Giant oil and gas fields approach the production stage.

The official sanction of the US $10-billion, 9-billion-bbl-plus Kashagan field complex offshore Kazakhstan has been in the public eye lately, but oil and gas operators offshore Azerbaijan are quietly bringing their own huge projects to the production stage.

On the exploration front, the Maersk Contractor Lider semisubmersible drilling rig has re-spudded the first well on ExxonMobil's Zafar Mashal block 80 miles (130 km) offshore Baku.

By mid-March the rig, operating in a water depth of 2,430 ft (740 m), had drilled to a depth of 4,920 ft (1,500 m) and operations were continuing.

Vafa Asadova, a spokeswoman for ExxonMobil in Baku, said the drilling operation could continue for 8 months, with completion estimated in September or October this year. "It is quite a challenging well, and it is a deepwater well - the water depth is 740 m (2,430 ft) and the planned total depth is 7,200 m (23,623 ft)."

Earlier, according to Agence France-Presse Drew Goodbread, general manager of Exxon Azerbaijan Operating Co., said, "We had to re-spud. At shallow depths the rock is pretty young and has not settled down. We have to be sure before we drill down to deeper levels that the shallow rock is stable."
ExxonMobil is working hard to keep the odds of success in its favor. The Lider was specifically commissioned by Exxon Azerbaijan for a 3-year drilling program in the Caspian Sea.

Maersk had the semisubmersible built by Keppel Fels' Far East Levington shipyard in Singapore, while the Caspian Shipyard Co. in Baku handled topside and assembly work. The deck load capacity is rated at 4,000 tons and the derrick and riser tension capacities are rated at 2 million lb each.

The rig was designed with three 7,500-psi working pressure mud pumps and a top drive with 750 tons capacity. It can house 130 people.

To handle the treacherous conditions found in the Caspian, Maersk based the design of the rig on its experience in the North Sea.

"This semisubmersible will be the biggest and most powerful drilling platform in the Caspian Sea," said Steve Mullen of Parker Instruments, the company that supplied tube fittings and valves for the platform.
ExxonMobil signed a rig utilization agreement for the shared use of the Lider on the Exxon-operated Nakchivan and Zagar Mashal production sharing agreement (PSA) areas and for the ChevronTexaco-operated Absheron PSA. Chevron later transferred its drilling time to Lukoil's Overseas Operating Co. to drill in Lukoil's Yalama PSA area.

The Lider is rated to drill in the deepest water in the Caspian at water depths ranging from 250 ft to 3,300 ft (75 m to 1,000 m), allowing it to operate in 40% of the Caspian Sea region. The rig respudded the Zafar Mashal prospect 2.5 miles (4,000 m) southeast of the original drill site.

Zafar Mashal doesn't represent the only activity in the area. The production side is flourishing, too.

Phase 1

The BP Azerbaijan-led group getting the offshore Azeri-Chirag-Gunashli (ACG) field ready for production by the end of 2004 already has spent $3 billion on the first phase of the planned $6-billion project.
At this point, infrastructure for the central part of the Azeri field complex is 90% complete. Construction of the East Azeri production platform is 18% complete and construction on the gas compressor and water injection platforms are 65% complete, according to an Interfax article quoting BP Azerbaijan Vice President Neil Shaw.

In early March BP Azerbaijan floated the 14,000-ton jacket to the Central Azeri platform site to mark the start of the biggest marine engineering project ever undertaken in the Caspian Sea.

"Today's launch is a critical part of the first oil for the ACG field project," said Frank Wilson, installation manager, in an Agence France-Presse report.

The jacket was built at the Primorsk construction yard some 19 miles (30 km) from Baku, where the fabrication took place.

The topside modules are scheduled for installation this summer.

The partners will finish installation of the production platform on station in the third quarter this year, and it will test operations between the platform and the onshore Sangachal terminal.

The first phase of the massive project involves only the development of the central part of Azeri field from the Central Azeri platform. That platform will have 48 wells. Two additional platforms will be needed for the east and west sections of Azeri field. Those will come on stream during the second phase.
If everything goes according to plan, the Phase 1 development will produce more than 1.4 billion bbl of oil at rates up to 375,000 b/d. The companies must have the first phase completed in time to begin feeding oil into the Baku-Tbilisi-Ceyhan (renamed the Geidor Aliyev after the former president of Azerbaijan) pipeline.

Phase 2

The second phase was sanctioned late in 2002, Partners anticipate production from the east platform to start in the second quarter of 2006 and production from the west platform about 9 months later.

The second phase should reach another 1.6 billion bbl of oil with a potential production rate of 420,000 b/d of oil.

The BP-led Azerbaijan International Operating Co. has started the pre-drilling program, spudding the first East Azeri well in February this year using the Dada Gorgud semisubmersible drilling rig.

The first part of the East Azeri pre-drill program involves five producing wells and a cuttings re-injection well for follow-up drilling after the platform is installed. At least two wells will have gravel packs installed, according to AssA-Irada.

Well depths will range from 13,124 ft to 17,389 ft (4,000 m to 5,300 m), and the wells will take between 1 month and 3 months to drill under the difficult geological conditions under the Caspian Sea.

The Caspian Drilling Co., a joint venture between the State Oil Co. of the Azerbaijan Republic (Socar) and GlobalSantaFe is handling the drilling duties.

Chirag field will come on later, and the partners have not decided positively whether to develop the expensive deep Gunashli phase of the project, although with much of the infrastructure already in place, it is likely that phase will go ahead as well.

Partners in Azeri-Chirag-Gunashli are BP (34.1%), State Oil Co. of the Azerbaijan Republic (10%), Unocal (10.3%), Inpex (10%), Statoil (8.6%) ExxonMobil (8%), TRAO (6.75%) Devon Energy (5.6%), Itochu Oil (3.9%) and Delta Hess (2.7%).

Contractors on the first two phases include J. Ray McDermott, Bouygues Offshore, Saipem, Eiffel and Emtunga.

McDermott finished laying the underwater gas pipeline from the ACG field 116 miles (186 km) to the Sangachal terminal, a job that took 3 months. It also will lay two 30-in.-diameter oil pipelines along the same route. Each pipeline will have a capacity of 500,000 b/d of liquids. The last pipeline will be installed next year.

Shah Deniz

McDermott also picked up a contract from BP Shah Deniz Exploration Ltd. to lay the pipe from BP's giant Shah Deniz gas field to shore. That Stage-1 contract carries a value of $80 million.

Under the contract, McDermott will install two 56-mile (90-km) gas pipelines from the Shah Deniz Alpha platform to Sangachal. It will handle all pipeline tie-ins to the platform, the diving work and pre-commissioning duties.

The job includes installation of one 26-in.-diameter trunkline and another 12-in.-diameter line with a 4-in.-diameter piggyback line on top.

The pipelay operations will take place next year, and the company will complete the installation operations early the following year.

"We are extremely pleased J. Ray has been selected for this third award from BP-operated projects in the Caspian within the last 12 months. The level of openness and commonality of project goals between BP and our company on these projects will help to ensure our future success in this area of the world," said Kurt Nelson, senior vice president of McDermott.

The Azeri government's Azneft Production Association outlined a program to increase offshore production from the nation.

Both onshore and offshore, a recently completed plan forwarded to Socar by the Azneft Production Association calls for production of 58.6 million bbl of oil and some 141 Bcf of gas production this year.
The organization expects to add 2.8 million bbl of oil by drilling 62 new wells and another 696,000 bbl of oil by re-working 281 wells.

Technical improvements could add another 5.3 million bbl and more than 3 million bbl of additional oil could come from shut-in wells brought back into production. The organization anticipates all operators in the country will drill 411 onshore and offshore wells between 2004 and 2008. Those wells should provide production of 176.6 Bcf of gas and 65.2 million bbl of oil at the end of the period.

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