2011 first half results

22 August 2011

Azeri-Chirag-Gunashli (ACG)

ACG participating interests are: BP (operator – 35.78%), SOCAR (11.65%), Chevron (11.27%), INPEX (10.96%), Statoil (8.56%), ExxonMobil (8%), TPAO (6.75%), ITOCHU (4.3%), Hess (2.72%).

During the first half of 2011, ACG spent $325.3 million in operating expenditure and $874.9 million in capital expenditure. For the full year, we expect to spend about $628 million in operating expenditure and $1.998 million in capital expenditure on ACG activities.

Production

During the first half ACG produced on average 775,700 barrels per day (b/d) (140. 4 million barrels or 19.0 million tonnes) from the Chirag, Central Azeri, West Azeri, East Azeri and Deep Water Gunashli platforms. 

At the end of the first half, a total of 60 oil wells were producing, while 25 wells were used for injection in the ACG field, as follows: 

Chirag had 11 oil producer wells in operation and during the first half it produced on average about 78,700 b/d. 

Central Azeri (CA) had 18 wells (12 oil producers, 5 gas injectors and one water injector) and during the first half it produced on average about 216,100 b/d. 

West Azeri (WA) had 20 wells (14 of which are oil producers and 6 water injectors) and during the first half it produced on average around 218,600 b/d. 

East Azeri (EA) had 15 wells (11 of which are oil producers and 4 water injectors) and during the first half it produced on average around 131,900 b/d. 

Deep Water Gunashli (DWG) had 21 wells (12 oil producers and 9 water injectors) and during the fist half it produced on average about 130,400 b/d of oil. 

Associated gas

During the first half of 2011 BP as operator of the ACG field continued to supply associated gas via the 28” gas subsea pipeline from three platforms (CA, WA and EA) to the Sangachal terminal and from there into Azerigas’ national grid system for domestic use. Some 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. The rest of the associated gas from the ACG platforms was sent via in-field subsea gas pipelines to the compression and water injection platform (C&WP) on CA for re-injection to maintain pressure in the reservoir. Gas injection activities currently continue from five wells on CA. During the first half we delivered around 10.5 million cubic metres (about 370 million standard cubic feet) per day of ACG associated gas to SOCAR. In total we delivered about 1.9 billion cubic metres (about 67 billion standard cubic feet) of associated gas to SOCAR during the first half of 2011. Our plan for the full year is to deliver 2.3 billion cubic metres (over 80 billion standard cubic feet) of associated gas to SOCAR.

Drilling and completion activity

Three oil producers were completed during the first half of 2011, and five additional well completions are planned by the end of the year. Several wells have been pre-drilled as part of the Chirag Oil Project, and planned rig maintenance is underway on three (Chirag, Central Azeri, Dada Gorgud) of the eight drilling rigs. Chirag: Rig maintenance will continue until the first quarter of 2012. 

Central Azeri: Since completion of the B04z oil producer in March 2011, rig maintenance has been under way. Drilling will resume in the third quarter to deliver the B18z oil producer and start the B01y gas injector, for delivery in the first quarter of 2012. 


West Azeri: C25z oil producer was complete in the first quarter of 2011 and C15z will be completed in the third quarter of 2011. 

East Azeri: The D-19 producer was completed and the D20 pilot well was drilled to assess the current oil-water contact. D-20 pilot hole was subsequently abandoned, and the D20z is currently being drilled, with delivery planned in the fourth quarter of 2011. 

Deep Water Gunashli (DWG): The E15z oil producer is being drilled for delivery in the third quarter of 2011. Drilling of E16 will follow, with well completion planned for the first quarter of 2012. 

Chirag Oil Project (COP) pre-drilling: The COP pre-drilling programme which commenced in April 2010 has continued this year. J03, J04 and J06 wells were drilled to 13 3/8’’ casing point and suspended. The 30’’ conductors were set on the J08, J09 and J05 wells and operations were suspended. The Dada Gorgud rig completed maintenance and a planned 5-year certification requirement. Drilling activity re-started in late July, 2011 with a plan to pre-drill five additional COP wells, and suspend operations until platform installation is complete. 

Shah Deniz: The SDA06 gas producer is currently being tied-in for production. SDA03y will be drilled in the fourth quarter, with delivery planned in the first quarter of 2012. 

Shah Deniz Full Field Development (FFD) appraisal: The SDX6 well was successfully drilled and completed with the Istiglal rig in March 2011. Afterwards, the SDX7A was spud in March 2011 and is expected to be complete in the first quarter of 2012. 

Chirag Oil Project (COP)

Since the beginning of 2011 COP construction activities have continued on schedule and according to plan. 

So far the project has made very good progress at all of fabrication sites where COP construction activities are ongoing. 

During the first half of 2011 COP accomplished the following activities: 

At the ATA yard: 
  • completed our upgrade programme to the ATA facilities to increase in country fabrication.
  • continued to hire and re-hire personnel for the fabrication and erection of the topsides. Currently there are up to 3000 personnel at site including client, contractor and sub contractors.
  • trained in excess of 400 welders, 100 of these were on stainless steel and duplex materials previously performed out of country.
  • COP Drilling facilities fabrication and construction which was previously undertaken out of country progressing well, now 39% complete
  • awarded a scaffolding sub-contract to the local company
  • completed fabrication of drilling support module - 02 plate girders
  • completed fabrication of cellar deck nodes
  • commenced pipes fabrication both carbon steel, stainless steel and duplex pipes and currently on target
  • commenced switch room installation
  • commenced build of weather deck sections
  • completed erection of first mechanical equipment onto Cellar Deck
  • commenced installation of major mechanical equipment on Drilling modules
  • derrick trial assembly completed in Poland
At Baku Deepwater Jackets Factory (BDJF): 
  • completed our upgrade programme to the BDJF facility to undertake all jacket fabrication activities in the country, some further upgrades being undertaken
  • continue to hire and re-hire personnel for the fabrication and erection of the jacket. Total workforce now stands at 1265 including client, contractor and sub contractors
  • external competency training programme for workforce continues with 695 personnel having been trained and passed various courses to date
  • rolling and fabrication in the workshops continues, with increased scope being done under cover
  • weather damage repairs to the heavy welding line now complete and line working again
  • assembly of launch runners complete, centre box jacket frames 3 and 5 and conductor frames assembly continues on site. Outer frame sections for frames 1 and 7 now on site.
  • Blasting and painting continue on legs, bracings and associated items.
COP milestones for the remaining part of the year are: 

At ATA: 
  • complete fabrication of topsides plate girders and nodes (3Q)
  • complete erection and installation of the 1st weather deck panel (3Q)
  • complete drilling support module - 01 steelwork erection (4Q)
  • complete drilling support module - 02 steelwork erection (4Q)
  • complete drilling equipment set (4Q)
  • complete installation of the drilling support module piping (4Q)
  • complete lifting of first drilling module onto the weather deck (4Q)
  • complete additional upgrades planned at the site (4Q)
At BDJF:
  • start pile sleeve sssembly (3Q)
  • prepare skidways to push centre box to the front (3Q)
  • start jacket level 1-3 assembly (4Q)
  • start jacket level 5-7 assembly (4Q)
  • start jacket tower frame assembly (4Q)
  • start roll up frame 3 into centre box (4Q)
  • start roll up frame 5 into centre box (4Q)
Marine and Subsea activities:
  • STB-1 dry docking (3Q)
  • STB-1 inclining tests (4Q)
  • STB-1 mounting of sponsons and second inclination test (4Q)
  • STB-1 handover to SOCAR (4Q)
At CPC: 
  • coating plant reactivation (3Q)
  • coating pre-qualifications (3Q)
  • receipt of coated bends from Europe (3Q)
  • pipe coating production (3Q)/(4Q)
  • partial pipe load in 18" spool / line pipe (4Q)
  • pipe coating 18" spool pipe (4Q)
Through our construction contractors COP currently employs over 4265 people and more than 95 per cent of these are Azerbaijani nationals.

Export operations

Oil and gas from ACG and Shah Deniz continue to flow via subsea pipelines to the Sangachal terminal. 


The capacity of the terminal’s overall processing systems is currently 1.2 million barrels of oil and 25.5 million cubic metres of Shah Deniz gas per day (about 39.5 million cubic metres in total) 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 2011 the Sangachal Terminal exported about 154.5 million barrels of oil (including 135.7 million barrels through Baku-Tbilisi-Ceyhan (BTC), 15.2 million barrels through the western route export pipeline [WREP] and 3.6 million barrels through rail). On average about 17.7 million standard cubic meters (about 624.4 million standard cubic feet) of Shah Deniz gas was exported from the terminal daily during the second quarter. 

Baku-Tbilisi-Ceyhan (BTC)

The BTC Co. shareholders are: BP (30.1%); AzBTC (25.00%); Chevron (8.90%); Statoil (8.71%); TPAO (6.53%); ENI (5.00%); Total (5.00%), Itochu (3.40%); INPEX (2.50%), ConocoPhillips (2.50%) and Hess (2.36%).

During the first half of 2011 BTC spent $8 million in capital expenditures. The 2011 plan for BTC capital expenditures is $65.9 million. 
BTC’s throughput capacity is currently 1.2 million b/d.

Since June 4, 2006 up to end of June, 1572 tankers were loaded at Ceyhan with a total of about 1222 million barrels (163.7 million tonnes) of crude oil transported via BTC and sent to world markets. 

Up to date (by 22.08.2011) 1624 tankers have been loaded at Ceyhan with a total of about 1261 million barrels (169 million tonnes) of crude oil transported via BTC and sent to world markets. 

To date BTC’s highest daily throughput has been 1.044 million barrels per day. 

The total volume of oil exported via BTC during the first half of 2011 was about 135.7 million barrels (about 18.2 million tonnes). 

The BTC pipeline currently carries mainly ACG oil and Shah Deniz condensate from Azerbaijan. In addition, crude oil from Turkmenistan has and continues to be transported. 

Shah Deniz

Shah Deniz participating interests are: BP (operator – 25.5%), Statoil (25.5%), SOCAR (10%), LUKOIL (10%), NICO (10%), Total (10%), and TPAO (9%).

In the first half of 2011 Shah Deniz spent $ 86.8 million in operating expenditure and $298.2 million in capital expenditure. 

For the full year, we are planning to spend $169.9 million in operating expenditure and $791.6 million in capital expenditure on Shah Deniz activities. 

Production

During the first half 2011 the field continued to produce from three wells to deliver gas to the markets of Azerbaijan, Georgia and Turkey. The gas from Shah Deniz Stage 1 continues to be sold to Azerbaijan, GOGC (Georgia), BOTAS and the BTC Company. 

During the first half of 2011 the field produced about 3.07 billion cubic meters (more than 108.4 billion cubic feet) of gas and 0.8 million tonnes (6.5 million barrels) of condensate or over 17 million cubic meters of gas per day (about 600 million standard cubic feet per day) and about 35,800 barrels of condensate per day. 

Since the start of Shah Deniz production in late 2006 till the end of the second quarter of 2011 about 56.3 million barrels (7.13 million tonnes) of Shah Deniz condensate was exported to world markets. 

Production is expected to increase as new platform-drilled wells are brought on stream over the next few years. Plateau production from Stage 1 is currently expected to be approximately 9 billion cubic meters of gas per annum and approximately 50,000 b/d of condensate.

Shah Deniz Full Field Development (FFD)

Shah Deniz FFD is a giant project that is designed to bring gas from Azerbaijan to Europe and Turkey increasing gas supply and energy diversity to European markets through a new Southern Corridor. 
It is expected to add a further 16 billion cubic meters per year (bcma) of gas production to the approximately 9 bcma from Shah Deniz Stage 1. It is one of the largest gas development projects anywhere in the world and the new Southern Corridor will substantially increase the security and diversity of European gas imports. 

The project is progressing engineering to ensure first gas deliveries in 2017. 

The current plans are that the project will include two new bridge-linked production platforms; 26 subsea wells to be drilled with 2 semi-submersible rigs; 500 km of subsea pipelines built at up to 550m of water depth; an additional 16bcma of export capacity through new pipeline and compression in Azerbaijan and Georgia; expansion of the Sangachal Terminal. 

It is also planned that the project itself will take FFD gas to the Georgian-Turkish border. Transportation of gas through Turkey to the European markets will either use existing Turkish infrastructure or new pipeline infrastructure. The project is currently working to assess all options. 

On August 10 SOCAR as leader of the Shah Deniz Export Negotiating Team announced that a request for proposal (RFP) and a request for information (RFI) had been issued to the three main prospective EU pipeline groups for transit of Shah Deniz gas to Europe. These are IGI Poseidon, Trans-Adriatic Pipeline and Nabucco. 

In these documents Shah Deniz requested the pipeline groups to provide the consortium with information it requires to evaluate the projects and take a decision on an export solution. The submission date to the request, which should include a tariff offer and associated terms and conditions, as well as detailed information on wider aspects of the projects, has been set for October 1, 2011. 

South Caucasus Pipeline (SCP)

The SCP Co. shareholders are: BP (technical operator – 25.5%), Statoil (commercial operator - 25.5%), Azerbaijan SCP Ltd. (10%), LUKOIL (10%), NICO (10%), Total (10%), and TPAO (9%).

During the first half of 2011 SCP spent $3.7 million in capital expenditures. 

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 second quarter SCP daily average throughput was 12.3 million cubic meters (about 434 million cubic feet) of gas or about 77,500 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 and Statoil, as commercial operator, is responsible for SCP's business administration. 

Exploration

On May 6, the Parliament of the Republic of Azerbaijan ratified the new 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. 

In May, the project also awarded a contract for acquisition of the Shafag-Asiman 3D seismic survey to Caspian Geophysical, a joint venture between WesternGeco (Schlumberger) and SOCAR. The survey is scheduled to start in September, 2011 with the seismic vessel ‘Gilavar’ which returned to the Caspian on August 1 to begin this new exploration era of Azerbaijan. 

The block lies some 125 kilometers (78 miles) to the South-East of Baku. It covers an area of some 1100 square kilometers and has never been explored before. It is located in a deepwater section of about 650-800 meters with reservoir depth of about 7000 meters. 

People

BP currently employs directly 2,189 Azerbaijani nationals. 87 percent of BP’s permanent professionals in Azerbaijan are nationals and many of them are in very senior leadership positions. 

Sustainable development initiatives

Success of our projects in the Caspian in part depends on our ability to create tangible benefits from our presence for the people of the countries where we operate. To achieve this, we continue to carry out major sustainable development initiatives which include educational programmes, building skills and capabilities in local communities, improving access to social infrastructure in communities, supporting local enterprises through provision of access to finance and training, as well as technical assistance to public institutions. 

During the first half of 2011 BP and co-venturers spent about $1.33 million in Azerbaijan alone on such sustainable development projects. 

BP and its co-venturers will continue their sustainable development initiatives to support local enterprise development and capacity building throughout Azerbaijan to assist the country in strengthening its economy. 

The most recent examples of such initiatives have been: 
  • “Meet the Buyer” exhibition hosted by BP and its co-venturers . The event was part of BP’s and its co-venturers’ commitment to helping local companies increase their participation in BP-operated projects through enhancing their capabilities, developing their business and building relationship with their potential clients. It is planned that the event will become annual.
  • A new School of Project Management established by BP and its co-venturers in Azerbaijan. The school is designed for the private and public sectors, providing access to a globally-recognized, comprehensive project management programme. It focuses on simultaneous goals of improving immediate project management performance and establishing long term project management capability in the country.
  • BP and co-venturers’ award of a major grant to the local business service provider AZERMS LLC for implementation of the Enterprise Development and Training Programme (EDTP) to develop local oil and gas sector companies.
  • BP and its co-venturers’ support to the Ministry of Economic Development focused on macroeconomic analysis and forecasting through EU-based think tank.
  • BP and its co-venturers’ economic capacity building project for youth– it aims to support primarily young community entrepreneurs in their efforts to enhance capacities, increase revenues and contribute to youth social welfare via sustainable and market driven solutions.
  • BP and its co-venturers’ project to support needy families with children through increasing quality of and access to innovative pre-school programmes.
  • BP and its co-venturers’ project aimed to create a new centre of entrepreneurship for young people. The centre functions as a special business and management unit within Ganja vocational training centre.
  • BP and its co-venturers’ project to develop greenhouse agriculture in Goranboy communities. It commenced in June, 2010, with the establishment of ‘greenhouse agriculture’ in Azizbayov, Yolpag, Nadirkend and Jinli Boluslu villages.
  • BP and its co-venturers’ project to provide community-based support to dairy producers to help increase dairy production by small and medium-sized farmers.
  • BP’s support for the publication of a fundamental research book about Haji Zeynalabdin Taghiyev
  • BP’s support for the publication of major research on who the author of the famous Azerbaijani novel “Ali and Nino” was.
  • BP's ongoing support for the Baku-based Qafqaz University to broaden its scope to cover undergraduate education in chemical, petroleum, and mechanical engineering disciplines.
  • BP’s “Business Journalism” training programme to help develop national business journalism capacity and bridge local journalists with international journalistic standards.
  • BP’s annual bursary awards to a large group of first and second year students of the Azerbaijan State Oil Academy. The bursary awards programme is part of BP’s educational support commitment and is aimed at promoting the best students specializing in petroleum engineering, geosciences, oil mechanical, process automation, energy power at the State Oil Academy.
  • BP’s ongoing Geosciences and Engineering Speaker Series (BPGESS) initiative which is designed to enhance commitment by future generations of engineers to promoting geosciences in Azerbaijan.

presentation slides

For further information please contact:
Tamam Bayatly, BP Baku Press office, telephone:      994 (0) 12 599 4557