Kashagan project in Kazakhstan faces long-term delay

Baku, Azerbaijan, Dec. 19
By Elena Kosolapova - Trend: Kazakhstan's Kashagan oil and gas project will probably face another long-term delay and will need unplanned investments.

Kashagan is one of the largest oil and gas fields in the world and is expected to bring huge profit to Kazakhstan and the developer companies.

Meanwhile, according to the ratings of CNN Money, Kashagan became the most expensive energy project in the world. Moreover it has experienced several delays since 2005 due complicated structure of the field.

Eventually oil production at Kashagan off-shore field was launched on September 11, 2013. It was suspended on September 24, though following detection of gas leak in the onshore section of the gas pipeline running from D Island to the onshore processing facility Bolashak. Oil production was resumed on October 6 as the affected joint was repaired and stopped again on October 9 after a seep was detected. Following repair of the affected joint, pressure tests were performed in a fully controlled environment revealing some other potential seeps. The production was stopped and a thorough investigation was launched.

Some of the corrupt parts of the pipeline were sent to Cambridge (TWI Laboratories) in England, where the immediate cause of the pipeline failures was traced to be sulphide stress cracking.

Such a cause of the leaks is the worst NCOC consortium developing the field can expect.

"It could be really serious, because it means that the pipeline could leak anywhere along its entire length. The big worry is that, if the leaks have been caused by sulphur stress,
rather than by some poor welds, they may have to replace the entire pipeline
system from the field to the onshore processing facility," Julian Lee, energy analyst at the Centre for Global Energy Studies (CGES) told Trend on Dec 19.

Lee believes that if the leaks were provoked by pipelines cracking, NCOC would likely
delay the restart of production until 2015, as new pipe, with anew steel specification, will have to be fabricated and delivered.

The project operator itself says that serious predictions of the restart of production can only be made, when the root cause of the defects has been identified, and the extent of defects has been mapped.

The problem of pipelines would be that either the grade of steel that has been used is not suitable to withstand the effects of the very high levels of sulphur in the gas from Kashagan, or that the quality of the steel is not uniform along the whole length of the pipeline, according to Lee.

"Pipeline engineers have expressed the view that they thought it unlikely that the wrong grade of steel had been used, as the high sulphur content had long been known," he said.

The consortium itself stated that the specifications of the steel properties for the pipelines, their construction and installation methodology were specifically designed to cope with high H2S content and the presence of water and approved by the State as being correct for the pipelines in question.
Currently the material experts are investigating the pipeline joints in the lab to identify the root cause of the incidents.

If the preliminary causes of the leaks are confirmed Kazakhstan's and project operators' hopes for Kashagan revenues will by delayed to uncertain term.