42" in diameter and is supplied by Sumitomo Corporation which is providing all SCP pipe for both Azerbaijan and Georgia.
The pipe joints are being stored in the Yevlakh, Kurdamir and Ganja pipe yards. The pipe will be transferred to the Right of Way upon completion of the BTC pipeline when physical construction activities for SCP are planned to commence.
Opportunities to lay SCP line pipe at the same time as BTC were being taken at specific locations (such as mud volcano ridge, the Garabagh Canal, the Jeyrankechmez river and others crossings), thus minimizing environmental impact or exposure to geographical hazards with two of the six river crossing sections in Azerbaijan already completed. Some 360 people are currently involved in the SCP construction activities in this country and of these 263 are Azerbaijan nationals.
In Georgia some 50% of linepipe has already been received. Construction at two facilities locations - close to the Azerbaijan border and the Turkish border, has commenced. Engineering interfaces have begun with BOTAS in Turkey to ensure design and construction alignment with the BOTAS built extension to their gas distribution system that will meet SCP at the Georgian - Turkish border. All SCP engineering and procurement activities are continuing on schedule.
The SCP Co. funding shareholders are: BP (technical operator - 25.5%), Statoil (commercial operator - 25.5%), the State Oil Company of Azerbaijan Republic (Socar - 10%), LUKAgip(10%), NICO (10%), Total (10%), and TPAO (9%).