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Caspian Oil & Gas Conference - BP increases gas production at Shah Deniz

BP increases gas production at Shah Deniz
06.11.2019

Azerbaijan’s largest gas field, Shah Deniz, produced around 12.2 billion standard cubic metres (bscm) of gas and 2.6 million tonnes (about 21 million barrels) of condensate in January-September 2019.

BP, Shah Deniz’s operator, said this in a press release that summed up the results of the three quarters of 2019.

The production in Shah Deniz was realized from the Shah Deniz Alpha and Shah Deniz Bravo platforms.

The existing Shah Deniz facilities’ production capacity is currently over 56 million standard cubic metres of gas per day or more than 20 bcma.

In the first three quarters of 2019, Shah Deniz spent around $481 million in operating expenditure and $818 million in capital expenditure, the majority of which was associated with the Shah Deniz 2 project, BP reports

The agreement on the exploration, development and shared production of promising areas of Shah Deniz was signed on June 4, 1996. Shah Deniz 2 is the starting point of the new Southern Gas Corridor, which will deliver Caspian resources directly to European markets for the first time.

Its reserves are estimated at 1.2 trillion cubic meters of gas and 240 million tons of condensates. Within the second stage of the field development, the volume of gas production can be increased to 24 billion cubic meters per year, according to forecasts.

Shah Deniz participating interests are: BP (operator – 28.8 per cent), TPAO (19.0 per cent), AzSD (10.0 per cent), SGC Upstream (6.7 per cent), PETRONAS (15.5 per cent), LUKOIL (10.0 per cent) and NICO (10.0 per cent).

In the meantime, Sangachal terminal reduced oil exports, according to BP’s press release.

During the reporting period, the terminal exported more than 198 million barrels of oil. This included over 178 million barrels through Baku-Tbilisi-Ceyhan (BTC) and over 20 million barrels through the Western Route Export Pipeline (WREP).

“The daily capacity of the terminal processing systems is 1.2 million barrels of crude oil and about 80 million standard cubic metres of Shah Deniz gas, while overall processing and export capacity for gas, including ACG associated gas is around 100 million standard cubic metres per day. In the first three quarters, BTC spent approximately $95 million in operating expenditure and about $25 million in capital expenditure” the report says.

On average, about 44 million standard cubic metres (about 1,548 million standard cubic feet) of Shah Deniz gas was exported from the terminal daily during the three quarters of 2019.

BP has also reduced deliveries of associated gas to SOCAR.

During the first three quarters, Azeri-Chiraq-Gunashli (ACG) oil field delivered an average of 5.7 million cubic metres per day of ACG associated gas to SOCAR (1.6 billion cubic metres in total), primarily at the Sangachal Terminal but also to SOCAR’s Oil Rocks facility. The remainder of the associated gas produced was re-injected for reservoir pressure maintenance.

BP informs that in April 2019, the ACG partnership took a decision to commence the next stage of development of the ACG field with a $6 billion project which includes a new offshore platform and facilities designed to process up to 100,000 barrels of oil per day. The project is expected to achieve first production in 2023 and produce incremental up to 300 million barrels of oil over its lifetime.

The project has already awarded the main fabrication, marine and subsea contracts and has started construction activities (started in July). These activities continued to ramp up through the third quarter of the year.

Over the past nine month, BP spent more than $418 million in operating expenditure and about $1,034 million in capital expenditure on ACG activities.

ACG is the largest oil and gas field in the Caspian Sea, covering more than 432 square kilometers. Proven oil reserves of ACG block are estimated at 1.2 billion tons, while gas reserves make 350 billion cubic meters.

A contract for the development of ACG block of fields was signed in 1994 for 30 years. Oil extraction from the field began in November 1997. The new agreement signed in 2017 provides for the development of the field until 2050.

ACG participating interests are: BP (30.37 per cent), SOCAR (25.0 per cent), Chevron (9.57 per cent), INPEX (9.31 per cent), Equinor (7.27 per cent), ExxonMobil (6.79 per cent), TPAO (5.73 per cent), ITOCHU (3.65 per cent), ONGC Videsh Limited (OVL) (2.31 per cent).

“During the first three quarters of 2019, the South Caucasus Pipeline transmitted about 28 million cubic metres of gas per day. The SCP has a dual operatorship with BP as the technical operator being responsible  for construction and operation of the pipeline facilities and SOCAR Midstream Operations, as commercial operator, responsible for the commercial operations of the pipeline,” the BP report also stated.

The SCP has been operating since late 2006, transporting Shah Deniz gas to Azerbaijan, Georgia and Turkey. The expanded section of the pipeline commenced commercial deliveries to Turkey in June 2018.

In the first three quarters of 2019, SCP spent about $33 million in operating expenditure and more than $28 million in capital expenditure in total.

The SCP Co. shareholders are: BP (28.8 per cent), TPAO (19.0 per cent), AzSCP (10.0 per cent), SGC Midstream (6.7 per cent), PETRONAS (15.5 per cent), LUKOIL (10.0 per cent) and NICO (10.0 per cent).

BP is one of the world's most renowned oil and gas suppliers. It has been managing large projects for exploration, development and transportation in oil and gas fields in Azerbaijan since 1992.

BP and SOCAR have long-term cooperation in the oil and gas industry of Azerbaijan. BP Azerbaijan is the operator of ACG, Shah Deniz, Shallow Water Absheron Peninsula, Shafag-Asiman and Gobustan fields.


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