Dragon Oil PLC said it has built production to 70,017 b/d of oil on Aug. 11 from the Cheleken contract area in the eastern Caspian Sea offshore Turkmenistan.
First half 2012 output averaged 64,200 b/d, 10.7% higher than in the first 6 months of 2011. An oil swap agreement with Iran has expired, and all oil is exported via Azerbaijan.
Production is surging even though a number of wells were choked to minimize sand production in the second quarter. Desanders are being installed in problem areas, and all new wells are equipped with desanding devices. The company placed 12 wells on production in 2012 and aims to drill four more wells by yearend.
The Caspian Driller jack up is expected to begin drilling in the first quarter of 2013, and Dragon is securing two platform-based rigs and another jack up to support offshore operations in 2013 and beyond.
Later this year and throughout 2013, the company will let contracts to construct as many as five platforms in Lam field. The company also has approval to tender for an engineering, procurement, installation, and construction project for a gas treatment plant and will proceed with the tendering process later this year.
Dragon is tendering for two land rigs to be deployed when the Zhdanov A and B platforms are ready for drilling.
A preliminary water injection study using a dynamic simulation model was completed in 2011 for the Lam 75 area and an injectivity test was conducted in June 2011. Dragon is converting one well in the target area to an injector and plans to start water injection around yearend.
The Zhdanov A platform is due for delivery by yearend and should be ready for drilling in first-quarter 2013. Zhdanov B is to be delivered and ready for drilling in first-half 2013. Both have 16 slots, eight for drilling with a jack up and eight for drilling using a land rig.
Completion of the Zhdanov Block 4 gathering platform and installation of the associated in-field pipelines are almost finalized. Block 4 will act as a gathering station for the production from new wellhead and production platforms in Zhdanov field.
Dragon is evaluating bids to build and install the Lam D and E platforms and associated pipelines and anticipate the contracts to be awarded by yearend. These platforms will be suitable for drilling by a jack up with eight slots each initially. Structural upgrades may be performed and slots added in the future depending on drilling results.
Tendering is near for construction and installation of the Lam F, G, and H platforms and associated pipelines, and contracts may be awarded in 2013.
Geophysical and geotechnical investigations to evaluate locations for future platforms are undertaken on an ongoing basis. Later in 2012, Dragon expects to receive a completed survey for 10 sites for platforms and gathering stations.
Dragon recently awarded a contract to perform a front-end engineering and design study to increase crude oil storage capacity at the central processing facility. This would include, among other aspects, application for land use and construction of bigger storage tanks. Tank construction is likely to take 2 years.
Dragon is reviewing a strategy for plugging, abandonment, and decommissioning of old nonproducing wells and nonproducing platforms in the contract area as part of the activities it is to undertake under the PSA. The cost of the project is to be covered from abandonment and decommissioning funds.
Dragon is supplying a major portion of unprocessed gas into the compressor station; this allows considerable reduction of associated gas flaring. Construction will require 2-3 years after a contract is awarded.
Plant capacity is expected to be 220 MMscfd of gas, which should allow Dragon to strip 2,900 b/d of condensate and blend its share of condensate with its entitlement share of crude oil. The split of the produced condensate is subject to the same terms under the PSA as crude oil.