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Caspian drilling preparations

July 6, 1999, 10:00 CEST

The first exploration well is due to be spudded in Kazakstan's sector of the north-eastern Caspian during the late summer.

Offshore Kazakstan International Operation Company (OKIOC) is soon to start towing the Suncar drilling rig from a yard at Astrakhan in Russia to the Kashagan East structure.

A consortium of international companies which includes Statoil, OKIOC is due to pursue an exploration programme under a production sharing deal with Kazakstan.

The other partners are Agip, British Gas International, BP Amoco, Inpex, Mobil, Phillips, Shell and Totalfina.

If oil is found in the area, the volumes involved are likely to be large.

"This prospect is the biggest in our portfolio," reports Rolf Magne Larsen, senior vice president for International Exploration & Production in Statoil.

"Although the most probable outcome is a dry well, the result could be a very substantial discovery."

He adds that the group, with an interest of just 4.76 per cent in the consortium, will have limited opportunities to influence decisions if oil is found in the north-eastern Caspian.

Plans call for drilling and testing of the first well to take roughly four months, with a second exploration well due to be drilled on the same structure next year.

Owned and operated by Parker Drilling Company, Suncar is scheduled to drill both wells. It has been converted at a cost of about NOK 800 million to operate in the extremely difficult conditions found in this part of the inland sea.

The wells will be drilled in just three-four metres of water about 180 kilometres from land. Extensive ice formation in winter and a complex geology are other elements likely to complicate the work.

Both animal life and other natural conditions in the area are very sensitive, which means that OKIOC is subject to stringent environmental restrictions.

These include a ban on discharging drilling waste to the sea, and the rig is equipped with systems for protection of the environment. Drilling mud will be recirculated or shipped back to land in barges along with other waste.

Kashagan is one of many prospects identified in the seismic surveys carried out by the consortium in 1993-97.

Under the agreement subsequently negotiated with the Kazakstan government, OKIOC can explore for hydrocarbons across 6,000 square kilometres of the north-eastern Caspian.