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KCA Deutag wins new Sakhalin Island contract

By OGJ editors
HOUSTON, Dec. 23 -- South Korea's Hyundai Heavy Industries (HHI), which holds the main contract for drilling package fabrication for the Sakhalin-1 project in the Russian Far East, has awarded a subcontract to Houston-based KCA Deutag Drilling Inc., a division of Abbot Group PLC, for the detailed design of drilling facilities.

The design project will be executed in Houston, followed by construction support and commissioning at Ulsan shipyard in South Korea.

The Sakhalin-1 project encompasses three offshore oil and gas fields in the Sea of Okhotsk, off Sakhalin Island. The project is being developed in phases, with first production from the Chayvo field scheduled to commence at yearend 2005. A consortium of US, Russian, Japanese, and Indian companies is developing the project, which is operated by Exxon Neftegas Ltd., an ExxonMobil Corp. affiliate.

A modified concrete and steel structure, formerly used by ExxonMobil off Alaska's North Slope, will be installed 7 miles off Sakhalin Island in about 45 ft of water. It will support existing living quarters, minimum production facilities, and a new drilling package designed for world class, extended-reach wells. Production will be moved by pipeline for further processing at a new onshore processing plant.

"This is a very interesting and strategically important project that will build on our current drilling operations contract offshore Sakhalin," said Neil Stevenson, vice-president of KCA Deutag, adding, "We have targeted Sakhalin as an area of significant potential for our drilling business, which is very similar to the businesses we are growing in our other main international markets of the Caspian Sea, the Middle East, and North and West Africa."

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