The giant Kashagan oil field has begun production, said the field’s operator, marking the end of almost a decade of delays.
Located in the North Caspian Sea, approximately 80 kilometres southeast of Atyrau, in Kazakhstan, the Kashagan field is a joint venture between Kazakh state energy company KazMunaiGaz, Eni SpA (E), ExxonMobil Corp. (XOM), Royal Dutch Shell PLC (RDSA), France’s Total SA (TOT) and Japan’s Inpex (1605.TO).
The field was discovered in 2000, and was projected to cost $10 billion to develop. But this was soon reassessed when the need to build artificial islands to protect facilities from the north Caspian’s harsh conditions became apparent.
The use of conventional drilling and production technologies, such as concrete structures or jacket platforms that rest on the seabed – is not possible due to the shallow water and cold winter climate of the northern part of the Caspian Sea.
To ensure their protection from harsh winter conditions and pack ice movement, offshore facilities are being installed on artificial islands. There are two main types of island – small unmanned ‘drilling islands’ and larger manned ‘hub islands’. Hydrocarbons will travel from the drilling islands to hub islands via pipeline. The hub islands will contain processing facilities to separate recovered liquid (oil and water) from the raw gas, as well as gas injection and power generation systems.
During Phase I, around half of the gas produced will be re-injected back into the reservoir. Separated liquid and raw gas will be taken by pipeline to the Bolashak onshore processing plant in Atyrau oblast, where export quality oil will be produced. Some of the processed gas will be sent back offshore for use in power generation while some will be used to generate power at the process plant itself.
According to the Oil&Gas Journal, Phase 1 status has been reached at a cost of $41.2 billion. The first phase entailed the completion and operation of offshore and onshore facilities with the capacity to produce as much as 180,000 bpd from 20 wells. Phase 2 will involve completion of remaining facilities that will increase production to 370,000 bpd; currently these facilities are mechanically completed and under commissioning. A total of 40 wells are planned for Phase 1.
Kashagan is one of the largest oil fields discovered in the last 40 years, with estimated reserves of 35 billion barrels of oil in place. “Considering the size, the specifications, the environmental and logistical characteristics, Kashagan has been one of the most complex and challenging industrial projects worldwide,” said a statement by Eni SPA.
In a report published by the Wall Street Journal, China National Petroleum Corp. recently bought into the Kashagan field. The Kazakh government, which had just bought ConocoPhillips’ 8.4% interest in the project, sold a similar sized stake to the Chinese state-owned company for an identical $5 billion, the journal said.
