Monday, January 23, 2017

Kashagan Update -- January 23, 2017

Don't even ask, but somehow today I got onto the subject of Kashagan again (I need to get a life, 😃).

I follow the Kashagan at this link.

I am re-posting the update here; it's pretty interesting:

Over the years, much has changed with regard to the Kashagan (see original post at the link; compare those notes with the Diplomat link, October 17, 2106. Data points:
  • consortium: Eni, Shell, XOM, Total, CNPC (China), Inpex, and Kazakhstan-state oil company
  • at the end of the 20th century, the Kashagan was the largest oil discovery in a generation
  • production had begun in late 2013 but immediately suspended due to faulty pipes
  • back on-line late 2016
  • now very cautious optimism
  • early production (late 2016 when brought back on-line): 90,000 bopd (compare with 1 million bopd from North Dakota, mostly the Bakken)
  • costs continue to be a headache
  • behind schedule; significantly over-budget
  • since contract signed in 2000, costs have surpassed $53 billion
  • below $100/bbl, the companies running the North Caspian Operating Consortium will incur losses -- does anyone think we will see $100 oil before 2020, if ever (in today's dollars)?
  • it is estimated that production costs at Kashagan exceed $50/bbl; in other words, probably selling oil at a loss right now
  • despite that, the government directed that Kashagan go back on-line
  • first phase: in a couple of years, at its peak, Kashagan projected to yield 370,000 bopd; pretty puny in the big scheme of things (at $60 oil, if the full $60 was profit [and, of course it isn't] it would take almost seven years of producing at its peak of 370,000 bopd to pay off the $53 billion; and there are obviously continuing production costs; interest payments; etc)
  • second phase: no timeline yet -- hope to get to 1 million bopd
  • government is anxious about the project getting through its first winter (2016 - 2017); workers unhappy with low pay; workers pay increased to keep them from striking 
This Is Truly Bizarre

Eight years of Barack Obama have led us to this (Barack has been out of office for about four days):
So, with that, three strikes against me:
  • white
  • old
  • male
I'm going to shut up and go to bed.

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