THE Kazakhstan Thread (merged)

[altair333]

http://www.theaustralian.news.com.au/st ... 75,00.html

Kazakh field to yield 25pc more oil by Carola Hoyos, London, November 28, 2006
KAZAKHSTAN'S giant Kashagan oil field will produce 25 per cent more oil than expected once it hits peak production, international companies developing the field have found.
News that the field, the largest and most important discovered in more than 30 years, will yield significantly more than the 13 billion barrels forecast is a breakthrough as dwindling world oil supplies and problems accessing oil-rich countries such as Iraq raise doubts about meeting rapidly increasing demand.

The Financial Times has learnt that peak production of the Kashagan field in the Caspian Sea, due at the end of the next decade, is expected to be 1.5 million barrels a day, 25 per cent higher than published estimates.

The field, operated by Eni, Italy's biggest oil and gas group, is expected to pump this amount each day for more than 10 years, meaning it will yield 10 per cent more reserves than assumed.

Kashagan's extra production is almost equivalent to all the oil produced in Sudan in 2005, according to the latest figures.

[joewp]

Except that

But the complicated field - originally due to start pumping oil in 2005 - will take longer to develop, Eni is expected to warn shortly.

The operator has pushed back its start date several times, most recently to 2008, but is now set to announce production will not start until 2009 at the earliest.

So wait three years at least for this one, even if they do get that extra 300,000 b/d out of it. These stories remind me of scraping the container to get the last bits of ice cream out.

[pstarr]

This is way too funny. 25% of 13 billion will last the world another 2 months at our current consumption rate.

A U.S. Department of State report to Congress in 1997 estimated that the Caspian region might hold up to 200 billion barrels” of oil reserves. A 1998 Time Magazine cover article hyped it as “Caspian Black Gold.”

The truth has turned out to be much less sanguine even tragic. Some think that this remote region north of Afghanistan played an important role far exceeding its actual reservoir importance. It is thought by many that the invasion of Afganastan was motivated by an oil-pipeline out to the west.

In 2001 the largest Caspian reservoir complex (Kashagan) was finally discovered. It was deemed to be the greatest field in the decade. The enthusiasm has since vanished. It is now thought that the Kashagan field contains perhaps 9-13 billion barrels of petroleum (and the entire Caspian region has perhaps 16 to 43 billion barrels.)

Furthermore, Caspian oil is deeply located, offshore, and requires a costly, complex technology for recovery (including ice breakers). The Caspian Sea is landlocked so oil rigs have had to be cut up into parts, floated down the Volga River, and then reassembled. BP Amoco is reported to have spent nearly $200 million to reconstitute one such rig. Caspian oil also has a high sulfur content, a contaminant which must be removed on site because it damages pipelines. The region is surrounded by antagonistic, warring cultures. One of the reasons the Soviet oil industry left the Caspian for the Vulga and Siberia was the expense and technological difficulty of oil recovery in its remaining Caspian fields. In 2002 BP and Stat Oil quietly sold their 14% of Kashagan for 800 million dollars. In 2003 British Gas put their 17% on the block for 1.2 billion dollars.

Link

[clv101]

This is way too funny. 25% of 13 billion will last the world another 2 months at our current consumption rate.

It shouldn't be belittled like that, an extra 300,000 b/d is a lot!

See this A primer on Caspian Oil we put up last week.

Kashagan

The biggest oil field to be discovered in the world in the past 30 years, it is in the North of the Caspian Sea, in the Kazakh sector (as shown on the map above), and it is being developped by a consortium including all the big majors - ExxonMobil, Shell, Total, ConocoPhillips, ENI and Inpex, with ENI, the Italian group, as the operator (Exxon did not want Shell, Shell did not want Exxon, and ENI was smarter than Total to be voted in...)). BP and BG were initially in but sold their shares in recent years. With 9-15 billion barrels of reserves (exploration is not totally complete), it is yet another ANWR fully in control of BigOil, but it is very, VERY, challenging technically (very high pressures, located in an areas which is at times seawater, ice, mud or any combination in between, and far away from any infrastructure of any kind in an area with a very tough climate) and it will need to find export routes for its production (a combination of CPC and BTC is likely to start with).

Getting 1.5mbpd from Kashagan will be hard though - there isn't the transport capacity!

[PWALPOCO]

Again this perspective of total amounts and production rates.

A year ago I couldnt have told you how much oil we used in a day , or a year , this has all been pretty educational eye opening (and jaw dropping) stuff.

I would probably have gone "oh , 13 billion , that sounds like a lot" back in 2005 , now I know we happily chew through 30ish billion in a year. So ok , the field isnt going to transform the globe as much as say when the Middle East oil was being found way back when we were using 5 billion a year.

However PO is all about the rates and 300kbd is useful ! The global production is a house of cards propped up by fields that do worse than that. I fear the new production willl be swallowed up by declines elsewhere but at least its an asset.

The treadmill seems so obvious now, all the work thats going on and to gain what ? I was taken aback when reading the North Sea article at TOD .....

1985 - 32 Fields needed to peak at 2.5mbd
1999 - 136 Fields needed to re-peak at 2.5mbd.

Thats a lot of extra work to stay still.


Paul

[Concerned]

This is way too funny. 25% of 13 billion will last the world another 2 months at our current consumption rate.

It shouldn't be belittled like that, an extra 300,000 b/d is a lot!

I disagree. In the big picture scheme of things 300,000 b/d is NOT a lot. Sure it might be great for the company that owns the field but compared to global consumption of 84,000,000 then the increase is truly small. (roughly 1/3 of 1 percent of current consumption)

Then if you consider decline rates to 2009 when it finally scheduled to get on line. I'd hazard a guess that the additional 300,000 b/d will not even cover existing fields decline.

[pstarr]

1985 - 32 Fields needed to peak at 2.5mbd
1999 - 136 Fields needed to re-peak at 2.5mbd.
Thats a lot of extra work to stay still.
Paul

such is the nature of declining energy returns.

Let's say for sake of argument that in 1985 it took 1 barrel of produced and refined petroleum from every 20 pumped to operate (and to build) those 32 fields.

Now in 1999 we need 4x energy because the infrastructure must be replicated for each 136 smaller field (same wellheads, collection pipes, etc.) to get equal petroleum.

In 1985 the energy efficiency was 95%. In 1999 it is 80% so the cost to use the petroleum just increased 19%

[kokoda]

It just seems to be following the modern trend of finding medium to small reserves of oil in places previously thought to be too difficult or expensive to develop.

All we are really doing now is finding a bit of loose change that has fallen down the back of the lounge and making out that is some sort of cash windfall.

Oh well ... at least Borat might be able to afford to get that car fixed.

[rockdoc123]

All we are really doing now is finding a bit of loose change

Well considering this ends up being one of the largest in-place accumulations of oil in the world I hardly think it is loose change.

As with everything in life timing is important. Based on the WoodMac analysis of production coming on stream over the next ten or so years (only announced projects) the bulk of Kashagan doesn't hit until everything is starting to decline off a conventional oil peak in 2013 or so. Basically it tends to flatten out the decline as does other fields from the Caspian that are projected to come on stream. CERA requires unconventional oil to get its flat plateau out to 2030 or more.

[altair333]

I disagree. In the big picture scheme of things 300,000 b/d is NOT a lot.

Yeah, and that's what people said about the discovery of the additional oil in the Gulf of Mexico months ago. Ditto the story I recall recently about the large find in the Norwegian offshore fileds. But when you add these stories together, you've got a very significant amount of oil coming online that wasn't known about last year at this time. Combine that with falling oil prices right now, along with the oil-from-coal projects (China is moving hard on this) and ethanol contributions which are constantly growing, and the notion that we'll be seeing apocalyptic results from peak oil in our lifetimes seems pretty unreasonable. Certainly in comparison to much more real threats like avian flu. But hey, people here seem to like worrying about it, so knock yourselves out.

[Zardoz]

...when you add these stories together, you've got a very significant amount of oil coming online that wasn't known about last year at this time...

Fine, but it doesn't come close to matching the decline of existing fields. That's the problem.

[pstarr]

if you'd read my previous post Altair you'd realize that not only is Caspian oil (and the tentaive GOM Jack II project) literally drops in the consumption bucket, but they are probably both disappointing drops. Caspian has already destroyed rosy 'reserve growth' assumptions and year discovery still trails consumption by a ratio of 1:5.

Furthermore you'd better bone up on your biofools facts before you promote this magic bullet. Many here bristle at food-fuel conversion schemes.

[Fergus]

Any little bit will help I am sure.

[wowpleasewakeupalready]

All we are really doing now is finding a bit of loose change

Well considering this ends up being one of the largest in-place accumulations of oil in the world I hardly think it is loose change.

As with everything in life timing is important. Based on the WoodMac analysis of production coming on stream over the next ten or so years (only announced projects) the bulk of Kashagan doesn't hit until everything is starting to decline off a conventional oil peak in 2013 or so. Basically it tends to flatten out the decline as does other fields from the Caspian that are projected to come on stream. CERA requires unconventional oil to get its flat plateau out to 2030 or more.

Hey Rockdoc, any idea on when WoodMac originally had this field coming online in their current peak projections?


From what I have seen, many of these forecasts have been overly optimistic lately in regards to project timing because of current resource constraint. When I was doing my number crunching a while back it seems like they had expected the bulk of this one to come on at this end of this decade.

I will be curious to see if the larger projects in SA, Iran, and Brazil come in on time. If not, my forecasted liquids peak in the early to middle part of the next decade may just be wishfull thinking.

[DantesPeak]

Kashagan could start up in 2009.

And then again, maybe not.

12/12/06 Lloyd's List Int'l
LLOYDS LIST
December 12, 2006

Fifth biggest oilfield dogged by delays

Estimates claim that the Kashagan development off Kazakhstan could produce 1.5m barrels of oil a day when in peak production, writes Nigel Green

THE Kashagan oilfield development has been delayed by a vast range of environmental and safety problems, but is believed to hold around 38bn barrels, making it the fifth biggest in the world.

Latest estimates claim the field could produce 1.5m barrels of oil a day at peak production, boosting supply to Europe and beyond from 2010.

But the optimistic forecast comes after a series of delays. Originally it had been hoped that Kashagan would be producing oil by 2004.

The delays are reported to have been caused by a range of safety concerns as well as disputes between partners in the consortium developing the field.

The original capital development cost estimation of $29bn will rise to around $35bn, according to experts, making it one of the most costly projects in the world.

In October, Kazakh energy and mineral resources minister Baktykozha Izmukhambetov said: 'Some technical issues need to be addressed. There are some technical challenges and it is possible we are going to build some more production islands.

'Based on preliminary estimates, we will not get the first oil until 2009.'

Umberto Carrara, managing director of Agip KCO, said: 'The authorities are fully knowledgeable of the situation and the date they state is in the range of possibilities.'

First, as the world's largest lake, it freezes from November to March when temperatures can drop as low as minus 40C.

Conventional rigs would be crushed in the ice. Instead, operator Agip KCO has already built four of 17 islands planned for the area, which has water depths of just two to four metres.

The islands have been constructed from 4.5m tonnes of rock placed on the seabed and secured by steel sheet piling. Each island is protected with man-made berms.

Each has a self-moving rig, which ramp up and move along tracks.

Another challenge is that the oil has a high sulphur content and is under high-pressure, therefore increasing the risk of a blow-out.

Sour gas compressors have been made specially for Kashagan. At 35 megawatts and 800 bars, they have the highest combination of power and pressure in the industry.

Each island is equipped with special tracked vehicles capable of evacuating workers across the ice in the event of a leak of hydrogen sulphide gas or during any other dangerous incident.

(Pg. Unavail. Online)

[DantesPeak]

Kazakhstan was most recently expected to start up in the third quarter of 2010, after many delays. The first original projected opening date was in 2005, now there is an additional delay of three months beyond the last projected opening date.

Kazakhstan Orders Eni to Halt Work on Biggest Field (Update4)
By Nariman Gizitdinov and Greg Walters

Aug. 27 (Bloomberg) -- Kazakhstan ordered Eni SpA to halt work at the world's biggest oil discovery in 30 years as the Central Asian country follows Russia's lead in seeking greater control over its natural resources.

The Eni-led Kashagan development was suspended for at least three months because of ``environmental violations,'' Environment Minister Nurlan Iskakov said on state television today. Kazakh officials also told Eni to halt construction of a refinery for allegedly violating safety rules and opened a criminal probe into alleged customs violations by an Eni unit.

Kashagan holds 12 billion barrels of recoverable crude, enough to supply the U.S. for 19 months, according to the Kazakh Energy Ministry. Setbacks have pushed the total cost of the project to $136 billion, more than double earlier estimates, according to the government.

'Friendly Talks'

Eni officials will hold ``friendly'' talks with Kazakh authorities today, a Rome-based spokeswoman for the company said by phone, declining to comment on the suspension or alleged violations. Chief Executive Officer Paolo Scaroni said last week that he would fly to Kazakhstan for talks in September, followed by Italian Prime Minister Romano Prodi in October.

Two-Year Delay

Eni said in February that production at the field would start two years behind schedule and that costs for the first phase would almost double to $19 billion. The company attributed the delay and higher cost in part to the need to meet environmental standards. Eni had planned to start commercial production at Kashagan in the third quarter of 2010, with output eventually reaching 1.5 million barrels a day.

Last Updated: August 27, 2007 09:53 EDT

Bloomberg

[pstarr]

I believe the problem is sulfur and nimbyism. Fancy Caspian seaside vacationers (think Hamptons in the Balkans) do not look forward to swirling clouds of sulfur dust ruining their cocktail hours. No one wants yellow yellowtail.

[Ming]

Predicting production rates for 2019 is truly ridiculous, and even more so when those companies that announce that wonderful improvement in reserves and in maximum production rates are the same that first predicted first oil in 3 years (from 2001 to 2004/2005) and had to delay that to 8 years (2001 to 2009/2010) – that is almost triple the previous time estimation!

Are they really able to accurately predict the 2019 production?

Or was that (1 year old) announcement just a sweetening of the reality (safe for the present CEOs, since 12 years distant), and a way to prevent a more significant drop in their stock prices resulting from the extreme delay and price increases that they had to announce?

[nth]

I believe the problem is sulfur and nimbyism. Fancy Caspian seaside vacationers (think Hamptons in the Balkans) do not look forward to swirling clouds of sulfur dust ruining their cocktail hours. No one wants yellow yellowtail.

Umm... the location of these fields is not a sunny beach, but a very foul smelly area.

[nth]

I can bet anyone that oil production from this won't exceed 100kbpd avg in 2011.

They have some technical issues, and on top of that, they have some financial and political issues, too. It really does not matter how big the field is right now. They are just running into one headache right after another.