1. Main
  2. Learn
  3. Industry
  4. Industry, Infrastructure

Kashagan oil production may be suspended for 2 years10 апреля 2014, 04:52

Kashagan oilfield. ©REUTERS Kashagan oilfield. ©REUTERS

Operations at gigantic Kashagan oilfield in Kazakhstan may be suspended for two years, Tengrinews reports citing Quartz.

In March, Minister Uzakbai Karabalyn called everyone not to jump to conclusions concerning Kashagan. “Individual failures of a pipeline don’t have any substantial impact on the entire system,” the Kazakh Minister of Oil and Gas said.

Commercial production at the Capsian Sea offshore oilfield started in September but was suspended after two weeks because of a gas leak. The production was haltered to seal the leak and restarted on October 6 only to be halted again 3 day later because another gas leak was found.

Karabalin said that a thorough investigation of pipelines would take place in April.

A source close to Kashagan project said that the oilfield would be shut down to replace pipelines that failed to withstand corrosion based by toxic hydrogen sulfide (H2S). The overhaul might delay production at the oilfield until the end of the summer of 2014.

Some believe that it might take even longer. Quartz wrote that Kashagan might end up closed till 2016 or even 2017.

H2S posses a real problem to the Kashagan engineers who arguably will have to replace the pipelines with expensive nickel alloy ones. 17% of Kashagan’s gas contains H2S that leads to corrosion of the pipelines. Kashagan needs gas and oil pipelines that are 55-miles long. A corrosion engineer of the Battelle Memorial Institute, Barry Hindin, told Quartz that nickel-based alloy pipelines would cost 10 and even 15 times that of ordinary pipeline. This does not only add to expenses of Exxon Mobil, Shell, Eni, Total and KazMunaiGas, but also means a multi billion tie-up for the companies involved in the project.

“It remains to be seen how oil and stock markets will react to the news, as at least some of the blow is already built in to prices: Kashagan, which was contractually required to begin production in 2005 and rise to about 1.6 million barrels a day, began to produce at a daily rate of 75,000 barrels on September 11. But the companies shut it down a month later when gas began to leak from the natural gas line leading from the offshore field to an onshore processing plant,” Steve LeVine wrote.

Initially, Kashagan was expected to produce around 8 million tons of oil before the beginning of 2014. It was also expected that oil production at the first stage in 2013 and 2014 will make 180 thousand barrels per day and 370 thousand barrels per day after that during the second stage.

The Kashagan oil field is developed by North Caspian Operating Company (NCOC). The shareholders are AgipCaspian Sea B.V. (16.81%), KMG Kashagan B.V. (16.81%), ConocoPhillips North Caspian Ltd. (8.4%), ExxonMobil Kazakhstan Inc. (16.81 %), Inpex NorthCaspian Sea Ltd. (7.56 %), Shell Kazakhstan Development B.V. (16.81%) and Total EP Kazakhstan (16.81%). ConocoPhillips has withdrawn from the Kashagan project selling its share to Kazakhstan's KMG. KazMunaiGas is expected to subsequently resell the share to Chinese CNPC.

Nobel prizewinner proposes a new city in KZ
New abnormal snowfalls expected in Kazakhstan
Huge glacier retreat triggered in 1940s
Hyperloop construction begins in Las Vegas
"Moonlight" to top Spirit Awards nominations
Oil prices fall due to investors uncertainty
New dwarf galaxy discovered around Milky Way
Kanat Islam becomes a top ten WBO boxer
World oil prices continue to rise
Kazakhstan expects warming - Kazhydromet
Merkel to seek fourth term as chancellor
Sale of Tintin drawings set to break records
US, EU stocks fall as markets focus on dollar
Pacific leaders urged to defend free trade
EU warns eight nations on budget deficit
Universiade-2017: Athletic Village is ready
Bob Dylan can't make Nobel ceremony
Messi will never leave Barca - club president
Google, Facebook take aim at 'fake' news
Aerosmith announces Europe 'farewell' tour
Putin, Trump to normalise US-Russia ties
At least 10 hurt in southern Turkey blast
6.2 quake hits western Japan
OPEC agrees shock oil output cut
Israeli ex-president and Nobel laureate Peres dies
Germany blocks WhatsApp data transfers to Facebook
32,000 arrested in Turkey coup probe
Youth to the fore as Milan fashion week opens
Xenophobia threatening peace in eastern Germany
Four-in-10 Japanese are virgins: poll
Sweden re-militarises Baltic island of Gotland
China to launch second space laboratory: Xinhua
More than a billion stars mapped in Milky Way: ESA
Boxing: Golovkin eyes Saunders after stopping Brook
Kazakhstan shifts PM to security chief
Oil prices gain despite rising OPEC supply forecast
US to give Philippines military planes
Singapore wages war on Zika-bearing mosquitoes
Italy quake death toll nears 250
Viral photos add fuel to French burkini debate
18 dead as Italy struck by powerful quake
Japan's first lady visits Pearl Harbor
Pokemon's a no-go on Bangkok's roads
July was Earth's hottest month in modern times
Pakistan rock climbers scale new heights