Caspian Basin Drillers Face Blistering Heat, Ice Packs, Lethal Hydrogen Sulfide To Open Kashagan

[hatrack]

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The rewards are potentially huge. Kashagan, discovered in 2000 in Kazakhstan's sector of the Caspian, was the world's largest oil find in 30 years. In 2019, production there is expected to plateau at 1.5 million barrels of crude a day, more than the output of established producers Angola or Qatar.

But such projects are also pushing the majors' technical capabilities to the limit, often leading to holdups and soaring costs. That in turn is testing the patience of host countries, which see their payday recede with every fresh delay. As their frustration grows, so does the petro-nationalism that has shifted the balance of power between Western oil majors and oil-producing nations.

Kashagan is a prime example. Under Eni, the original production start-up date had been pushed back from 2005 to the end of 2010. Earlier this year, Eni announced that the cost of the field's initial phase would be $19 billion, rather than the $10 billion it had previously flagged. Oil majors blame rising costs on a shortage of skilled engineers and project managers, soaring steel prices and expensive leases for new drilling rigs.

Kazakhstan was unconvinced. "When costs increase by 5%, by 10%, that's one thing," Kazakh Prime Minister Karim Masimov said in an interview earlier this month. Projected costs over the 40-year life of the project, he said, had increased to $136 billion from $57 billion. "When they rise by two and a half times, either the planning was wrong, or the execution is wrong, or it was deliberate." Kashagan is now increasingly resembling another energy project that fell victim to its host's rising assertiveness -- Sakhalin 2 in Russia's Far East. When Royal Dutch Shell PLC announced costs at Sakhalin had nearly doubled, Russian environmental regulators began bombarding it with complaints. They ended their campaign only when Shell ceded a majority stake in the project to a Kremlin-run gas company.

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There were also the challenges of the Kashagan deposit itself. It's buried about 2 1/2 miles beneath the seabed, under pressures of roughly 500 times that of the atmosphere at sea level. Extracting the oil requires costly stress-resistant pipes, as well powerful compressors to pump the noxious gases back below the sea. Also, the Caspian here is like a shallow wading pool that freezes over for nearly five months of the year. In winter, the wind whips up mounds of pack ice that can destroy a conventional oil rig. "We've had experience with hydrogen sulfide, low temperatures and high pressure -- but never all together," says Mr. Campelli, the Eni official.

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http://www.rigzone.com/news/article.asp?a_id=49533

Not to worry - I'm SURE the oil so produced will be cheap and widely available!!

[mainegreen]

1. Nah, they'll just drain the Caspian like they did the Aral.

:D

[DS1]

2. gas will be 20 dollars a gallon by that time

so it'll all work out

:eyes: