BP updates operations in Azerbaijan

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Dec. 2 -- Rashid Javanshir, head of BP PLC’s subsidiary in Azerbaijan, said production will be reduced next year at the massive Azeri-Chirag-Gunashli (ACG) oil field in the Azerbaijani sector of the Caspian Sea.

Consortium members plan to reduce the field’s oil production to 850,000 b/d in 2011, just under this year's projected level of 854,000 b/d. ACG’s participating interests include operator BP 37.4%, Chevron Corp. 11.3%, State Oil Co. of Azarbaijan Republic (SOCAR) 10%, INPEX Corp. 11%, Statoil ASA 8.6%, ExxonMobil Corp. 8%, Turkish Petroleum International Co. (TPAO) 6.7%, Itochu Corp. 4.3%, and Hess Corp. 2.7%.

Javanshir’s remarks coincided with release of BP’s fourth quarter business update for its work in ACG, where it spent $270 million on operations and $1.149 billion in capital investment in the first 9 months of 2010.

“For the full year we expect to spend about $587 million in operating expenditure and $1.584 billion in capital expenditure on ACG activities,” BP said.

BP said ACG production averaged 835,100 b/d of oil, amounting to 228 million bbl total from the Chirag, Central Azeri, West Azeri, East Azeri, and the deepwater Gunashli platforms.

The firm said its full-year plan remains an average 854,000 b/d production from the five ACG platforms, including 90,900 b/d from Chirag, 184,200 b/d from Central Azeri, 285,700 b/d from West Azeri, 158,100 b/d from East Azeri, and 135,100 b/d from Deep Water Gunashli.

BP said Chirag has 21 wells in operation (15 oil producers and 6 water injectors) and produced 98,000 b/d in the first three quarters of 2010. Central Azeri (CA) has 18 wells (13 oil producers, 5 gas injectors) and during the first three quarters it produced on average about 206,600 b/d.

West Azeri (WA) has 21 wells (15 oil producers, 6 water injectors). In the first three quarters it produced an average 252,800 b/d. East Azeri (EA) has 15 wells (10 oil producers, 5 water injectors). It averaged 143,500 b/d production during the first three quarters. Deep Water Gunashli (DWG) has 22 wells (11 oil producers, 11 water injectors), and during the first three quarters it produced on average 134,100 b/d of oil.

ACG associated gas
BP said it continued in the first three quarters to supply associated gas via the 28-in. subsea pipeline from three platforms (CA, WA, and EA) to the Sangachal terminal and from there into Azerigas national grid system for domestic use.

Some of the associated gas produced from the Chirag platform was sent to the SOCAR compression station at the Oil Rocks via the existing 16-in. subsea gas pipeline.

BP said the rest of the associated gas from the ACG platforms was sent via infield subsea gas pipelines to the compression and water injection platform on CA for reinjection to maintain reservoir pressure. Gas injection continues from five wells on CA.

During the first three quarters, BP said it delivered 9.3 million cu m/day of ACG associated gas to SOCAR.

“In total we delivered 2.5 billion cu m (bcm) of associated gas to SOCAR during the first three quarters, which already exceeds our original plan to deliver 1.9 bcm of ACG associated gas during the full year,” BP said.

Shah Deniz
Meanwhile, BP said the consortium developing the Shah Deniz oil field spent $121 million on operations and $251.1 million capital expenditure during the first 9 months of 2010.

Another $56.8 million is to be spent on operations and $253.7 million on capital expenditures by yearend, said BP, which operates the field with a 25.5% stake. The other shareholders include Statoil 25.5%, SOCAR 10%, OAO Lukoil 10%, Naftiran Intertrade Co. Ltd. (NICO) 10%, Total SA 10%, and TPAO 9%.

According to BP, Shah Deniz continued to produce from four wells to off-take points in Azerbaijan, Georgia, and the Turkish border during the first 9 months of 2010. It said the gas from Shah Deniz Stage 1 continues to be sold to Azerbaijan, Georgian Oil & Gas Corp. (GOGC), Turkey's state-owned Botas, and the BTC Co.

In the first three quarters of 2010, Shah Deniz produced more than 5.3 bcm of gas and 11.5 million bbl of condensate. By yearend, BP expects to produce 7.6 bcm of gas and 16 million bbl of condensate.

“Production will increase as new platform-drilled wells are brought on stream over the next few years,” BP said, adding that plateau production from Stage 1 is expected to be 8.6 bcm/year of gas and 45,000 b/d of condensate.

“Appraisal activities to support plans for the Shah Deniz full field development continue,” BP said, noting the SDX-06 appraisal well was spudded in July and is being drilled to a planned TD of 6,272 m. Completion is expected in 2011.

Oil, gas exports
Oil and gas from ACG and Shah Deniz continue to flow via subsea pipelines to the Sangachal Terminal, which has an overall capacity of 1.2 million b/d of oil and 39.5 million cu m/day, including 25.5 million cu m/day of Shah Deniz gas.

In the first three quarters of 2010 the Sangachal Terminal exported 244 million bbl of oil. That total included 213.5 million bbl through the Baku-Tbilisi-Ceyhan (BTC) pipeline, 23 million bbl through the western route export pipeline [WREP] and more than 7.5 million bbl by rail.

Gas is exported via the South Caucasus Pipeline (SCP) and via a SOCAR gas pipeline connecting the Sangachal Terminal’s gas processing facilities and Azerigas’ national grid system.

On average 19.3 million standard cu m/day of Shah Deniz gas was exported from the terminal during the first three quarters of 2010.

BTC pipeline
The BTC pipeline has throughput capacity of 1.2 million b/d of oil and currently carries mainly ACG oil and Shah Deniz condensate from Azerbaijan.

However, following a new transportation agreement in July, crude from Turkmenistan is being transported through the line, and BTC also has agreements to carry oil from the Tengiz field in Kazakhstan.

During the first three quarters, BTC had $20.1 million in capital expenditures and exported 213.5 million bbl altogether, reaching its record high throughput of 1.057 million b/d on July 21.

BTC shareholders are BP 30.1%, Azerbaijan (BTC) Ltd. 25%, Chevron 8.9%, Statoil 8.71%, TPAO 6.53%, Eni SPA 5%, Total 5%, Itochu 3.4%, INPEX 2.5%, ConocoPhillips 2.5%, and Hess 2.36%.

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