Saturday, July 2, 2016

Peak Oil? What Peak Oil? Tengiz To Close In On One Million BOPD -- July 2, 2016

Updates

July 5, 2016: Chevron "pulled the trigger." Chevron and Exxon Mobil commit to $36.8 billion Tengiz expansion program. It will increase production to 1 million bopd. First production form the expansion will occur in 2022.
 
Original Post
From Bloomberg/Rigzone.

Wow, if this doesn't get your attention, nothing will.

Kazakhstan -- I doubt many folks could even pick this country out on a globe -- could surpass Norway and Qatar in crude oil output. One expert: "This will be like another small producing nation coming online."
The Tengiz expansion probably will begin pumping barrels in 2021 or 2022, said Samuel Lussac, research manager for Caspian upstream oil and gas at Wood Mackenzie in Edinburgh. The combination of new Tengiz supplies and output from the Kashagan project set to come online later this year could boost Kazakhstan’s daily output to more than 2 million barrels, vaulting it past countries including Norway and Qatar.
But for that to happen, Chevron has to pull the trigger:
Chevron Corp. may shortly give a green light to the most expensive oil project in the world this year as the industry digs out from the worst slump in a generation.

The company said this week in a presentation on its website that the decision on expanding the Tengiz development in Kazakhstan will be made in mid-2016. Installing 4,500 camp beds for construction crews is done and port dredging 25 percent complete. The project may cost as much as $40 billion and add crude supply equivalent to that of Libya. The investment was put on hold last year after cost estimates ballooned amid plunging oil prices.
Chevron (50%); other partners -- Exxon Mobil, Kazmunaigaz National Co, and Lukoil PJSC.

Current production:
Tengiz produced about 595,000 barrels a day last year. The expansion will involve pumping sulfur-laden gas back into the rocks to force out an additional 250,000 to 300,000 barrels a day.

“Tengiz has been very lucrative for Chevron for many years,’’ said Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis, who has a “buy’’ rating on the shares. “It’s one of the few projects in that part of the world that worked as planned.’’

It’s also the only major new project Chevron spared from the austerity budget imposed this year to cope with the slump in crude prices and cash flow.
A bit of history:
Discovered in 1979, Tengiz was too technically challenging for Soviet engineers to develop. A blowout in a well called T-37 in June 1985 blazed for more than 400 days before it was extinguished by U.S. well-control experts.  [400 days! That's more than a year. And again, it's the "US roughnecks" that get it done.]
Chevron won the rights to develop the field in 1993 after the collapse of the Soviet Union. Tengiz produces a very light form of crude oil, highly prized by refiners because of its high gasoline yield. [Sort of like the Bakken, I guess.]

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