Shah Deniz, one of the largest oil and gas fields in the world at an estimated 1.5-3 Bbbl of oil and 50-100 bcm of gas, came onstream last December. Full production could reach 37,000 b/d of condensate and 20 MMcf/d of gas. Spending for upstream and midstream development is expected to exceed $3 billion.
The Shah Deniz structure is in the south Caspian Sea 70 km (43 mi) southeast of Baku in water depths ranging from 50 m to 600 m (164-1,969 ft).
KCA Drilling Ltd. performed front-end design, construction, and commissioning on the drilling facilities and operations. Plans for later in the field’s life call for a second drilling center in 300 m (984 ft) of water, 5 km (3 mi) south of the first one. The second center is expected to be a subsea satellite with wells tied back to a manifold and flowlines to the fixed platform for gas/liquids separation and subsequent subsea pipeline to shore.
A seismic survey commissioned by BP in late February will further delineate the Shah Deniz field. Reservoir Exploration Technology ASA will carry out a five-month 4C seismic survey beginning in 4Q 2007.
In late Oct. 2006, the BP-operated Azerbaijan International Operating Co. (AIOC) began oil production from the East Azeri platform in the Azeri-Chirag-Gunashli (ACG) field in the Azerbaijan sector of the Caspian. Production, which began four months ahead of schedule, marks the completion of Phase 2 of the ACG field development. ACG is the largest oil field under development in the region.
Phase 3, which will develop the deepwater Gunashli area of ACG, is on schedule to begin production in 2008.
East Azeri (EA) lies in 150 m (492 ft) water depth on the east side of the Azeri field. Production will increase through mid-2007 as the other pre-drilled wells are brought online. When it reaches plateau, the EA facility will produce 260,000 b/d, bringing Azeri production, including West and Central Azeri, to over 800,000 b/d.
Dragon Oil, meanwhile, is continuing its drilling program in the Cheleken contract area of the Turkmen sector of the Caspian. The company signed a five-year extension for theIran Khazar jackup in early March. Around that time, another jackup, the Astra, completed perforating and testing of a well from the LAM 13 platform, which tested at a rate of up to 1,525 b/d of oil from three reservoir zones.
In addition to the drilling program, Dragon is planning a sustained program of workovers through 2007, with the objective of drilling up to 25 development and appraisal wells. The company also has budgeted $500 million this year for new production platforms, offshore facility upgrades, new pipelines, and enhanced export capability.
Brazil’s Petrobras, in a cooperative effort with the National Iranian Oil Co. (NIOC) will invest at least $470 million to develop Caspian Sea reserves. According to NIOC, negotiations for cooperation between Iran and Brazil have been finalized, and a contract is pending. The work scope covers three wells in blocks 6 and 29 offshore Iran.
Aral Sea
There were some interesting developments late last year in the Aral Sea when the members of a consortium of investors, including Uzbekneftegaz, Lukoil Overseas, Petronas Carigali Overseas, CNPC International Ltd., and KNOC Aral Ltd., signed a joint operating agreement and a single-operator agreement to implement a production-sharing agreement (PSA) in the Uzbek sector of the sea.
The original PSA was signed Aug. 30, 2006, in Tashkent. In late October 2006, the government of the Republic of Uzbekistan adopted a resolution on measures required to implement the project.
Exploration operations will be carried out in two phases. In the first phase, which covers three years, a 2,300-km (1,429-mi) 2D seismic survey will be shot and two exploration wells drilled for a minimal financial commitment of $99.8 million.
Phase two exploration operations, which will last for 35 years, will be undertaken after the commercial terms of the PSA are approved.
Black Sea
The Black Sea saw a fair amount of activity in 2006, and drilling plans are in place for 2007.
In 4Q 2006, Toreador Resources Corp. and partners TPAO and Stratic Energy Corp. hit gas with the Akcakoca-3 well offshore Turkey. The well encountered 81 m (266 ft) of gas-bearing sands in seven zones.
Akcakoca-3 was the 10th successful well drilled in the South Akcakoca sub-basin gas project and the first well drilled by Toreador and its joint venture partners to assess the reserve potential along the Akcakoca trend in waters too deep for jackup rig operations.
Toreador hit more Black Sea gas with the Guluc-1 well in mid-March this year. Guluc-1 flowed approximately 17 MMcf/d of gas from a fault-separated prospect along the same trend as the Akcakoca-3 well in the deeper waters of the project area.
With operations complete on Guluc-1 the rig will move to Bulgarian waters to begin work for Melrose Resources plc., which in late January announced its plans for an exploration drilling program offshore Bulgaria for later this year.
The company holds 100% working interest in four exploration concessions in the Bulgarian portion of the Western Black Sea covering over 10,000 sq km (3,861 sq mi).
Melrose plans to begin a drilling program that includes three firm and two optional wells. Drilling is expected to begin by late March.
The first well will be in the Bourgas Deep block. The Izgrev No.1 exploration well will be the first in this area of the Black Sea. The second well, Obzor No.1, is in Block Kaliakra 99 in 650 m (2,133 ft) water depth. The third well will be the Ropotamo No.1 exploration well in block Rezovska 45 km (28 mi) east of the Bulgarian coast in 160 m (525 ft) water depth. Ropotamo No.1 will be the first well in this region of the Black Sea.
Depending on drilling results, up to two further wells could be drilled.
For fiscal year 2007, Toreador has budgeted about $52.5 million (64% of the total budget) for Turkey and is making plans for additional drilling in August on the Thrace Black Sea permit area in the extreme western end of Turkey’s coastal waters.
Highlights from the Middle East
In February, Saudi Aramco signed a contract with Belgium dredging contractor Jan De Nul to develop the 900,000-b/d Manifa offshore oil field.
Jan De Nul will carry out dredging work in the Gulf before building several drilling islands and a 41-km (24.5-mi) causeway that will provide Saudi Aramco with a direct link from the coast to shallow-water offshore manmade drilling islands. The initial project is scheduled for completion in 2009.
This is the first lump-sum turnkey contract to be signed under Saudi Aramco’s Manifa development program, the company’s largest offshore project. The objective is to add 900,000 b/d of oil production by 2011.
Last July, ExxonMobil Middle East Gas Marketing Ltd., Qatar, and Qatar Petroleum (QP) signed a development plan for phase two of the Al Khaleej Gas project off Qatar.
Plans call for production of 1,580 MMcf/d gas from the North field when AKG-2 is operational in 2009.
Al-Khaleej gas is being developed concurrent with the Ras Laffan LNG Expansion Project. Total investment for AKG-2 is expected to be more than $3 billion.
AKG-2 development will involve construction of offshore and onshore facilities, including two wellhead platforms, gas treating and liquids recovery facilities, and fractionation operations. The onshore components will be built adjacent to other RasGas facilities in Ras Laffan Industrial City.
A subsidiary of J. Ray McDermott S.A. won the contract for engineering, procurement, construction, and installation of the two wellhead platforms and pipelines.
The intra-field pipeline included in the new contract will connect the platforms with 38-in. wet gas export trunk lines. The platforms will be connected to the RasGas Alpha Complex by two separate power and fiber-optic subsea cables.
Construction is scheduled to begin in May 2007 at McDermott’s Jebel Ali yard, with installation scheduled for completion in 2009.
In Feb. 2007, Qatar Petroleum offered ExxonMobil Middle East Marketing Ltd. an opportunity to participate in the Barzan gas project. The offer brought with it the right to participate in all future phases of the project as well.
The initial phase of the project will supply domestic gas to meet Qatar’s infrastructure and industry growth.
The companies expect the initial phase of the Barzan project to yield about 1.5 bcf/d of sales gas. Startup is anticipated in 2012.
In March, Maersk Oil Qatar AS awarded the National Petroleum Construction Co. of Abu Dhabi the pipeline contract for block 5 development at Al Shaheen field.
The work scope includes design, engineering, procurement, fabrication, offshore installation, and testing of 260 km (162 mi) of submarine in addition to 60 km (37 mi) of submarine power and communication cables, and associated works. Water depths range from 52 m to 70 m (171-230 ft).
The first work is scheduled for completion by the end of 2007 and the remainder by mid-2009.
Most of the work offshore the United Arab Emirates aims at increasing gas production as well.
In early March, Dolphin Energy Ltd. began testing its gas receiving and distribution facilities at Taweelah, Abu Dhabi.
Gas is being received from Qatar Petroleum (QP) for Dolphin’s export pipeline connecting Qatar with the UAE. Early commissioning saves many weeks of commissioning work that would otherwise have been required in the summer.
With Taweelah facilities commissioning complete, Dolphin will supply up to 400 MMcf/d of this gas to Dubai. The arrangement for early gas deliveries with QP will come to an end when Dolphin’s own gas is received from Qatar in mid-summer for UAE customers.
In May 2006, appraisal/development drilling got under way with the West Bukha-2 well in block 8, which lies 25 km (15.5 mi) offshore Oman. The field is being developed via a wellhead platform.
Indago Petroleum Ltd. carried appraisal forward with a 3D seismic survey over the field in August, the results of which will undergo evaluation during the first half of 2007.
In November, the company completed the initial flow test on the Bukha-2 well, identifying significant oil and gas deposits. The main objective of the well was to prove the commerciality of the Mishrif-Mauddud reservoir. Tests concluded in January.
More seismic surveying took place offshore Oman in Oct. 2006, with Circle Oil Plc. contracting TGS-Nopec Geophysical Co. (UK) Ltd. for a 2D survey over the 90,000-sq-km (34,749-sq-mi) block 52 off the southwest coast.
The survey, which concluded in March 2007, covered 6,300 km (3,915 mi) of seismic data plus shipborne gravity data. Initial data interpretation is scheduled to begin in early summer.
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