Spring 1997 (5.1)
The fifth Steering Committee meeting for the development of the Azeri, Chirag, and deep-water portion of the Gunashli fields in the Azerbaijan sector of the Caspian Sea was held in Baku on February 28, 1997.
A major topic of discussion was the status of the obligations under the 30-month Minimum Obligatory Work Program due for completion on June 12, 1997, for a total budget of $220 million. Of the nine obligations detailed in the production sharing agreement (PSA), AIOC has completed seven. Still outstanding are drilling and testing of three appraisal wells and a study of issues relating to a Main Export Pipeline, although progress on these two activities is on schedule.
After the meeting, Azerbaijan President Heydar Aliyev met with AIOC management and members of the Steering Committee and commended AIOC for being the "standard-bearer" for all other oil contracts signed in Azerbaijan.
Three Appraisal Wells
In December 1996, AIOC successfully completed the first of three appraisal wells which is due to start production later this year. Peter Ryalls, VP of Operations, stated that the results seem very promising. The second appraisal well is nearing completion, and the drilling of the third well is scheduled for this spring. An additional $10 million for production testing, coring and analysis from these wells has been approved.
Early Oil Project
Major milestones have been achieved this first quarter of 1997 in regard to AIOC's Early Oil Project. In February 1996, AIOC was commissioned to bring ashore 130,000 barrels of oil per day (bpd) and transport them to Western markets. In addition, they were assigned to extract 55 million standard cubic feet of gas per day for local consumption. AIOC has been challenged to accomplish in 18 months what would normally take 30 months to achieve even in well-established oil-producing regions with existing infrastructure.
On February 24, 1997, the "topping out" ceremony took place for the first of four crude oil storage tanks at the Sangachal Terminal. The remaining three tanks are taking shape, as are the processing plant and buildings. The main storage tanks can each hold 160,000 bbl (25,300 cubic meters). Seven major contractors are involved with the terminal construction, including five Azerbaijani companies. The total anticipated work force will soon peak at 800-900 people with more than 80% being from Azerbaijan.
In January 1997, AIOC completed the refurbishment of the Northern Pipeline in Azerbaijan north of Sumgayit to the Russian border. The more southern sections of the Northern Route are nearing completion, as well. North of Sumgayit, the line is now full of oil awaiting transportation into the Russian system for export at the port of Novorossiysk on the Black Sea. Until Chirag-1 and the AIOC shore terminal at Sangachal are completed, the oil in this line will be SOCAR crude from its onshore fields. The original plan was for oil to begin flowing into the Northern Pipeline in early February 1997. But this is being delayed until Transneft (the Russian oil transportation company) resolves some technical issues associated with transit across Russia.
Pipecoating at Zygh
Bredero Price has completed the coating of 230 km of 16" gas line and 24" oil line which will bring oil ashore from Chirag - 1 to the Sangachal Terminal and gas to the Neft Dashlari. They finished the project one month ahead of schedule.
Chirag - 1 Platform
The Chirag - 1 Platform has been undergoing extensive refurbishment, including work on the processing and support modules onshore, the offshore jacket on which these modules sit, and the topside modules. The refurbishment has been an immense job, already requiring more than a year to complete. The first loadout is expected this spring. The drilling rig which will be positioned on the platform was refurbished in Europe and has now arrived in Baku via 107 truckloads of sub-assemblies.
One of the challenges of the Early Oil Project has been deploying the marine support infrastructure necessary for offshore construction in a landlocked environment. Key to this activity is the ability to float heavy lift facilities, a barge capable of laying subsea pipeline, and a marine fleet (tugs and anchor handlers, plus the necessary support and supply vessels). Such infrastructure did exist in Baku but has required major refurbishment to reach acceptable standards.
Derrick Barge "Azerbaijan"
The refurbishment of the heavy lift barge "Azerbaijan" has been substantially completed. The project, which began in the summer of 1996, aimed to refurbish all the barge equipment, systems and accommodation and to modify the structure of the barge in order to meet the maximum required Chirag topside structures lift of 1500 tons at 50 meters radius. Carried out by AIOC and MacDock (a joint SOCAR-McDermott venture), the refurbishment has cost $23 million and used 540 tons of steel. Up to 290 people were involved with the project at any given time, including 260 Azerbaijanis. The barge will be used to load out and install the Chirag-1 Platform topside structures, support jacket refurbishment (including diving work) and provide accommodation for the hook-up and commissioning of the platform. The "Azerbaijan" is now undergoing final lift tests.
With upgrades complete, the pipelaying vessel "Israfil Huseinov" will begin a 1 km pipelay trial prior to the commencement of pipelay proper. The vessel will be used for the construction and testing of two subsea pipelines. This includes 52 km of gas line and 182 km of oil line to pipe gas from Chirag-1 to Neft Dashlari and crude oil to Sangachal. The work will be carried out by the pipelay contractor Saipem between March and July 1997.
The Steering Committee has approved $315 million for the construction of the Western Pipeline from the Sangachal Terminal to a new terminal to be built at Supsa on the Black Sea coast of Georgia. The project includes the refurbishment of 601 km of existing pipeline sections, the construction of 258 km of new pipeline sections, an onshore terminal and an offshore loading system, and the installation of five pump stations, two pressure reducing stations, telecommunications, data control systems and pipeline cathodic protection systems. The pipeline will have a design capacity of 115,000 bpd. Construction work has already commenced at the Supsa terminal.
AIOC in the Community
AIOC recently presented a vehicle specially designed for transporting physically challenged people in wheelchairs to the Azerbaijan Center for the Disabled. This center provides jobs to members who are talented in the field of applied folk art, including carpet making, pottery, embroidery, painting and ceramics.
In early 1997, AIOC sponsored the publication of the long-awaited Azeri translation (Cyrillic script) of a collection of novels, short stories, talks and interviews by Columbia's Gabriel Garcia Marquez, the Nobel prize winner for literature in 1982. In addition, AIOC will be sponsoring a production of Shakespeare's "Hamlet" under the direction of Huseinaga Atakishiyev at the Youth Theatre of Azerbaijan in April. Shakespeare's works are deeply loved and admired in Azerbaijan.
From Azerbaijan International (5.1) Spring 1997.
© Azerbaijan International 1997. All rights reserved.