Boglanbaeva D.E., Madyarova G.B.

South Kazakhstan State University named after M.Auezov,

The Republic of Kazakhstan

The pride of Independent Kazakhstan

In our country there are many oil and gas deposits. Besides comparatively smaller fields in Aktobe and Atyrau regions there are bigger deposits of hydrocarbons.

One of them is “Kumkol” oilfield in Kyzylorda region, located 200 km from the city. Development of the field began during Soviet time. This field and some smaller fields around that area are now under control of Chinese national oil company.

One of the biggest in the world fields is located in “Tengiz”-about 250 km from Atyrau and 40 km from Caspian Sea shore. Exploration and development of the field also has started during soviet period under control of USSR central government in Moscow together with a company from Hungary. Many specialists were hired from Russia and as per the agreement between states, from Hungary. Only few Kazakhstan residents worked there at first. This field is now operated by Kazakh-American joint venture “Tengizchevroil” (Kazakh national company “KazMunaiGas” and American company “Chevron”). Only after gaining independence, many Hungarian and Russian specialists have been replaced by Kazakhstani engineers and technicians. As per the agreement of both sides-2 major expansion projects have been implemented: Train-5 project and Second generation plant\sour gas injection projects. Another huge gas condensate field is “Karachaganak” filed in Western-Kazakhstan. Exploration and development of the field has been implemented after gaining by Kazakhstan its independence. The field is operated by our “KasMunai Gas” together with “British Gas” from UK, “ENI” from Italy and “Lukoil” from Russia. They also have an expansion project, the start of which is scheduled for this year. All above mentioned fields are of course very important for economic growth of our country. But, nevertheless, the real pride of our independent Kazakhstan is “Kashagan”. This is the biggest field in Kazakhstan sector of North Caspian Sea. This is the first huge offshore field explored and now being developed by “KazMunaiGas” with participation of some companies from abroad. Most of the employees are locals and all of them are really proud of this really unique field. Its future is really great.

Kashagan –giant field beneath the northern Caspian

Kashagan field is the largest oilfield discovered in the North Caspian Sea. It is considered to be the most important oil discovery worldwide since the Prudhoe Bay in Alaska’s North Slope in 1968. Kashagan extends over a surface of approximately 75 x 45 km across, with a narrow neck joining two broader platforms (Kashagan East and Kashagan West), around the size of Greater London. The top of the reservoir is about 4.5 km below sea level and the oil column extends for more than 1 km and is named after a 19^th century Kazakh poet from

Aktau.

Kashagan’s development represents a complex combination of coordinated offshore and onshore activities, including survey, construction and commissioning, drilling, logistics, development and production

What is Kashagan?

Kashagan Field is an oil field located in Kazakhstan. The field is situated in the northern part of the Caspian Sea close to Kazakhstan city of Atyrau. An offshore oil project in the north Caspian Sea, Kashagan is part of the North Caspian Sea Production Sharing Agreement (PSA), a 40 – year contract that was signed in 1997 and includes the development of 11 offshore blocks. Phase 1 of Kashagan’s development has been extended three times – most recently in January 2008 – and current reports put the end of phase 1 and the beginning of commercialization at the end of 2012. Construction costs spiraled from $27 billion to $60 billion in 2006. The consortium’s July 2007 projection for total project costs was $136 billion. In February 2010, Kazakhstan’s Minister of Energy and Mineral Resources anticipated that spending on Kashagan this year would be cut by $ 3 billion.

Since its discovery, the project has faced several problems, including technical difficulties of extracting oil in a harsh climate, and the presence of sulphide in the associated natural gas. Because of these hurdles, the original production date, which was slated for 2005, was postponed to 2012.

Companies Involved

In January 2009, operational responsibility for the Kashagan project was transferred from Agip KCO ( a company fully owned by Eni S.p.A.) to the North Caspian Operating Company ( NCOC)BV, which is a consortium comprised of the following major oil companies

Eni / Agip ( Italy ) 16.8 %

Exxon Mobil ( USA ) 16.8 %

Kazmunaigaz (KMG ) Kazakhstan’s State Oil Company 16.8 %

Royal Dutch Shell 16.8 %

Total ( France ) 16.8 %

Conoco Philips (USA ) 8.4 %

Impex ( Japan ) 7.6 %

According to Eni’s website, “development, drilling and production operations are delegated by NCOC BV to the main partners of the consortium, with ENi retaining responsibility for the execution of phase 1 ( the Experimental Program) and for the onshore parts of the subsequent development phase ( phase 2) of the oil field.

Health Concern

Consortium and Kazakhstan government are concerned about the impact of the field on residents living nearby, including “oil capital” of Western Kazakhstan, the city of Atyrau. Residents of Atyrau city and Atyrau region are at risk of toxic exposure from the development of the Kashagan field itself, as well as from the Bolashak Processing Plant, which is under construction approximately 30 km from Atyrau. The plant will separate hydrogen sulfide and other sulfides from the highly sulfurous Kashagan oil, making it “ready” for transportation. We are also concerned for the safety of workers on Island D, the artificial island in the Caspian Sea. The hydrogen sulfide content in the oil has been reported as high as 15 percent

The risk of exposure to hydrogen sulfide, which is known for its toxicity to humans, is highly concerning. According to the United States Agency for Toxic Substances and Disease registry ( ATSDR ), hydrogen sulfide is a neurotoxin, and long term exposure causes disruption of the brain, including permanent memory loss, vision problems, dizziness, headaches and nausea. Acute exposure can cause severe illness or death.

The United States Environmental Protection Agency has reported that prolonged exposure to hydrogen sulfide results in” neurological deficits” among residents of communities close to oil and gas fields.

Karabatan and Iskene

Agip KCO is building an inland complex approximately 30 km east of the city of Atyrau, the “Bolashak” Onshore Processing Facility. A pipeline will take crude from the Kashagan Field to the “Bolashak” complex, which covers an area the size of Amsterdam.

“Bolashak” complex is situated 7 km from the settlement of Karabatan (approximately 25 homes) and 5 km from the settlement of Iskene (approximately 60 homes. There are no stores, services, schools, telephones or streets in either community.

There is no emergency plan for local people living near the Bolashak complex; there is only emergency plan for the workers. The wind blows from the Bolashak complex toward Atyrau, and an incident at the complex could have a devastating effect on this city as well as on the settlements of Karabatan and Iskene

Development

A development plan, adopted on February 25, 2004, commenced operations in 2006, which calls for the field to be developed in three phases. In 2007, a revised Kashagan development plan and budget were submitted, which further delayed the development and production dates of the project. Finally, after government officials and the consortium came to an agreement, field development continued with the production date set for 2012.

.Given the size and complexity of the Kashagan project and other NCPSA developments, NCOC, the contracting companies and the Kazakhstan authority have agreed to divide responsibilities for the project delivery as follows:

· Eni is responsible for the execution of the “Experimental program” (Phase 1)

· During Phase 2 of Kashagan development, co-ventures managing project execution will be Shell for the offshore development; Eni for the onshore plant and ExxonMobil for drilling.

· Shell will manage the production operations after the start-up of phase 1 with KazMunai Gas (KMG) progressively assuming greater responsibility.

Great people of the great project.

Let us come down from political, economical, financial geological and all other aspects of items around Kashagan closer to what is in fact happening on this giant field these days.

The scope of work being carried out on D island is really very tremendous. More than 2000 employees work here day and night with the purpose to complete the project on time and with require d quality demands. Hundreds of mechanical department workers from all parts of our vast Kazakhstan are involved in construction and assembly of huge

pipe racks, installation of tens of kilometers of different diameter and different destined pipelines on and inside these pipe racks.

These pipes which are being installed and mounted on and inside of huge about the height of 5 story houses are for transporting crude oil extracted just from under the sea,

associated gas for partly refined gas to supply gas turbine of power generation plant on Module 8 , for transporting gas to the Flare tower near to Riser island. Some pipelines will be used for cooling water.

Electro technicians are busy with mounting of thousands of meters of Cable trays and laying hundreds of meters of power and instrumentation cable on them.

Hundreds of welders work day and night to connect pipe end with require quality weld joints .For connection of different length and diameter pipelines together, hundreds of spools (2-3 meter pipe sections are being brought from onshore supply bases. All these spools on both sides need to be beveled at correct angle to have them ready for weld joint activities. After the completion of welding, all these joints are usually treated with special Post Weld Heat Treating equipment by specially trained personnel.

General view of “D” island’s north end with accommodation ship U. Andropov

Besides Pipe racks, on “D” island there are Modules. Total number of them should be 14 and 12 of them are in place already. 2 more Modules are expected to be delivered to Island “D” from Europe this spring. These huge and heavy enough Modules first come to Mediterranean Sea, Black Sea, Tsymlyan water-storage reservoir, Don-Volga channel, river Volga and Caspian Sea. Here, they are lifted up to the top of Pipes with the help of very powerful hydraulic Strand Jacks and welded there.

Many of these Modules also have pipe rack installations on them.

Installation and mounting of different diameter and purpose pipes, assemblage of technological equipment and hundreds of detectors, gauges, indicators and other instrumentation inside and on top of these pipe racks are also executed continuously by daytime and night shift workers without any stop.

Two of such Modules- # 11 and # 12 will be used as living quarters for the Plant operators after the completion of all construction works. They will be equipped with canteen, laundry system, toilets, TV rooms and sleeping cabins.

Nowadays, really big job on engineering and mounting, installation and assembly of piping, tubing, cable trays and special technological equipment are being carried out on these Modules and inside of pipe racks on top of them day and night-round the clock.

All these Modules are supported by huge ( 65 m long, 1,5 m wide ) Piles.

About 45 m parts of these Piles have been driven deep into the underwater soil.

Besides our Kazakhstan employees, specialists, technicians and engineering workers, construction engineers from Italy, Norway, United Kingdom, United States, Ireland, Canada, India, Pakistan, Philippine, Azerbaijan, Russia and Portugal are also involved in everyday activities on island “D”.

All this international workforce wake up at 06:30 and work from 07:00 morning until 19:00 evening in hot summer days (more than +40^o in summer and cold winter

(about -40^o). Night shift starts at 19:00 evening and continues until 07:00 next morning.

Dressed in working coveralls, wearing safety boots, glasses, gloves and helmets, workers carry out work continuously under rain, snow, hot summer sun, fog, mist and cold wind.

With such a work they contribute to the main purpose of the project-to complete all planned work timely, in safe way, with high quality and thus move near the really historical date-the start date of oil extraction from worldwide known Kashagan in 2012.

Transportation of workers to the island is done is summer by 150 seat Crew boats which leave for island from Balykshy River port of Atyrau on river Ural. In winter, after the river and shallow water near the island freezes, transportation is organized by 12 seat helicopters from Atyrau airport and back from one of the Helidecks arranged on top of some ships.

All work activities are being carried out according to demands of international standards as per worked out by engineering services department drawings and prepared prior to start of work execution.