View source for Kashagan Field

{{Use dmy dates|date=March 2012}}
{{Infobox oil field
| name        = Kashagan Field
| image       = 
| caption     = 
| location_map       = Caspian Sea
| location_map_width = 
| location_map_text  = 
| coordinates = {{coord|46|10|N|51|35|E|type:landmark|display=inline,title}}
| coordinates_ref    = 
| country     = [[Kazakhstan]]
| region      = Pre-Caspian Basin
| location    = Near [[Atyrau]]
| block       = 
| offonshore  = Offshore
| operator    = [[North Caspian Operating Company]]
| partners    = [[Eni]] (16.81%)<br/>[[KazMunayGas]] (16.81%)<br/>[[Royal Dutch Shell]] (16.81%)<br/>[[Total S.A.]] (16.81%)<br/>[[ExxonMobil]] (16.81%)<br/>[[China National Petroleum Corporation]] (8.4%)<br/>[[Inpex]] (7.56%)
| contractors = 
| discovery   = 2000
| start_development = 2001
| start_production  = Sept. 2013<ref name=nyt11092013/>
| peak_year         =
| abandonment       = after 2040
| peak_of_production_oil_bbl/d    =
| peak_of_production_oil_tpy      =
| peak_of_production_gas_mmcuft/d =
| peak_of_production_gas_mmscm/d  =
| peak_of_production_gas_bcm/y    =
| oil_production_bbl/d    =
| oil_production_tpy      =
| production_year_oil     = 
| est_oil_bbl     = 38000
| est_oil_t       =
| recover_oil_bbl = 13000
| recover_oil_t   =
| formations      = Carboniferous limestones
}}
'''Kashagan Field''' is an offshore [[oil field]] in [[Kazakhstan]]'s zone of the [[Caspian Sea]].<ref name=oies>{{cite paper | first= Shamil | last = Yenikeyeff | url = http://www.oxfordenergy.org/wpcms/wp-content/uploads/2010/11/NG25-KazakhstansgasExportMarketsandExportRoutes-ShamilYenikeyeff-2008.pdf |title= Kazakhstan's Gas: Export Markets and Export Routes | publisher=[[Oxford Institute for Energy Studies]] | format=PDF | date = November 2008 | accessdate=17 November 2011}}</ref>  The field, discovered in 2000, is located in the northern part of the Caspian Sea close to [[Atyrau]] and is considered the world's largest discovery in the last 30&nbsp;years, combined with the [[Tengiz Field]].<ref name=johnston>
{{cite book
|last1= Johnston|first1=Daniel
|last2= |first2=
|title= International Exploration. Economics, Risk, and Contract Analysis
|edition= 1
|isbn=0-87814-887-6
|year= 2003
|publisher= [[PennWell Corporation]]
|page=199}}
</ref>

It is estimated that the Kashagan Field has recoverable reserves of about {{convert|13|Goilbbl}} of [[crude oil]].  Harsh conditions, including sea ice during the winter, temperature variation from {{convert|-35|to|40|°C|°F}}, extremely shallow water and high levels of [[hydrogen sulfide]], together with mismanagement and disputes, make it one of the most challenging [[oil megaprojects]].<ref name=ft261112>
{{cite news
 | url = http://www.ft.com/intl/cms/s/0/6e870d1a-37e0-11e2-8edf-00144feabdc0.html
 | title = Conoco sells stake in Kashagan field
 | first1 =  Ed | last1 = Crooks
 | first2 = Guy | last2 = Chazan
 | newspaper = [[Financial Times]]
 | date = 26 November 2012
 | accessdate =8 December 2012}}
</ref><ref name=bbc071212/>  Commercial production began in September 2013.<ref name=nyt11092013/>  It has been designated as the main source of supply for the [[Kazakhstan-China oil pipeline]].<ref name=asiatimes>
{{cite news
 | url = http://atimes.com/atimes/Central_Asia/GB09Ag02.html
 | title = Caspian oil exports heading east
 | publisher = Asia Times
 | date = 9 February 2005
 | accessdate =20 May 2007}}
</ref>  [[CNN Money]] estimates that development of the field had cost US$116&nbsp;billion as of 2012, which made it the most expensive energy project in the world,<ref name=cnn291112>
{{cite news
 |url=http://en.tengrinews.kz/industry_infrastructure/Kazakhstans-Kashagan-tagged-worlds-most-expensive-energy-project-14913/
 |title=Kazakhstan's Kashagan tagged world's most expensive energy project
 |work=Tengrinews.kz
 |date= 29 November 2012
 | accessdate =1 April 2014}}
</ref><ref>
{{cite news
 |url = http://money.cnn.com/gallery/news/economy/2012/08/27/expensive-energy-projects/10.html
 |title = 10 most expensive energy projects in the world
 |first = Steve | last = Hargreaves
 |work = [[CNNMoney]]
 |date=27 August 2012
 |accessdate=1 April 2014}}
</ref> while other sources report the cost at up to $50&nbsp;billion.<ref name=ft261112/><ref name=bbc071212>
{{cite news
 | url = http://www.bbc.co.uk/news/world-asia-20251682
 | title = Development challenge of Kazakhstan's giant oilfield
 | first1 = Rayhan | last1 = Demytrie
 | work = [[BBC News]]
 | date = 7 December 2012
 | accessdate = 8 December 2012}}
</ref>

A stake in the field was acquired by the Chinese government in September 2013 after [[Xi Jinping]] struck a deal with [[Kazakhstan]] for around $5 billion.<ref>{{cite web| title=China buys into giant Kazakh oilfield for $5 billion| author=Mariya Gordeyeva| publisher=Reuters| url=http://www.reuters.com/article/2013/09/07/us-oil-kashagan-china-idUSBRE98606620130907?feedType=RSS&feedName=topNews&utm_source=dlvr.it&utm_medium=twitter&dlvrit=992637|  date=7 September 2013}}</ref>

==History==
Interest in the Caspian Sea first began in 1992 when an exploration program was announced by the Kazakh government. They sought the interest of over 30&nbsp;companies to partake in the exploration. In 1993 the Kazakhstancaspiishelf was formed which consisted of [[Eni]], [[BG Group]], [[BP]]/[[Statoil]], [[ExxonMobil|Mobil]], [[Royal Dutch Shell]] and [[Total S.A.]], along with the Kazakh government.  This consortium lasted 4 years until 1997, when seismic exploration of the Caspian Sea was undertaken.

Upon completion of an initial 2D seismic survey in 1997, the company became Offshore Kazakhstan International Operating Company (OKIOC). In 1998 [[Phillips Petroleum Company]] and [[Inpex]] joined the consortium. Kashagan was discovered in 2000.<ref name=rigzone1>{{cite web | title= Project: Kashagan | publisher=Rigzone | url=http://www.rigzone.com/data/projects/project_detail.asp?project_id=87| accessdate=26 April 2006 |archiveurl = https://web.archive.org/web/20060630022038/http://www.rigzone.com/data/projects/project_detail.asp?project_id=87 |archivedate = 30 June 2006}}</ref>

The consortium changed when it was decided that one company was to operate the field instead of joint operatorship as had been agreed before. Eni was named the exclusive operator in 2001.  In 2001 BP/Statoil sold their stake in the project to the remaining partners. With Eni as the operator, the project was renamed Agip Kazakhstan North Caspian Operating Company NV (Agip KCO).

In 2003, BG Group attempted to sell their stake in the project to two Chinese companies, [[CNOOC]] and [[Sinopec]]. However, the deal did not go through due to the partners' exercise of their pre-emptive privileges. Eventually, in 2004 the Kazakh government bought half of BG's stake in the contract, with the other half shared out among other five Western partners in the consortium that had exercised their pre-emptive rights. The sale was worth approximately $1.2&nbsp;billion.  The Kazakh stake was transferred to the state-owned oil company [[KazMunayGas]].  On 27 September 2007, the parliament of Kazakhstan approved a law enabling the government to alter or cancel contracts with foreign oil companies if their actions were threatening national interests.<ref name=bw>
{{cite news
 | publisher=BusinessWeek
 | url= http://www.businessweek.com/globalbiz/content/jul2008/gb20080714_206553.htm
 | title = A New Oil Bully in the Caspian?
 | date = 18 July 2007
 | accessdate=18 July 2008}}
</ref>

With President [[Nursultan Nazarbayev]] appointing [[Maksat Idenov]] <ref>{{cite web|url=http://www.neurope.eu/article/creation-new-operating-company-rules-out-operatorship-kashagan|title=The creation of a new operating company rules out operatorship in Kashagan |work=New Europe|accessdate=24 March 2013}}</ref> to lead negotiations,<ref>{{cite web|url=http://www.ogj.com/articles/2008/10/kazakhstan-consortium-agrees-to-new-kashagan-terms.html|title=Kazakhstan, consortium agrees to new Kashagan terms|work=Oil and Gas Journal|accessdate=24 March 2013}}</ref> KazMunayGas further increased its stake in January 2008,<ref>{{cite web|url=http://www.kmg2.isd.kz/page.php?page_id=310&lang=1|title=Краткая информация по Северо-Каспийскому проекту|work=KazMunayGas|accessdate=21 March 2015}}</ref> after its six partners and the Kazakhn government agreed on compensation for the probable five-year delay that was taken in developing the field.  Eni operated this project under the JV company name of AgipKCO (Agip Kazakhstan North Caspian Operating Company N.V.).<ref name=forbes>
{{cite news
 | agency= [[Agence France-Presse|AFX]]
 | newspaper = [[The Daily Telegraph|The Telegraph]]
 | title=Eni to share Kashagan operator status with other consortium members
 | url= http://shares.telegraph.co.uk/news/article.php?id=2581102&archive=1&epic=KMG
 | date=14 January 2008
 | accessdate= 8 December 2012}}
</ref>  Following the agreements reached on 31 October 2008 between Kazakh authorities and co-ventures under the North Caspian PSA (NCPSA), operatorship of the NCPSA was formally transferred from AGIP KCO to a new company, North Caspian Operating Company BV (NCOC), on 23 January 2009.<ref name=upstream230109>
{{cite news
 | newspaper = [[Upstream (newspaper)|Upstream Online]]
 | publisher = [[NHST Media Group]]
 | url= http://www.upstreamonline.com/live/article170381.ece
 | title = Change of guard at Kashagan helm
 | date = 23 January 2009
 | accessdate=30 January 2009}}
</ref>

In October 2008, Agip KCO handed a $31&nbsp;million letter of intent for FEED work on phase two to a joint venture of [[Aker Solutions]], [[WorleyParsons]] and [[Chicago Bridge & Iron Company|CB&I]]. WorleyParsons and Aker Solutions are also engaged in phase one, carrying out engineering services, fabrication and hook-up.<ref name=upstream2>
{{cite news
 | newspaper = [[Upstream (newspaper)|Upstream Online]]
 | publisher = [[NHST Media Group]]
 | url= http://www.upstreamonline.com/live/article165149.ece
 | title = Trio tuck in to Kashagan FEED
 | date = 21 October 2008
 | accessdate=26 October 2008}}
</ref>

In November 2012, [[ONGC Videsh]] agreed to buy ConocoPhillips's 8.4% stake. The Kazakh government, however, decided in July 2013 to use its pre-emptive right to buy ConocoPhillips's stake, which it sold to CNPC later that year.<ref name=ft261112/><ref name=cnn291112/><ref name=upstream261112/>  The deal was already approved by Eni.<ref name=express071212>
{{cite news
 | newspaper = [[The Financial Express (India)|The Financial Express]]
 | url= http://www.financialexpress.com/news/ongc-gets-project-operators-nod-for-5bn-kashagan-stake-buy/1041459
 | title = ONGC gets project operator's nod for $ 5-bn Kashagan stake buy
 | date = 7 December 2012
 | accessdate= 8 December 2012}}
</ref>

On 11 September 2013, Kashagan began oil production after years of delay, with [[ExxonMobil]] and [[ConocoPhillips]] planning to increase production over the next several years.<ref name=nyt11092013>
{{cite news
 |title = Kazakhstan Oil Field Begins Production After Years of Delay
 |first = Andrew E. | last = Kramer
 |newspaper = [[The New York Times]]
 |url =  http://www.nytimes.com/2013/09/12/business/global/kazakhstan-oil-field-starts-production-after-years-of-delay.html?_r=0
 |date = 11 September 2013
 |accessdate = 1 April 2014}}
</ref> The Oil and Gas Minister of Kazakhstan has estimated the oil field will pump 8 million tonnes of oil in 2014.<ref>Kazakhs expect 8m tonnes of oil from Kashagan in 2014. Central Asia Online. http://centralasiaonline.com/en_GB/articles/caii/newsbriefs/2013/09/19/newsbrief-11</ref><ref>{{cite web|title=ENI cuts production guidance, cites Libya and Nigeria disruptions|url=http://oilpatchasia.com/2013/10/eni-cuts-production-guidance-cites-libya-and-nigeria-disruptions/|publisher=Oil Patch Asia|accessdate=7 January 2014}}</ref>

When the pipeline was shutdown, Hydrogen Sulfide remaining in the pipe was burned off as an emergency measure, releasing [[Sulfur Dioxide]] into the atmosphere.  As a result, in March 2014, Kazakhstan's environment ministry levied a fine upon the operating companies of $735 million.<ref name=wsj31032014>
{{cite news
 |title = How a Giant Kazakh Oil Project Went Awry
 |first = Selina | last = Williams
 |newspaper = [[The Wall Street Journal]]
 |url =  http://online.wsj.com/news/articles/SB10001424052702303730804579437492040999738
 |date = 31 March 2014
 |accessdate = 13 October 2014}}
</ref><ref name=tn25022014>
{{cite news
 |title = There is still uncertainty at Kashagan: KazMunaiGas National O&G Company Head
 |newspaper = [[Tengri News]]
 |url =  http://en.tengrinews.kz/industry_infrastructure/There-is-still-uncertainty-at-Kashagan-KazMunaiGas-National-OG-Company-Head-26307/
 |date = 25 February 2014
 |accessdate = 13 October 2014}}
</ref><ref name=mb17042014>
{{cite news
 |title = The World's Most Toxic Money Pit
 |first = Alex | last = Pasternack
 |url = http://motherboard.vice.com/en_uk/read/kashagan-the-worlds-most-toxic-money-pit
 |work=[[Motherboard (website)|Motherboard]]
 |date = 17 April 2014
 |accessdate = 13 October 2014}}
</ref>

==Geology==
The Kashagan contract area covers an area of over {{convert|5500|km2}} and consists of five separate fields, producing formations from the Precaspian Basin.  These fields are Kashgan, Kalamkas A, Kashagan Southwest, Aktote and the Kairan.<ref name=rigzone1/>

Kashagan is a carbonate platform of [[Late Devonian]] to middle Carboniferous age. The "reef" is about {{convert|75|km}} long and {{convert|35|km}} across with a narrow neck joining two broader platforms (Kashagan East and Kashagan West). The top of the reservoir is about {{convert|4500|m}} below sea level and the oil column extends for over {{convert|1000|m}}. The field is in very shallow water, {{convert|3|to|9|m}} deep.  The seal is middle Permian shale and late Permian salt. The reservoir consists of limestones with low porosities and permeabilities. The oil is a light oil with 45 API gravity with a high gas-oil ratio and hydrogen sulphide (H<sub>2</sub>S) content of 19%.<ref name=AAPG>
{{cite conference
 | last1=Zempolich | first1=W.
 | last2=Negri | first2=A.
 | last3=Leo | first3=C.
 | last4=Van Ojik | first4=K.
 | last5=Verdel | first5=A.
 | publisher = [[American Association of Petroleum Geologists|AAPG]]
 | conference = Annual Meeting
 | location = [[Houston, Texas]]
 | title=The Kashagan Discovery: An Example of the Successful Use of a Multi-disciplined Approach in Reducing Geologic Risk
 | url= http://www.searchanddiscovery.com/abstracts/pdf/2002/annual/EXTENDED/ndx_46651.pdf
 | format=PDF
 | date=10 March 2002
 | accessdate= 8 December 2012}}
</ref> The field is heavily overpressurized, which presents a significant drilling challenge. The figures for oil in place range between {{convert|30|and|50|Goilbbl|abbr=off}} with a common publicly quoted figure of {{convert|38|Goilbbl}}. The recovery factor is relatively low (15-25%) due to reservoir complexity, with between {{convert|4|and|13|Goilbbl|abbr=off}} being the estimated ultimate recoverable resource.<ref name=green>
{{cite journal
 | last=Eytchison | first=Patrick
 | title=The Caspian Oil Myth
 | journal=Synthesis/Regeneration
 | url=http://www.greens.org/s-r/32/32-25.html
 | issue=32
 | year=2003
 | accessdate=23 January 2008}}
</ref>
Three of the other fields in the contract area, Kashagan SW, Kairan, and Aktote, are also Carboniferous carbonate platforms. Kalamkas offshore has a Jurassic sandstone reservoir.

=== Repairs ===
The original pipeline that went to production in September 2013 leaked immediately.. This was because the pipe metallurgy was susceptible to high levels of wet H<sub>2</sub>S found in the Kashagahan oil.  The old pipeline was replaced by a inconel cladded steel pipe. This pipeline is expected to go into production 23 October 2016.<ref>https://www.neweurope.eu/article/long-delays-kashagan-oil-slowly-come-stream/</ref>

==Development==
[[File:Kashagan Oil Field, Kazakhstan by Planet Labs.jpg|thumb|Aerial view of the field structures]]
The field is developed  by the international consortium under the North Caspian Sea Production Sharing Agreement. The Agreement is made up of 7&nbsp;companies consisting of Eni (16.81%), Royal Dutch Shell (16.81%), Total S.A. (16.81%), ExxonMobil (16.81%), KazMunayGas (16.81%), China National Petroleum Corporation (8.4%), Inpex (7.56%).<ref name=upstream261112>
{{cite news
 | newspaper = [[Upstream (newspaper)|Upstream Online]]
 | publisher = [[NHST Media Group]]
 | url= http://www.upstreamonline.com/live/article1299573.ece
 | title = ONGC Videsh buys Kashagan entry ticket
 | date = 26 November 2012
 | accessdate= 8 December 2012}}
</ref>

The main development for the field operation is a structure named ''Island D'', connected with 12&nbsp;oil wells. It consists of two trains of production, separating oil and gas, delivering them to the onshore plant and dehydrating and partly re-injecting the sour gas into the reservoir. In 2012, about 5,000 workers were employed there.  Oil is transported onshore by a {{convert|92|km|adj=on}} long pipeline.<ref name=bbc071212/>  Workers are accommodated on the living quarters barge ''Vivaldi'' delivered by Wagenborg Offshore in cooperation with Wagenborg Kazakhstan B.V. and Ersai Caspian Contractor LLC.<ref name=heavylift>
{{cite news
 | work = Heavy Lift & Project Forwarding International
 | url= http://www.heavyliftpfi.com/content/NewsItem.aspx?id=5173
 | title = Living quarter barge delivered to Kashagan oilfield
 | date = 4 December 2012
 | accessdate= 8 December 2012}}
</ref>

The initial production is expected to be {{convert|90000|oilbbl/d|m3/d}}. It should reach a production rate of {{convert|370000|oilbbl/d|m3/d}}.<ref>http://thediplomat.com/2015/06/kazakhstan-kashagan-hopes-are-up/</ref>

==Oil production==
Kashagan sent its first crude for export in the amount of 26,500 metric tons in October 2016. North Caspian Operating Co., which took over running of the field from Eni SpA in 2009, said it’s working to gradually increase production capacity to a target level of 370,000 barrels a day by the end of 2017.<ref>{{Cite news|url=https://www.bloomberg.com/news/articles/2016-10-14/oil-from-50-billion-kashagan-field-starts-flowing-for-export|title=Oil From $50 Billion Kashagan Field Starts Flowing to Export|last=Gizitdinov|first=Nariman|date=2016-10-14|newspaper=Bloomberg.com|access-date=2016-10-14}}</ref> The commercial output of oil started at Kashagan in November 2016.<ref>{{cite web|title=Commercial oil output commences at Kashagan - Minister|url=http://www.inform.kz/en/commercial-oil-output-commences-at-kashagan-minister_a2971818|website=inform.kz}}</ref>

The Kashagan field produced over 450,000 tonnes of raw materials as of November 2016. Over 350,000 tonnes of oil from the Kashagan field was transported through the Caspian Pipeline Consortium (CPC) pipeline in 2016.<ref>{{cite web|title=More Than 350,000 Tonnes of Kashagan Oil Shipped For Export|url=http://astanatimes.com/2016/12/more-than-350000-tonnes-of-kashagan-oil-shipped-for-export/|website=astanatimes.com}}</ref>

==See also==
{{Portal|Kazakhstan|Energy}}
*[[Oil and gas basins of Kazakhstan]]
*[[Trans-Caspian Oil Pipeline]]
*[[North Caspian Operating Company|North Caspian Operating Company (NCOC)]]

==References==
{{Reflist|30em}}

==External links==
*[http://silkroadintelligencer.com/tag/kashagan/ Silk Road Intelligencer - Kashagan]
{{Resources in Kazakhstan}}

[[Category:Oil fields of Kazakhstan]]
[[Category:Caspian Sea]]
[[Category:ExxonMobil oil and gas fields]]
[[Category:Royal Dutch Shell oil and gas fields]]
[[Category:Eni]]