North Caspian Operating Co. BV (NCOC), the seven-company consortium behind Kashagan development, confirmed 12 June that production is not expected to resume in 2014. It appears that “both oil and gas lines might have to be fully replaced,” NCOC said.
Gas leaks in two different areas of the project have halted operations twice since its 11 September 2013 start-up: the first on 24 September, and the final on 9 October. Production has been at a standstill since.
“[The] production only started last autumn; there are still some unresolved issues related to the pipelines. Over 2000 weld seams have been inspected; we have covered over 6000 meters of pipes with in-line inspections; the data is being processed at laboratories” Kazakh Oil Minister Uzakbai said 7 April.
NCOC said that investigations and task forces were mobilized following October’s gas leak, including multiple, 100-day-campaign Intelligent Pipeline Inspection Gauges (PIGS). Offshore investigations commenced in March.
“The immediate cause of the pipeline failures was traced by material experts to be sulphide stress cracking (SSC) due to unexpected locally-elevated hardness in tiny areas of the steel,” NCOC said, noting that the pipeline specifications met NACE and ISO standards, and were appropriate for the harsh environment of the Caspian Sea. Total said that temperatures slide between -40°C and 40°C (-40ºF - 104ºF) throughout the year.
The tender process for the purchase of pipeline joints has been initiated, and a full replacement plan is expected to be completed by mid-2014.
In addition to production stoppages and pipeline problems, the Kashagan co-venturers were recently shuffled. Effective 1 May, ExxonMobil secondee Stephane de Mahieu stepped in as managing director, and the NCOC itself will see some restructuring.
Located in around 4200m of water in the northern Caspian Sea, with reserves estimated at 35 billion bo and 52Tcf of gas. The Kashagan consortium is comprised of Italy’s Eni, ExxonMobil, Royal Dutch Shell, France's Total and Kazakh state oil company KazMunaiGas, each with 16.8%, along with Japan's Inpex (7.63%) and China National Petroleum Corp. (8.3%).
Image of Kashagan from Total.