During the first half of 2014 we spent approximately $479 million in operating expenditure and $1,231 million in capital expenditure on ACG activities. For the full year, it is planned to spend approximately $1,052 million in operating expenditure and $2,068 million in capital expenditure.
During the first half of 2014, ACG marked a major milestone by starting production from the Chirag Oil Project (COP). First Oil from the West Chirag platform was achieved on 28 January from one of the pre-drilled wells. Since that time West Chirag production has been increasing to its current level of over 50,000 barrels per day from four wells. Production will continue to increase through 2014 as the other pre-drilled wells are brought on-line.
Total ACG production during the first half was on average 656,100 barrels per day (b/d) (118.8 million barrels or approximately 16 million tonnes in total) from the Chirag, Central Azeri, West Azeri, East Azeri, Deepwater Gunashli and West Chirag platforms.
At the end of the first half of 2014, a total of 81 oil wells were producing, while 36 wells were used for injection in the ACG field, as follows:
Chirag produced on average 65,800b/d and had 18 wells operating (13 oil producers and 5 water injectors).
Central Azeri (CA) produced on average 167,600 b/d and had 25 wells operating (18 oil producers, 1 water injector and 6 gas injectors).
West Azeri (WA) produced on average 165,100 b/d and had 24 wells operating (18 oil producers and 6 water injectors).
East Azeri (EA) produced on average 83,200 b/d and had 17 wells operating (13 oil producers and 4 water injectors).
Deepwater Gunashli (DWG) produced on average 148,500 b/d and had 29 wells operating (15 oil producers and 14 water injectors).
West Chirag produced on average 25,900 b/d from four wells
During the first half of 2014, BP as operator of the ACG field, continued to deliver associated gas from the DWG platform via the 28” gas subsea pipeline directly to the Sangachal terminal and from there into Azerigas’ national grid system for domestic use.
Gas from the three Azeri platforms - CA, WA and EA – continued to be sent via in-field subsea gas pipelines to the compression and water injection platform on CA. From CA it was partly re-injected to maintain pressure in the reservoir and partly delivered to the Sangachal terminal via the same 28” subsea pipeline for further hand over to the national grid system. Gas injection activities currently continue from six wells on CA.
Most of the associated gas from West Chirag has been exported to the Sangachal terminal. During the second quarter, the commissioning of the gas conditioning and compression systems on West Chirag was completed and the systems were fully handed over to operations. This has allowed full export of West Chirag gas to the terminal via the same 28" subsea pipeline.
Most of the associated gas produced from the Chirag platform was sent to the SOCAR compression station at the Oil Rocks via the existing 16” subsea gas pipeline. During the second quarter of 2014, BP completed its planned work on the flash gas compressors and pipelines which has allowed us to significantly reduce flaring on Chirag.
During the first half of 2014, we delivered approximately 6.6 million cubic metres (233.8 million standard cubic feet) per day of ACG associated gas to SOCAR (1.2 billion cubic metres or 42.3 billion cubic feet in total).
Drilling and completion activity
During the first half of 2014, ACG delivered 8 oil producer wells and 1 water injection well.
Chirag - The producer well A06X, which started at the end of December 2013, was completed and handed over to production in March 2014. Following a surveillance and interventions programme in April 2014, Chirag had a one-month maintenance programme. In July drilling started on well A05y. The well is planned to be completed in mid-fourth quarter 2014.
Central Azeri - The oil producer well B28 was completed and handed over to production on 19 May 2014. This was followed by intervention activities on B22 and B13 and a four-conductor driving campaign. We then conducted intervention activities on B06 and moved the rig to well B29 on which drilling operations are still ongoing.
West Azeri - The oil producer C28, which we started in December 2013, was completed and handed over to production in March 2014. This was followed by intervention operations on well C25, sand shut-off work on C14, C11 gas lift retrofit, a conductor driving campaign and a rig maintenance programme. We are currently conducting additional intervention clean-out activities on C14.
East Azeri - In January 2014, we completed intervention activities on well D03. This was followed by further intervention and cleaning activities. We then started to drill oil producer well D25 which is expected to be completed by the mid-fourth quarter.
Deepwater Gunashli (DWG) - Intervention activities to install gas lift on well E02Y were completed in January. This work was followed by surveillance work on E12, side-tracking of E09Y and completion of E09y. We then conducted rig maintenance and further intervention operations and started to drill well E19.
Dada Gorgud - During the first quarter of 2014, we delivered one subsea water injector well - H07z. In early March we started to drill another water injector well - H08, which is nearing completion.
West Chirag – During the first half of 2014, four producer wells - J05, J11, J07 and J14 were completed and handed over to production. Drilling operations on well J03 commenced in June 2014 and are ongoing
Oil and gas from ACG and Shah Deniz continued to flow via subsea pipelines to the Sangachal terminal.
The daily capacity of the terminal’s processing systems is currently 1.2 million barrels of oil and approximately 970 million standard cubic feet or 27.4 million standard cubic metres of Shah Deniz gas, while overall processing and export capacity for gas, including ACG associated gas is about 41.5 million standard cubic metres per day.
Gas is exported via the South Caucasus Pipeline (SCP) and via a SOCAR gas pipeline connecting the terminal’s gas processing facilities and Azerigas’s national grid system.
During the first half of 2014, the Sangachal terminal exported about 152 million barrels of oil. This included about 133 million barrels through Baku-Tbilisi-Ceyhan (BTC), 15.4 million barrels through the Western Route Export Pipeline (WREP), 2.6 million barrels by rail and about 0.9 million barrels via a condensate export line.
On average, 26 million standard cubic metres (918.2 million standard cubic feet) of Shah Deniz gas was exported from the terminal daily during the first half of 2014.
During the first half of 2014, BTC spent $100 million in operating expenditure and $61.3 million in capital expenditure. For the full year, BTC operating expenditure is expected to be approximately $230 million and capital expenditure about $119 million.
BTC’s throughput capacity is currently 1.2 million b/d.
On 11 August, BTC celebrated the loading of the 2 billionth barrel of oil at the Ceyhan terminal in Turkey.
The 1,768km BTC pipeline became operational in June 2006. Since that time BTC has carried a total of about 2 billion barrels (263 million tonnes) of crude oil loaded on 2580 tankers and sent to world markets.
During the first half of 2014, BTC exported approximately 134 million barrels (17.8 million tonnes) of crude oil loaded on 185 tankers at Ceyhan.
The BTC pipeline currently carries mainly ACG oil and Shah Deniz condensate from Azerbaijan. In addition, crude oil from Turkmenistan continues to be transported via BTC. Starting October 2013, we have resumed transportation of some volumes of Tengiz crude oil through the BTC pipeline. In addition, in February 2014, the direction of flow through the SOCAR-operated Northern Route Export Pipeline (NREP) was successfully reversed. This was a result of a collaborative effort by BP and SOCAR to activate some facilities along NREP. Commercial agreements were finalised which allowed NREP volumes to be exported via BTC.
During the first half of 2014, Shah Deniz spent approximately $243 million in operating expenditure and over $1,766 million in capital expenditure. For the full year, it is planned to spend around $483 million in operating expenditure and $3,781 million in capital expenditure. The great majority of this capital expenditure is on the Shah Deniz Stage 2 project, which includes both offshore developments and expansion of the Sangachal terminal.
During the first half of 2014, the Shah Deniz field continued to provide reliable deliveries of gas to markets in Azerbaijan (to SOCAR), Georgia (to GOGC) and Turkey (to BOTAS and the BTC company).
During the first six months of 2014, the field produced 4.75 billion standard cubic metres (about 168 billion cubic feet) of gas and about 1.12 million tonnes (9 million barrels) of condensate or about 26.2 million cubic metres of gas per day (over 926.4 million standard cubic feet per day) and 49,757 barrels per day of condensate.
Since the start of Shah Deniz production in late 2006 until the end of the second quarter 2014, about 52.7bcm (1,861 billion standard cubic feet) of Shah Deniz gas, and about 108.5 million barrels (over 13.6 million tonnes) of Shah Deniz condensate has been produced.
As a result of debottlenecking of existing facilities in 2013, Shah Deniz Stage 1 capacity was increased to 966 million standard cubic feet per day and approximately 55,000 barrels per day of condensate. The Shah Deniz partners have also agreed terms with SOCAR for further expansion of production capacity to around 1,040 million standard cubic feet per day by the end of 2014.
Shah Deniz Stage 1
During the second quarter of 2014, Shah Deniz completed intervention operations on SDA02 which was followed by drilling operations on SDA07. The well was drilled and suspended at the 28” liner point after which the rig was moved to SDA08. This well was also suspended after the 28” liner was run and cemented. Currently, intervention activities are ongoing on SDA06.
Shah Deniz Stage 2
Istiglal – During the second quarter, the Istiglal rig completed drilling operations on well SDC03. At the end of the second quarter, drilling operations commenced on SDC04. Drilling operations on this well are expected to be completed by January 2015.
Heydar Aliyev – During the second quarter, the drilling of lower section on SDD02 continued. Drilling operations on this well are expected to be completed by the end of the third quarter of 2014.
Shah Deniz Stage 2 (SD2) is a giant project that will bring gas from Azerbaijan to Europe and Turkey. This will increase gas supply and energy security to European markets through the opening of a new Southern Gas Corridor. It is one of the largest gas development projects anywhere in the world.
The total cost of the SD2 project, including the South Caucasus Pipeline (SCP) expansion, will be approximately $28 billion. 16bcma of gas produced will be transported some 3,500 kilometres to provide energy for millions of consumers in Georgia, Turkey, Greece, Bulgaria and Italy. First gas is targeted for late 2018, with sales to Georgia and Turkey; first deliveries to Europe will follow approximately a year later.
The SD2 development, which lies some 70 kilometres offshore in the Caspian in water depths of up to 550m, includes two new bridge-linked production platforms; 26 subsea wells drilled with two semi-submersible rigs; 500km of subsea pipelines and expansion of the Sangachal terminal.
The final investment decision for the SD2 development on 17 December 2013 triggered plans to expand the South Caucasus Pipeline through Azerbaijan and Georgia by 16bcma (comprising a new 48’’ diameter pipeline in Azerbaijan and two compression stations in Georgia). It also triggered plans to construct the Trans Anatolian Gas Pipeline (TANAP) across Turkey and to construct the Trans Adriatic Pipeline (TAP) across Greece, Albania and into Italy. Together these projects, as well as gas transmission infrastructure to Bulgaria, will create a new Southern Gas Corridor to Europe.
The SD2 project will provide for delivery of some 10bcma of Shah Deniz gas for 25 years to customers in Italy, Greece and Bulgaria. In addition, some 6bcma of Shah Deniz Stage 2 gas will be delivered to consumers in Turkey. All gas sales and transportation contracts will be managed by the Azerbaijan Gas Supply Company.
Since the final investment decision, the SD2 project has progressed to schedule. Most of the major engineering, construction and supply contracts, valued at some $8.5 billion, have been awarded and early works have already started in most construction areas across Azerbaijan and Georgia.
These construction and supply contracts include:
Work has commenced at the fabrication yards for jackets and decks, as well as at the onshore terminal construction sites. In addition, first consignments of steel for fabrication of the platform jackets and topside units have already arrived in the country. These activities complement overall progress across the Southern Corridor projects.
As noted above, drilling activities have continued successfully using the Istiglal and Heydar Aliyev rigs with five production wells already completed in preparation for First Gas planned for late 2018. These two rigs will continue working on the Shah Deniz field to deliver all the wells required to deliver production up to the planned plateau level of 16 bcma.
During the first half of 2014, SCP spent $22.4 million in operating expenditure and $325 million in capital expenditure. For the full year, operating expenditure is expected to be $50 million. As a result of the ramp-up in the SCP expansion, capital expenditure will increase to $1,250 million.
The pipeline has been operational since late 2006, transporting gas to Azerbaijan and Georgia, and starting July 2007 to Turkey from Shah Deniz Stage 1.
During the first half of 2014, SCP’s daily average throughput was 17.8 million cubic metres (over 627 million cubic feet) of gas or 108,137 barrels of oil equivalent per day.
The SCP has a dual operatorship with BP as the technical operator being responsible for construction and operation of the SCP facilities whilst Statoil, as commercial operator, is responsible for SCP's business administration.
Since the final investment decision on the SCPX project on 17 December 2013, most of the SCPX project contracts have been awarded. These include contracts for:
The first shipment of line pipe is expected to arrive in Azerbaijan later this year.
In early 2012, the Gilavar seismic vessel completed the planned 3D seismic acquisition on the Shafag-Asiman structure. This was the first 3D seismic ever conducted on the Shafag-Asiman contract area. Since that time we had been processing the acquired data. This processing is believed to be the largest 3D survey ever processed in-country.
During the first half of 2014, we completed the data processing and started interpretation of the seismic dataset, which will require some 18 months to complete. This will be followed by another year required for planning of the first exploration well.
The Shafag-Asiman production sharing agreement (PSA) between BP and SOCAR on joint exploration and development of the Shafag-Asiman structure in the Azerbaijan sector of the Caspian Sea was signed in Baku in October 2010.
The block lies some 125 kilometres (78 miles) to the South-East of Baku. It covers an area of some 1,100 square kilometres. It is located in a deep-water section of about 650-800 metres with reservoir depth of up to 7,000 metres.
BP currently employs directly 2,912 Azerbaijani nationals. In total, 85% of BP’s permanent professionals in Azerbaijan are nationals and many of them are in senior leadership positions.
The Caspian Technicians Training Centre (CTTC) at Sangachal continued training national technicians effectively. In May, CTTC celebrated its 10th anniversary and the success of its training of about 900 national technicians for BP-operated facilities. The role of these highly qualified technicians has been critical to running all of BP-operated facilities both onshore and offshore safely and reliably over the past ten years.
BP also successfully manages a world-class petro-technical resource entry programme (PREP) for national engineers. PREP is a multi-million dollar learning programme designed for petro-technical graduates and is aimed at supporting capability development of young engineers joining BP.
In addition, BP has developed a nationalization plan for the years 2014-18 with a target to reach 90% professional staff nationalization rate by the end of 2018. This envisages nationalizing some of the professional roles that are currently occupied by the expatriate staff. Non-professional staff is already 100% nationalized. The nationalization agenda also includes further optimization of BP’s learning and development programmes, close participation in the public and private sector initiatives in order to further improve the local talent market and enhancing the rigorous internal performance management process.
In addition, BP has committed to cooperating with SOCAR on the training of national workforce at Gobustan Regional Training Centre. As part of this commitment BP will support vocational and technical discipline training for 100 representatives of the local communities residing in the neighbourhood of the Sangachal Terminal - Sangachal, Umid, Azimkend and Gobustan settlements. BP will also continue to cooperate with Baku Higher Oil School engaging the students of the School in its various programmes, initiatives and development activities, as well as delivering business lectures at this educational institution.
Further information: Tamam Bayatly at BP’s Press Office in Baku.
Telephone: (+994 12) 599 45 57