KASHAGAN - NEW "PROJECT OF THE CENTURY"
Kazakhstan is the second biggest oil manufacturer among CIS countries. The country's major oil and gas fields - Kashagan (with predominance of oil), Tengiz (with predominance of oil), Karachaganak (gas and condensate) and other big fields in western part of Kazakhstan, in regions Aktobe, Mangistau and Kizil-Orda.
Almost half of the hydrocarbons is produced from three big onshore fields - Tengiz, Karachaganak and Uzen. Today the Kashagan field with estimated 1.5 bn tons of stocks is the biggest field discovered in Kazakhstan. Kazakhstan is planning that production will double by 2010 following the signature of several new agreements with international consortia.
Such a raise is stipulated mainly due to the Kashagan and Tengiz fields, gas condensate from Karachaganak and commissioning of new fields. Kazakhstan is as well the biggest oil exporter in the Caspian Sea region, and its export capacities have actually doubled due to commissioning of CPC oil line. Further rapid increase of export is planned to take place in the forthcoming years.
More than 40% of gas stocks in Kazakhstan are located in the country's northwest, the huge field Karachaganak, which is the continuance of the Orenburg field in Russia. In past development of this field was troubled for the absence of processing capacities. Today it is planned to build a new gas treating gas to promote to increase of production. Tengiz, Janajol and Uritau fields are other big gas producing regions.
Biggest seismic exploration programme in the world
The history of exploration of the Kazakhstan shelf started actually in 1993, when the consortium was created for seismic exploration activities in the Caspian Sea. In 1995-1997 the international consortium ran geophysical survey in the ecologically vulnerable shallow-water sector of Kazakhstan in the Caspian in cooperation with the national company Kazakhstankaspiyshelf (KKP). The program covered area of 100 000 sq. km, including 26 180 km of seismic lines and was the most grandiose of all the seismic exploration programs in the world.
The survey revealed a number of extremely promising structures and in late 1997 the consortium members signed PSA with Kazakhstan on spudding of the structure of 550 sq. km chosen by them. The operations are conducted within "PSA on northern part of the Caspian Sea". The field is located in northeast of the Caspian Sea and consists of 11 offshore blocks at depths of 2-10 meters. Seismic exploration in northern part of the Caspian Sea revealed a number of structures laying much lower the Permian salt depositions with Upper Paleozoic carbonate collectors similar to those in the huge land field Tengiz.
In accordance with the world practice, activities of international oil holdings is a great success, when 20% of offshore explorations result in reveal of commercially attractive stocks. The correlation of success and failure in Kazakhstan exceeded all the most optimistic expectations of geologists. The project reached its culmination in 2000, when petroleum was revealed at spudding of a well in the Kashagan structure found out through seismic exploration. In opinion of geologists, this discovery can become the biggest since the moment of oil discovery in Alaska in 1969.
However there is as well a quite big "spoon of tar" - collector of the Kashagan field is characterized with high formation pressure, presence of hydrogen sulfide and mercaptans, which causes a number of technical problems.
Hard working conditions in the Kashagan field are added to geological difficulties. The structure is located in shallow-water area. Northern part of the Caspian Sea freezes from December till March. The temperature hesitates between -40°C and +40°C. The water depth change can reach 2 m depending on the inflow of Volga and other factors.
The coastal material and technical basis has a restricted volume and several channels restrict access to the Caspian Sea. The drilling platform used for spudding of exploration and extension wells was made in accordance with a special project on operation in the shallow-water area in conditions of surface ice in winter.
Self-elevating drilling unit and land drilling rig were commissioned in 2002, and two additional land drilling rigs were mobilized as well in 2003.
Kazakhstan oil industry
in figures (in 2003)
Proved + probable
oil stocks = 2.5 bn tons
Oil production 51 mln tons
Oil export 44 mln tons
Conventional
gas stocks = 2.3 trn c.m.
Conventional gas
production 14 bn c.m.
Further development of the project is based on plans of building artificial islands in Kazakhstan sector. Investors are planning to create 13 such complexes for the whole period of experimental-industrial developments.
Early oil rose in price
Therefore the Consortium faced significant price rise of experimental-industrial development (EID) of the Kashagan field - the early oil project with commence of production already in 2007-2008. Tentative assessment of its full cost is $9.8 bn. Before investors assessed EID at $7-8 bn. That's why optimization of expenditures and search for ways of reducing their further growth is one of the urgent tasks of the consortium.
Explorative drilling commenced in mid 1999 and by summer 2000 light oil of 41 degrees was revealed in the East Kashagan block 1 field at depth of 4000 m in a very promising offshore structure in 75 km from Atirau.
In March 2001 an oil field with similar features was revealed at depth of 4300 m in the West Kashagan block 1 in 40 km southwest. The program of extension to finish in 2004 included 3D seismic exploration and spudding of 5 additional development wells.
The assumption of that Kashagan is one of the biggest fields revealed in recent 30 years was confirmed. The plan of the field's development was approved by the consortium participants and local authority bodies. The first stage of capital investment is to be realized since early 2004.
The development will be realized stage-by-stage. At the first stage it is planned to produce 75 000 barrels of oil per day by 2008 with gradual increase up to 450 000 barrels. Stable volume of production will be achieved at the following stages. In accordance with present calculations it will equal to 1 200 000 barrels per day. For maximal increase of oil production at restriction of desulfurization problems to a minimum, gas will be re-pumped to the collector requiring building of coastal technical facilities for gas treatment and sea technological facilities for transfer of untreated gas.
Table 1.
Source: Agip KCO working group
International participants of PSA on north of the Caspian Sea:
ENI (Agip, operator) - 16,67%,
ExxonMobil - 16,67%,
Shell - 16,67%,
Total - 16,67%,
British Gas - 16,67%,
ConocoPhillips - 8,33%,
Inpex - 8,33%.
Associated gas handling
This year Kazakhstan government toughened the requirements of commercial gas handling.
Kazakhstan governmental agencies are aspiring for that Agip KCO provided manufacture of 4.09 bn c.m. of commodity methane already in the middle of third phase, that is in 2010. Correspondingly, writes the Russian web-portal Rus energy.com, the gas refining plant's capacity must as well increase. In the long-term Kazakhstan government expects from investors increase of the industrial gas output to 6 bn c.m. per year.
Table 2.
Source: Kazakhstan Ministry for Energy and Mineral Resources, Agip KCO working group, RusEnergy.
Export
The issue of export pipelines becomes more pressing as the significant additional crude hydrocarbon stocks are revealed in Kazakhstan water area of the Caspian. In addition to the current export lines the companies participating in development of the Kashagan fields - ENI, Total and Inpex acquired 5% of shares each in the construction project of BTC (Baku-Tbilisi-Ceyhan) pipeline to be commissioned in 2005. The terminal in Ceyhan will enable loading tankers of over 160 000 tons tonnage.
In cooperation with the national oil company KazMunayGaz, the Total concern studies as well the possibility of oil export from north Caspian to the oil refineries and/or to the Iranian ports via Turkmenistan.
Ecology
The Caspian Sea, particularly the Kazakhstan sector has especially vulnerable ecosystem. Shallow water (sea depth less than 3 m) deltas of the Ural and Volga rivers are favorite places of breeding of many species of fish, birds, reptiles and mammalians, as well as spawn places of beluga and sturgeons providing 90% of the global amount of spawn output. Sturgeon is an endangered species, particularly for its catch.
In order to maintain the unique natural environment of the shallow water area it is necessary to plan all the operations in detail. Complex ecological researches were realized with participation of international and Kazakh experts prior to the regional seismic exploration.
The researches included ecological inventory in the Ural delta, background studies of natural environment (imagery through IZS proved by the field survey) and environmental impact assessment. At fulfillment of all the spudding operations, well tests and building in coastal and offshore areas special ecological requirements should be observed, and engineering solutions are worked out with account of environmental protection.