BP Amoco eyes gas exports to Turkey from Caspian giant discovery

BP Amoco plc confirmed a major gas condensate discovery in the Caspian Sea off Azerbaijan with a wildcat drilled on the Shah Deniz license area.

Speculation about a major find on Shah Deniz began in May, when the State Oil Co. of the Azerbaijan Republic (Socar) announced that the well had cut gas and condensate pay zones in the Shah Deniz structure (OGJ, June 7, 1999, Newsletter).

BP Amoco announced on July 12 that results from the SDX-1 well suggest a significant resource in the structure - enough to justify the early establishment of a joint working group to explore prospects for "material gas exports."

A BP Amoco official said that the most likely estimate of reserves was put at 15 tcf of gas. Azeri sources have quoted figures as high as 25 tcf, though these estimates are thought to be based on politicians` hopes rather than engineers` expectations.

The working party is expected to push for exports of Shah Deniz gas to Turkey by pipeline. Unusually for such a find, no consideration has yet been made of condensate reserves: "Gas is the driver for this project, not liquids."

The well was drilled to a total measured depth of 6,316 m and encountered gas condensate in three separate horizons with a combined net pay of 220 m. The lowest horizon flowed 50 MMcfd of gas - the maximum capacity of the rig`s equipment - and 2,965 b/d of condensate through a 38/64-in choke at a wellhead flowing pressure of 7,126 psi.

The operator began drilling an appraisal well, SDX-2, into the Shah Deniz structure 6 km to the south of the discovery well in early May, with the Istigal semisubmersible rig operating in 348 m of water. The appraisal well is expected to be completed by mid-October.

Andy Hopwood, Azerbaijan exploration unit leader at BP Amoco, said: "Clearly SDX-1 is a good result for the Shah Deniz participants and the Republic of Azerbaijan.

"The second well should give us more information about other areas of the reservoir and, as work continues, we will be able to build up a much more complete understanding of the resource.

"But even at this early stage this discovery has confirmed the exciting potential to create a new dimension, namely gas exports, to the development of Azerbaijan`s energy industry."

The working party to study potential gas markets would include representatives of the Azeri government, Socar, and Shah Deniz interest holder: operator BP Amoco 25.5%; Statoil AS 25.5%; Socar 10%; Elf Petroleum Azerbaijan BV 10%; LukAgip NV 10%; Iran`s Oil Industry`s Engineering & Construction 10%; and Turkish Petroleum Overseas Co. Ltd. 9%.

Projects update

Norsk Hydro AS let a 250 million kroner ($32 million) contract to Kvaerner Oilfield Products AS, Oslo, for subsea equipment to develop Tune gas field. Tune will be developed with four subsea wells tied back via a seabed template to Oseberg field. Tune is due on stream in 2002 and has estimated reserves of 55 million bbl of condensate and 955 bcf of gas.

Production peaks of 35,300 b/d of condensate and 425 MMcfd of gas are anticipated. The field lies on Norwegian North Sea Blocks 30/8 and 30/5 where water depth is about 90 m.

Agip Algeria Exploration BV bought the combined interests of Anadarko Petroleum Corp. and Lasmo plc in two Algerian exploration and production blocks for $127 million.

The deal involved Blocks 401a and 402a in the Berkine Basin, in which Anadarko held 27.5% and Lasmo 13.75%, and which are operated by BHP Petroleum Pty. Ltd.

The two blocks contain a number of oil discoveries which are being evaluated for development. One find extends into Agip`s adjacent Block 403 license area.

Anadarko said the sale brought better value from a non-operated property, while Lasmo said the blocks were non-core assets. Both companies retain interests in nearby Blocks 404a and 208, where Anadarko is operator.

Saga Petroleum AS, recently acquired by Norsk Hydro AS, sold its Varg production ship to Petroleum Geo-Services AS, Oslo, for $350 million. Saga will lease the ship from PGS for the remaining production period of Varg.

The contract is due to last a minimum of 3 years, and the lease rate is $177,000 b/d. Varg was brought on stream in December 1998 and had estimated reserves of 50 million bbl of oil. Production currently average 33,000 b/d. Saga said the deal gave it a book value gain of more than 500 million kroner ($63 million).

Project Focus: Shell Expro lays Brent Spar to rest

Shell U.K. Exploration & Production completed the disposal of Brent Spar, after an initially rocky 4-year process, at last over the weekend of July 10-11.

That weekend three remaining cut and cleaned rings of the hull were placed on the seabed in Mekjarvik harbor, near Stavanger. The 1,200-1,800 metric ton rings, each about 22 m high and 29 m in diameter, were lifted into place by the Thialf crane barge. They were to be filled with ballast and covered in concrete to form a new quay, due to open in 2000 (OGJ, Feb. 9, 1998, p. 30).

The dismantling was carried out by Heerema Marine Contractors Nederland BV using H581, the world`s largest flat-top barge. This was fitted with a specially designed lifting cradle to raise the cylindrical spar vertically so the hull could be sliced. The barge was also used to transport and cut the cleaned ring sections to the quay site for placement by Thialf.

Eric Faulds, Shell Expro`s decommissioning manager, said: "We`ve learned a great deal in the process and, in the spirit of openness and communication which has been a feature of Brent Spar decommissioning, since we launched the `Way Forward` in October 1995 we will be publishing information on the technical and other lessons learned in a `close out` report later this year.

"In the report we will also be able to provide details of all aspects of the work including final costs and other statistical data compiled over the whole project."

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