[ROCKMAN]

Rut roh…Sour gas eating Kashagan oil profits

From http://news.yahoo.com/insight-sour-gas- ... nance.html I particularly like the part where they say: "Every corrosion engineer would have looked at that design and, hand on heart, have said it should be fine”. I wonder if those engineers went to the same uni as the ones on the Macondo well as well as the ones that designed the biggest refinery upgrade in US history at the Motiva plant in Port Arthur, Texas, which had to be shut down due to pipe corrosion as soon as they tried to start it up?

Reuters – “A pipeline inspection robot is set to join efforts to discover why the biggest new oilfield in decades is crippled and whether materials, construction methods, a design fault or all three are at the root of the problem. Its arrival at the Kashagan project on the Caspian Sea this week comes after the field's trouble-strewn 13-year, journey towards commercial production took another twist in September as it delivered its first oil but began leaking toxic gas from a processing pipeline. After costing nearly $50 billion, mostly paid by some of the world's top oil companies, Kashagan may now be delayed until 2015, jeopardizing a forecast budget boost for Kazakhstan of $28 billion - about a third - between 2014 and 2016.

Even at modest early rates of production, every day it sits idle costs millions of dollars in lost oil revenue. Industry jokers have nicknamed it 'Cash-All-Gone'. The robot or "intelligent pig" - device was dispatched this week, according to an industry source, to take part in an investigation officials said would last into December at the field, named after Kazakh poet-singer Kashagan Kurzhimanuly. The oil extraction structure has been built on artificial islands about 70 km (40 miles) off the coast in the remote and environmentally hostile northern Caspian Sea, which means fixing the problem may take months.

The Central Asian former Soviet state hopes the field will produce 1.66 million barrels a day at its peak, double the national oil output of 2012, and equivalent to the entire production of resource-rich Angola. But the location, high reservoir pressure, and other challenges such as high levels of corrosive and poisonous hydrogen sulphide associated with the crude oil have proved to be major difficulties.

The project is years late and billions of dollars over budget already. With output at just 70,000 barrels a day, it sprang leaks in a pipeline carrying the associated gas to an onshore processing plant. According to a senior executive at a large oil company with knowledge of the site, the leaks were most likely caused when the hydrogen sulphide - known in the industry as sour gas - ate through the pipeline. This could be because the metallurgy of the pipes has turned out to be wrong for the conditions, while welds could also be part of the problem, he said.

Some in the industry say the pipes might have deteriorated after being left in the open for an extended period during the long delays the project has experienced, making them more vulnerable to attack from the sour gas. Others rejected this explanation, saying the pipes are designed for just such exposure.

Doubt was also thrown on whether the welds could be the trouble. Unlike the reservoir itself, which is at very high pressure, the gas that comes off the crude as it reaches the surface is carried at low pressure to the processing plant. Whatever the cause, a shutdown for a leak just two weeks after startup on September 11 was followed by a second leak and interruption in October, backing the view expressed by the head of one project partner Total this week when he said: "It's more than just repairing pipes." Smith, the managing director of Wood Group's asset integrity division also said that from what she knows of the project, it used the right specifications for the job. "Every corrosion engineer would have looked at that design and, hand on heart, have said it should be fine," she said.”

[Oilfield T]

I don't know if the recent (2010) Norwegian Johan Svedrup discovery has received any coverage here yet. http://www.marketwired.com/press-release/lundin-petroleum-ab-johan-sverdrup-update-tsx-lup-1864495.htm

But with revised latest estimates of between 1.8 and 2.9 billion barrels of recoverable oil equivalent, it is an interesting 'recent' addition to the pot. First oil is, however, still a long way off (now in 2019/2020) with one of the current unresolved debates being about the topside designs and how to supply power the field - and to surrounding fields. The Norwegian government is keen to see a dedicated power supply coming from onshore supply, which in turn would power much of the surrounding off-shore infrastructures. The debate goes on, on a field that may account for 40% of Norwegian production by the year 2025.

[TheAntiDoomer]

If Rockman spent as much time fracking and drilling as he did scouring the web for the slightest bit of negative oil news the USA would be pumping 20mpbd by now.

[dissident]

The above post is nothing but a pure ad hominem without any basis in fact. Bugger off troll.

[dolanbaker]

If Rockman spent as much time fracking and drilling as he did scouring the web for the slightest bit of negative oil news the USA would be pumping 20mpbd by now.

From what I can tell from some of RM's recent posts is that he's scraping the nooks & crannies of old worked out wells for the past remaining dregs of oil. I'm certain if there were some (easy) virgin fields waiting to be exploited, he'd be in quicker than a randy cowboy!

He can't, because the oil isn't there!!!

[ROCKMAN]

Now, now boys. Don't be so rough on Anti. He's right: me and my 4 cohorts have only spent $450 million in the last several years drilling. I'm sure he has contributed more to the effort. LOL. As far as 'scouring' for negative news it really doesn't take much time. It's all readily available. I doubt I spend more than 10 minutes a day. And in truth my main source of all that negative news is Rig Zone, a leading industry cheerleader. If Anti wants to go after a messenger he should write their chief editor. They should be a leading shill for the oil patch putting out as much positive spin as possible. Hmm...maybe they already are.

Actually I'm just teasing the Rig Zone. Unlike some folks like the Oil & Gas Journal they neither editorialize or spin very much. They are essentially reporting from other sources. But they are good about not being biased towards just posting the good news. I also suspect Anti doesn't fully understand where I'm combining from: I've spent most of my 38 years as a development/production geologist/reservoir engineer and have dealt with more bullshit from exploration geologist's then a dung beetle could handle. LOL. Been a while since I mentioned it so for any newbie: my first project was for Mobil Oil in 1975 drilling off a brand new platform in the GOM. I was drilling off the exploration staff's mapping. My first FIVE wells were dry holes. They reduced the fields reserves from 25 million bbls of oil to 1 million bbls and 125 bcf to 25 bcf. So yeah...I learned to stop sipping the Kool-Aid a long time ago. Which is a big reason I'm still around while many of my former cohorts aren't. And a VP in a multi $billion company I helped build with just 4 other chaps from the ground up. If that doesn't afford me a fair bit of street cred then maybe putting me on "ignore" would be the best way to go. LOL.

But Anti isn't alone: in my career I've been run off 3 times because of my "negativeness" about the company's operation. Oh...and yes...all three companies failed not long after I left and disappeared from the planet for ever. That's been the benefit of working with poorly managed companies: you learn to readily recognize the crap.

[Graeme]

One Of The World's Biggest Oil Projects Is A Total Fiasco

WHEN it was discovered in 2000, the Kashagan oilfield in Kazakhstan’s waters in the northern Caspian Sea was the world’s biggest oil find in three decades. By now it was supposed to be pumping out 1.2m barrels a day (mbd), enough to meet Spain’s entire consumption.

But the project, whose name sounds unfortunately like “cash all gone”, went spectacularly awry. A year ago, when the first trickle of crude briefly flowed, it was already eight years behind schedule. Having cost $US43 billion, it was $US30 billion over budget. And production lasted only a few weeks before leaks of poisonous gas forced its suspension. Earlier this month a government minister admitted it would not restart until at least 2016.

Undeterred by the Kashagan fiasco, this week the government said it would approve a plan to expand the onshore Tengiz oilfield, another huge budget-buster. Tengiz was first expected to cost $US23 billion but the government said this week that the bill had risen to $US40 billion.

Each of the two oilfields is owned by a different consortium of foreign firms and the state oil company, KazMunaiGaz. In Kashagan’s case they include Exxon, Shell, Total and ENI. In part the project’s setbacks are due to unexpected technical problems. Corrosive and poisonous hydrogen sulphide gas, pumped up from the seabed along with the oil, has eaten through pipes bringing it onshore.

businessinsider

[Tanada]

So I found this graph,


showing updated information of consumption vs discoveries up through the end of 2015. It is great to finally find a graph more recent than 2011 with newer data, but on the other hand due to low prices and low exploration new discoveries in 2015 are arguably the lowest in the last 75 years.

How high would prices have to reach and sustain for the major oil companies to return to investing in exploration and development of new trends?

[dissident]

So I found this graph,

This graph is moving goal posts around. Actual crude oil discoveries have not been that significant. And the peak around 2010 looks like BS to me. I recall a whole load of announcements around the time of Brazilian offshore and Gulf of Mexico which were allegedly tens of billions of barrels worth. This was total unconfirmed hype that has fizzled away yet it is being graphed as real.

[ROCKMAN]

And what should be obvious: how big any individual new discoveries might be the are not very relavent to PO or our energy future. IOW one field holding 300 million bo today is not significant compared to 100 fields each holding 30 million bo. Forget how accurate that chart might be on a yearly basis: picture the same chart with 20 year increments instead of a yearly scale.

Such a bigger picture chart isn't as subject to errors or misestimates as the one above. And obvious very representative of the long term trend.