[Premium] BP Consortium To Drill into Deep ACG Gas Layer
Under the framework of the $40bn contract signed last week to extend the Azeri-Chirag-Guneshli production sharing agreement (PSA), the BP-led consortium will also drill four wells in gas layer of Guneshli field for first time to extract dry gas.
Azerbaijan state oil company Socar's head of investments Vagif Aliyev told NGW September 20 that the produced dry gas would be sold to Azerbaijan; he did not cite expected production volumes.
Azerbaijan revised and extended the 1994 PSA for 32 years on September 14: it aims to produce a further 570mn metric tons of crude oil and 150bn m3 associated gas by 2050 from ACG oil layers at 3,500 meters depth. But there is also an, as yet undeveloped, dry gas layer at 4,000 meters depth.
Aliyev said that the consortium will drill two wells into gas layer by 2019 and that the extracted gas would be sold to Azerbaijan for local consumption. Two further wells would be drilled after that and a part of their production can be exported.
The reserves of the gas layer are about 200bn m3. Currently, the BP-led consortium produces 580,000 b/d of crude and 33mn m³/d associated gas but two-thirds of the gas is re-injected for oil production and the remaining volume is delivered to Azerbaijan in free of charge.
Deep gas layer's early production to count under 2nd PSA
Socar first vice president Khoshbakht Yusifzadeh told NGW Sep.14 that the gas layer project would belong to a third PSA in coming years.
Commenting to Yusifzadeh’s statement, Aliyev said: “Of course, the whole development plan of gas layer needs a new PSA, but that the drilling of the four wells and sale of gas to Azerbaijan is a limited operation and was put in framework of the contract already signed this month.
BP told NGW last week it expects to benefit from higher returns over time from signing the 2nd PSA early on, but did not mention the gas layer project.
Negotiations on supplying ACG gas to the Southern Gas Corridor have already started. It is not clear when the consortium plans to sign a new PSA specific to the gas layer, but exporting gas from this deposit is contingent to expanding the Southern Gas Corridor capacity.
The first phase of SGC is to transit 16bn m³/yr of Shah Deniz stage 2 gas to Turkey and EU by 2021. SGC’s capacity is projected to reach 24bn m³/yr in mid-2025 and finally 31bn m³/yr in early 2030s.
Ilham Shaban