Cheleken expansion programs nearing completion

Production from the Cheleken Contract Area fields in the Turkmen sector of the Caspian Sea averaged 46,400 b/d during Q3 2010, according to operator Dragon Oil.

Offshore staff

ASHKABAD, Turkmenistan -- Production from the Cheleken Contract Area fields in the Turkmen sector of the Caspian Sea averaged 46,400 b/d during Q3 2010, according to operator Dragon Oil. Currently, oil is flowing from 65 wells on 11 offshore platforms.

Since the start of July, Dragon Oil has completed four new wells and sidetracked one other. The Dzheitune (Lam) B/148 well has been completed by the Iran Khazar rig and put into production, with testing currently in progress. The NIS rig will shortly complete the Dzheitune (Lam) 28/149 well.

Over the remainder of this year, the NIS will drill the Dzheitune (Lam) 28/151 well, while the Iran Khazar rig has skidded to drill the Dzheitune (Lam) B/150 well. Both wells should come on stream before year-end, boosting production in 2011.

Phase 2 expansion of the Central Processing Facility (CPF) is almost complete. Its capacity will increase to handle up to 100,000 b/d of liquids and up to 220 MMcf/d of gas. Dragon expects to finish commissioning of the new 30-in. (76-cm), 40-km (24.8-mi) offshore trunkline and other associated in-field pipelines before yearend. All have been laid and are currently being connected into the system.

The company is constructing further in-field pipelines connecting the Dzheitune (Lam) 28 platform and the Dzheitune (Lam) A platform (18-in., or 45.7 cm), and from the Dzheitune (Lam) A platform to Block II (20-in., or 51 cm). This will increase the throughput capacity, and assiste future development of the western area of the Cheleken field.

The new 40-km trunkline, which runs from Block II to the CPF, will replace the two existing 12-in. (30.5-cm) trunklines, allowing Dragon to take gas and liquids onshore. However, the two trunklines will be maintained for future use.

Construction is also progressing of two wellhead platforms contracted earlier this year. The Dzheitune (Lam) C platform, which will support a jack-up rig, with up to eight drill slots, should be completed in Q4 2011.

Dragon plans to install the platform in the western part of the Dzheitune (Lam) field between the Lam B and Lam 28 platforms. The drilling program will target reserves beyond the reach of the two existing platforms.

The Dzhygalybeg (Zhdanov) A platform will be the first new platform that the company has installed in the Dzhygalybeg (Zhdanov) field. It will support a land rig and will also be suitable for a jackup rig alongside.

Up to eight wells will be drilled from this platform. Depending on the results from the first wells, more slots may be added to extend the drilling program from this structure. It should be completed in Q1 2012 and installed in the eastern part of the Dzhygalybeg (Zhdanov) field.

To support offshore construction activities, Dragon has ordered a 100-metric ton (110-ton) floating crane vessel from an international contractor, which should arrive on location in Q4 2011. It will be employed for drilling and infrastructure projects.

The company is also adding up to six additional slots to the Dzheitune (Lam) A platform, and this program should be finished next summer. Ten wells have so far been completed from the platform with an average initial flow rate of over 3,000 b/d per well.

Finally, a new platform is being built in the western part of the Dzheitune (Lam) Field to replace the existing Block I, which will act as a gathering station, increasing throughput capacity of crude oil flow in this part of the field.

Capital expenditure on infrastructure in 2010 is estimated at around $250 million, including completion of the trunkline and Phase 2 expansion of the CPF.

These new facilities will allow Dragon to deliver unprocessed raw gas to the Turkmen gas pipeline system. A Front End Engineering Design (FEED) study was recently completed for a potential onshore gas treatment plant to allow further processing of the gas. Dragon is evaluating the results, while continuing discussions with the government concerning commercialization of the gas resources.

During 2011, the company is looking to bring in more drilling rigs in addition to the Super M2 jack-up, which is due to be delivered in Q4 2011.

The company aims to complete 11 wells next year, including one appraisal well in the Cheleken Extension. The NIS and Iran Khazar will likely drill and complete four wells each, with a further two drilled and completed from the Dzheitune (Lam) 13 platform, using Rig 40.

Dragon is also trying to contract a new land rig for the appraisal well.

During 2011-13, the company expects to drill up to 40 wells, of which five will be appraisal wells. It is targeting production growth of 10-15%/yr over this period, with total infrastructure capex of $600-700 million.

10/21/2010

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