Kashagan oil field starts production

Posted on September 12, 2013


Around the world news media have reported that the giant Kashagan oilfield offshore Kazakhstan will start to produce oil before October 1st. Kashagan is the world’s biggest crude discovery in the last 40 years, with estimated resources (Oil Original In Place – OOIP) of 35 billion barrels and the recoverable reserves will be 9-13 billion barrels. (The world consumes 31 billion barrels per year.) It has been very difficult to start the production and the project is now delayed eight years and the costs have reached $48 billion, more than double early estimates. The problem with the field has been that the water depth just is been 3-6 meters and the only option for the production has been to make a man-made island.

A total of 40 wells are planned for the production from Kashagan. The first phase entailed the completion and operation of offshore and onshore facilities with capacity to produce as much as 180,000 barrels per day from 20 wells. Phase 2 will involve completion of remaining facilities that will increase production to 370,000 barrels per day. Currently these facilities are mechanically completed and under commissioning. During this phase of Kashagan production, about half the produced gas will be reinjected into the reservoir. Separate pipelines will carry produced liquids and raw gas to the Bolashak plant, which will treat oil for export. Some of the processed gas will be returned to the field to fuel operations, and some will fuel the onshore plant.

The Kashagan oilfield spans an area of 75 km by 45 km and lies at 4,200 m in 3-6 m of water about 80 km offshore Atyrau in the northern part of the Caspian Sea. Exxon Mobil Corp. (XOM), Royal Dutch Shell Plc (RDSA), Total SA (FP) and Eni SpA (ENI) each holds 16.81 percent in the project. Japan’s Inpex Corp. (1605) owns 7.56 percent. State-owned KazMunaiGaz National Co. retains 16.88 percent.

China National Petroleum Corp. this month bought an 8.33 percent holding from KazMunaiGaz. Kazakhstan had earlier exercised a preemptive right to buy out ConocoPhillips (COP)’ 8.4 percent share to block a sale to India’s Oil & Natural Gas Corp.

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