Oil production at Kazakhstan's giant Kashagan field, halted since early October because of a dangerous gas leak, won't resume before next year, according to people with direct knowledge of the matter, casting a cloud over one of the world's biggest industrial projects.
Oil production at
Kazakhstan
's
giant Kashagan field, halted since early October because of a dangerous gas
leak, won't resume before next year, according to people with direct knowledge
of the matter, casting a cloud over one of the world's biggest industrial
projects.
Equipment indispensable to inspect a leaking pipeline connecting the offshore
field in the
Caspian Sea
to an onshore processing unit
won't arrive on site before mid-November, the people familiar with the matter
said. Once inspection is completed, a preliminary report on how to conduct
repair work won't be submitted to Kashagan operators before late December, they
said.
A central focus of the inspection is to determine the extent of necessary
repairs and how much of the faulty pipeline must be replaced, the people
familiar with the matter said.
NCOC, the consortium of oil companies operating the field, said it was too
early to say when production, which exceeded 75,000 barrels per day at the time
of the shutdown, might restart.
"No prediction can be made," a NCOC spokesman said.
The prolonged stoppage at Kashagan is another setback for the NCOC consortium,
which has invested an estimated $40 billion and more than a decade to develop
one of the largest hydrocarbon discoveries of the last thirty years.
Ramping up production to 370,000 barrels per day in 2015 and later to a
projected plateau of 1.5 million barrels per day is crucial for some members of
the consortium, such as Total SA, which are relying on crude oil from Kashagan
to help offset output declines in other parts of the world. Similarly,
Kazakhstan
, a
scarcely populated country of desert steppe, is counting on Kashagan to
transform itself into a mighty petro state.
Oil from Kashagan had begun flowing on Sept. 11 after many years of delays and
cost overruns. But two consecutive gas leaks have led the NCOC consortium to
halt production indefinitely since Oct. 9.
Last week, Italian oil company Eni SpA, a consortium member which is
responsible for the execution of the first phase of development, said the field
would remain shut until engineers have a clear understanding as to what caused
the leaks.
The two leaks occurred on a pipeline that carries sour natural gas to the
onshore processing plant, where highly corrosive sulfur is removed.
Preliminary findings suggest the leaks weren't caused by corrosion, one of the
people familiar with the matter said. Other potential causes being investigated
are poor workmanship and inadequate material.
The faulty pipeline was laid several years ago and remained idle as delays in
starting production stretched on, another person said.
For now, operators are looking at replacing only two or three segments, work
that would take only a few weeks. If the inspection concludes that a much
longer section of the pipeline must be changed, work could take months, the
person said.
Any construction and repair work is very difficult at Kashagan because ice
envelopes equipment in the winter and extreme heat radiates across the field in
the summer.
In addition to Eni and Total, the NCOC consortium includes
Kazakhstan
's
KazMunaigas, ExxonMobil Corp. and Royal Dutch Shell PLC. The five partners each
hold a 16.81% interest. In addition,
Japan
's
Inpex has a 7.56% stake and China National Petroleum Corp. recently acquired an
8.33% tranche from ConocoPhillips.
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