Azerbaijan International

Winter 2005 (13.4)
Pages 92-95


Petroleum

BP Developments: Production Begins at West Azeri
by Tamam Bayatly, Communication Manager

The New Year arrived in BP Azerbaijan with the start up of oil production from the new platform in West Azeri (Azeri Project Phase 2), as part of the Azeri-Chirag-Gunashli (ACG) field development in the Azerbaijan sector of the Caspian Sea.

Located in approximately 118 meters of water 100 km east of Baku, West Azeri (WA) production began from the first of three pre-drilled production wells on December 30, 2005. Transiting the subsea pipeline to shore, WA oil production reached Sangachal on January 3, 2006. Production will increase through 2006 as the other pre-drilled wells are brought online, prior to further platform drilling which will begin later this year. Total production from WA is forecast to be approximately 3.5 million tons this year (equivalent to 70,000 barrels of oil on average per day).

"The start up of West Azeri is as important as our achievement of our First Oil from Central Azeri last year," said David Woodward, BP's Associate President in Azerbaijan. "It marks the culmination of our efforts to consistently meet our target of delivering a platform a year between now and 2008. The start up of WA will contribute to the rapidly increasing volumes of oil from ACG flowing into BTC once it becomes fully operational in spring this year."

"I'm proud to say that we have delivered WA oil four months ahead of schedule and this is thanks to our ACG Project and Operations Teams' excellent performance building on a track record of planning, construction and operations delivery in the Caspian Sea.

On this important day for Azerbaijan, BP and our ACG partners, I would like to recognize the hard work of more than ten thousand people, mostly from Azerbaijan, who have consistently delivered outstanding performance on this project over the past three years. I would also like to congratulate the government, our partners, employees, all the contractors and suppliers and everyone involved, on this tremendous achievement."

The WA facilities comprise a 48-slot production, drilling and quarters (PDQ) platform and a 30" oil pipeline tie - in to the onshore Sangachal Terminal.

Oil from WA will be transported via the new 30" subsea pipeline to the onshore Sangachal Terminal, which has been expanded (including three new crude oil storage tanks) to receive the additional oil volumes from the ACG field. The Azeri Project Phase 2, which includes West and East Azeri, will add production of more than 20 million tons per year (420,000 barrels per day). During Phase 2 of the PSA (Production Sharing Agreement) period, 210 million tons (1.6 billion barrels) of reserves are expected to be produced.

Associated gas produced from WA will flow via in-field gas subsea pipelines to the Compression and Water Injection Platform (C&WP) installed in Central Azeri for re-injection into the reservoir for pressure maintenance or for use as fuel. Surplus gas will be exported via an existing gas subsea pipeline into the Sangachal Terminal and onward via the new gas export pipeline into the Azerigas system for domestic use.

David Woodward Honored
The other fascinating New Year story for BP Azerbaijan came from London with the news that its Associate President David Woodward had been made a Companion of the Order of St. Michael and St. George by Her Majesty Queen Elizabeth II in the New Year's Honor list, announced on January 1. The honor, which was established by the Prince Regent, later King George IV, in 1818, is given for "extraordinary and important service" by UK citizens working overseas. It recognizes Mr. Woodward's achievements during his seven years leading BP's activities in Azerbaijan.

"This is a tremendous honor and I'm very proud to be recognized in this way," said Mr. Woodward. "It has been a great privilege to work alongside my colleagues in BP, our oil company partners and our contractors, together with the government to realize Azerbaijan's oil and gas potential. I remain indebted to all those working as part of this broader team for their contribution to the success of our projects. This award is as much a tribute to their efforts as mine.

BP's Associate President David Woodward was recently honored as a Companion of the Order of St. Michael and St. George by Queen Elisabeth II. Woodward has been involved with oil porjects in Azerbaijan since 1999. Photo: BP. "I'm very pleased that we have also been able to support the Government of Azerbaijan in its own endeavors - particularly revenue management and in its ground-breaking adoption of the UK Extractive Industries Transparency Initiative.

Left: BP's Associate President David Woodward was recently honored as a Companion of the Order of St. Michael and St. George by Queen Elisabeth II. Woodward has been involved with oil porjects in Azerbaijan since 1999. Photo: BP.

Over the past 15 years, we have witnessed the development of strong links between the UK and Azerbaijan, and I remain committed to furthering good relationships between our two countries," he added. At present 27 BP Azerbaijan employees are working on assignments with BP in the UK. BP also supports the John Smith Fellowship program, which was awarded to two young Azerbaijanis for the first time in 2005.

The program also funds English language courses, which are administered by the British Council for local staff, journalists and NGOs.

This year, BP also helped set up the UK-Azerbaijan Alumni Network for Azerbaijani students who had studied in the UK. David Woodward was appointed President of BP Azerbaijan in January 1999.

Through BP's role as Operator, he has overall responsibility for development and operation of the Azeri-Chirag-Gunashli (ACG) offshore oilfield, the Baku-Tbilisi-Ceyhan (BTC) pipeline project, the Shah Deniz offshore gas development and pipeline project, and for BP's exploration activities in the Southern Caspian and the Eastern Black Sea.

David joined BP in 1970, and has worked in a variety of engineering, operation and general management posts in London, Aberdeen, Abu Dhabi, Norway, Alaska and Russia. He has an Master of Science degree in Physics from the University of Sussex and attended the Program for Management Development at Harvard. He is a Chartered Engineer and a member of the Institution of Mining and Metallurgy, as well as the Society of Petroleum Engineers.

Woodward is married and has two children. Previous honors include: the "Order of Honor" from Georgia (2003) and the "Order of Glory" from Azerbaijan (2004).

Gunashli Pre-Drilling
The Deepwater Gunashli (DWG also known as Phase 3) pre-drilling program - the last within the Azeri - Chirag-Gunashli development - commenced in late December 2005. This followed the successful completion of the pre-drilling program at the East Azeri (EA) location.

The first DWG pre-drill well was spudded on December 28 by the Dada Gorgud semi-submersible drilling rig. The DWG platform template pre-drilling program currently consists of seven wells, six of which are planned as producers and one as a cuttings re-injection well (to be used for platform drilling activity only). In addition to the pre-drilled platform template wells, the DWG drilling campaign also includes six sub-sea water injection wells, which will also be drilled using the Dada Gorgud as part of the Phase 3 Development. The planned duration of the DWG pre-drilling and sub-sea injection well drilling program will take nearly two and a half years.

Flares against the Sunset in the Caspian: the West Azeri Platform, located 100 km east of Baku. In the distance, note the Central Azeri Platform, and the Compressor and Water Injection Platform (C&WP). Photo: BP.

Above: Flares against the Sunset in the Caspian: the West Azeri Platform, located 100 km east of Baku. In the distance, note the Central Azeri Platform, and the Compressor and Water Injection Platform (C&WP). Photo: BP.

BTC Turkish Linefill

BTC construction progressed smoothly during last year. On November 17, oil crossed the Georgian-Turkish border and reached Pump Station No. 1 in Turkey (PT1) the following day with more than 4 million barrels of oil in the pipeline. On January 4, 2006, oil reached the Intermediate Pigging Station No. 2 (IPT2) in Turkey, which is the highest elevation facility along the entire BTC line and is close to the city of Kars. From IPT2, oil then headed for Pump Station No. 2 in Turkey (PT2). The line-fill started up from the Sangachal Terminal in Azerbaijan in May 2005. It had reached the Azerbaijan - Georgian border and entered the Georgian section by August 2005. The oil line-fill and completion of the BTC pipeline is continuing. Rigorous testing and commissioning activities will ensure the integrity and safety of each section of the pipeline prior to introducing oil. This is taking longer than expected but the aim is to complete this safely and ensure that the pipeline will operate efficiently for the next 40 years or more.

Below: 1, 2, 3. Ceyhan Terminal at the Turkish Mediterranean part, final destination point of BTC (Baku-Tbilisi-Ceyhan) pipeline. Part is being readied for the ACG (Azeri-Chirag-Gunashli). Photos: BP.

Ceyhan Terminal at the Turkish Mediterranean part, final destination point of BTC (Baku-Tbilisi-Ceyhan) pipeline. Part is being readied for the ACG (Azeri-Chirag-Gunashli). Photos: BP. The company continues to make steady progress in the line-fill program and is now planning the official inauguration of the Turkish section of the pipeline and the Ceyhan Terminal to take place in spring 2006 once oil has reached the terminal and the first tanker has been loaded.

The Turkish section of the pipeline is 1,070 kilometers long and includes four pump stations, two metering stations and the Ceyhan marine export terminal, which itself consists of seven crude oil storage tanks, and a two-kilometer long jetty to load two tankers of up to 300,000 dwt simultaneously.

Commissioning of the Ceyhan Terminal facilities is already underway, using a cargo of crude oil delivered from the Supsa (Georgia) terminal. Following commissioning, the terminal will be fully ready to receive oil through BTC on arrival at Ceyhan.

At Sangachal Terminal, the BTC head pump station Phase 1 pumps are successfully operating while the commissioning of the BTC Phase 2 pumps is 99.5 percent complete.

Ceyhan Terminal at the Turkish Mediterranean part, final destination point of BTC (Baku-Tbilisi-Ceyhan) pipeline. Part is being readied for the ACG (Azeri-Chirag-Gunashli). Photos: BP. A total of 10 million barrels of crude oil is required to fill the 1,768 km long line running from the Sangachal Terminal near Baku via Georgia to the Ceyhan Terminal on the Mediterranean coast of Turkey. The oil originates from the ACG field in the Azerbaijan sector of the Caspian Sea. BTC will bring significant benefits to the region. By avoiding the Bosphorus Straits, it will help relieve the inevitable growth in oil-related traffic and associated environmental risks, while creating substantial revenues for the transit countries, and will help strengthen economic and political links between Azerbaijan, Georgia, Turkey and the West.
South Caucasus Pipeline (SCP)
The overall SCP project is about 96 percent complete, and by the end of 2005, the overall pipeline construction was 93 percent complete in Azerbaijan and more than 85 percent complete in Georgia. They have already hydro-tested some 75 percent of the 442.4 km Azerbaijan section of the pipeline. Good progress has also been achieved in Georgia, where the focus has been on completing the high ground work depending on the weather conditions. In Georgia they have hydro-tested 80 percent of the high ground sections of the pipeline. In both Azerbaijan and Georgia, current activities also focus on the main line block valve stations.

In addition, the Turkish offtake facility is 100 percent complete and the Georgian offtake is about 99 percent complete. The Azerbaijan offtake is within the Sangachal terminal scope. The SCP pipeline is scheduled to start system commissioning in the second quarter of this year and be completed to deliver first gas from Shah Deniz to Azerbaijan, Georgia and Turkey by the winter of 2006.

Ceyhan Terminal at the Turkish Mediterranean part, final destination point of BTC (Baku-Tbilisi-Ceyhan) pipeline. Part is being readied for the ACG (Azeri-Chirag-Gunashli). Photos: BP. Shah Deniz
In January, the Shah Deniz partnership successfully completed the drilling of the fourth pre-drill well and spudded the fourth appraisal well (SDX-04) under the Shah Deniz Production Sharing Agreement (PSA). The wells are being drilled by the Istiglal semi-submersible drilling rig.

The fourth pre-drill well was drilled through the Shah Deniz Stage 1 template to a total depth of 6,189 meters.

The well was then logged and after the production liner run, it was suspended, awaiting the installation of the TPG-500 platform later this year and subsequent completion as a gas producer. The Istiglal was moved to the SDX-04 location in the southwestern part of the Shah Deniz field on January 10.

The SDX-04 well will be drilled to a total depth of more than 7,000 meters.

The previous three exploration and appraisal wells (SDX-01, SDX-02 and SDX-03) were designed to appraise and delineate the Stage 1 reserves in northern flank of the field. The SDX-04 well will appraise and delineate the resources in the southern flank of the field and will also test for gas presence in deeper horizons.

The SDX - 04 will take approximately six months to drill and production testing could extend the well's duration by several months in order to confirm the commerciality of the gas reserves in the southern extent of the field. The Stage 1 project is progressing according to schedule to meet the target of delivering first gas to the market before winter 2006.


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