North Caspian Operating Company planning full replacement of pipelines at Kashagan

North Caspian Operating Company (NCOC), the current operator of the giant Kashagan oilfield, plans a full replacement of pipelines at the oilfield, the company’s spokesman told a Tengrinews.kz journalist.

In October 2008 the Republic of Kazakhstan reached an agreement with the seven companies participating in the Kashagan PSA to form a new joint operating company North Caspian Operating Company B.V. In January 2009 NCOC formally became operator under the PSA, taking over the role that was formerly held by Agip KCO.

The operator is working on the plan of replacement, with the plan to be complete by the mid-2014. “According to the estimates, both the oil pipeline and gas pipeline are in need of full replacement; the estimates are to be confirmed with the findings of the investigation”, he said.

Plans are there to hold bidding tenders to define suppliers and subcontractors. “As a precaution, not to waste time, the consortium has launched bidding processes to purchase pipe segments. Resumption of the commercial production depends on findings of the investigation to be obtained by the end of the Q2 2014; however, the resumption is not expected to happen in 2014”, the source said, adding that “the pipelines in need of replacement are intended to transport oil and gas from the D artificial island to the Bolashak oil and gas treatment facility”.

Earlier the country’s media reported that the giant oilfield might be suspended for 2 years to have a new pipeline produced that would be able to resist the toxic gases.

Given the risks of further postponement of commercial production at the giant Kashagan oilfield, talks will be held with other oil companies to boost crude production figures, Tengrinews.kz reported, citing the country’s Minister of Economic Affairs Yerbolat Dossayev as saying April 14.

Commercial production at Kashagan started September 11, 2013. However, it was suspended 2 weeks later due to a gas leakage. The production process was resumed shortly. However, another leakage was detected in October.

The Kashagan field, named after a 19th century Kazakh poet from Mangistau, is located in the Kazakhstan sector of the Caspian Sea and extends over a surface area of approximately 75 kilometers by 45 kilometers. The reservoir lies some 4,200 meters below the shallow waters of the northern part of the Caspian Sea and is highly pressured (770 bar of initial pressure). The crude oil that it contains has high ‘sour gas’ content.

The development of Kashagan, in the harsh offshore environment of the northern part of the Caspian Sea, represents a unique combination of technical and supply chain complexity. The combined safety, engineering, logistical and environmental challenges make it one of the largest and most complex industrial projects currently being developed anywhere in the world.

According to Kazakhstan geologists, geological reserves of Kashagan are estimated at 4.8 billion tons of oil. According to the project’s operator, the oilfield’s reserves are estimated at 38 billion barrels, with 10 billion barrels being recoverable. Besides, natural gas reserves are estimated at over 1 trillion cubic meters.

“We expect Kashagan to come on stream shortly. The volume of crude to be produced hinges on the period of repairs currently under way. Our estimates stand at about 2 million tons for 2014”, Tengrinews.kz reported mid-January 2014, quoting the country’s Oil and Gas Minister Uzakbai Karabalin as saying at a press-conference following the sitting of KAZENERGY petroleum association.