The past decade has seen the Caspian Sea region come into its own as one of the world’s most important frontiers in oil and gas production. Though it saw some of the first oil-producing wells of the modern era, the region’s importance to the global industry—if not to the Soviet Union, which long constituted most of its shoreline—waned as the Middle East took center stage. But with exploration and production (E&P) efforts expanding, geopolitical realities changing, and technology bounding forward, the Caspian has again moved into the spotlight.
Along with the Russian Federation and the Islamic Republic of Iran, three Central Asian republics—Azerbaijan, Kazakhstan, and Turkmenistan—share the Caspian’s extensive shoreline and, to varying degrees, its enormous potential for oil and gas production. All three republics are in the midst of intensive efforts to underpin their developing economies by increased exploitation of massive reserves.
Boundary and rights disputes among the neighbors over Caspian waters are common, and often greatly complicate investment opportunities. Azerbaijan’s oil reserves are estimated to be approximately 7 billion bbl, with gas reserves of 35 Tcf; Kazakhstan’s oil and gas reserves both rank well within the world’s top 20, at 30 billion bbl and 1.5 Tcm, respectively; and Turkmenistan’s gigantic gas reserves are among the world’s largest at 17.5 Tcm. In their third decade of full independence, all three nations have encountered challenges in contacting, producing, and exporting their impressive resources.
Some of these challenges, such as struggles with creating an efficient infrastructure and a skilled domestic labor force, are endemic to emerging nations, while others are particular to the broad range of climactic and environmental conditions that encircle the world’s largest enclosed inland body of water. As the three young republics search for the best way to solidify economic and geopolitical identities as stable industry producers, a proliferation of companies has established a presence both on- and offshore. Most Caspian oil production currently comes from onshore fields, but offshore production is viewed as the primary target of future development. The goal now is to successfully expand and nurture these economic identities while best serving the world’s energy needs in a period of uncertainty.
Two recent SPE conferences brought together industry professionals in an effort to better understand the region’s geophysical and economic complexities. The first of these, the SPE Russian Petroleum Technology Conference, ran from 26–28 October in Moscow’s InfoSpace venue. The conference, held annually since 2006, provided attendees a unique opportunity to share experience and ideas in a noncompetitive environment, and a chance to establish business contacts both with domestic and international companies. More than 170 papers were submitted in both English and Russian, with the 22 technical sessions covering a wide range of topics important to E&P in Russia and Asia in general; many of these papers concentrated on fields and facilities in Azerbaijan, Kazakhstan, and Turkmenistan. In addition to paper and panel presentations, 12 ePoster sessions were held.
The second regional conference, the SPE Annual Caspian Technical Conference and Exhibition (CTCE), followed last year’s successful inaugural meeting in Kazakhstan. The 2015 meeting was held from 4–6 November in Azerbaijan’s capital of Baku, and was attended by more than 500 professionals. Conference co-chairs were Khoshbakht Yusifzadeh of the State Oil Company of Azerbaijan Republic (SOCAR) and Martyn Smith of BP. More than 50 papers were submitted in both English and Russian. Twelve technical sessions across the program focused on the issues faced by the E&P industry in Azerbaijan and the broader Caspian region. Thirty-six oral papers and 25 posters were presented, covering drilling and completions; reservoir description and dynamics; projects, facilities, and construction; production and operations; health, safety, and environmental and social responsibility; and data management and information. Panel sessions featured both decision-making personnel in the private sector and regional government representatives, who clarified and discussed the relationships that must develop between the two spheres. The conference also offered training courses on advanced completion techniques and sand control.
The scope and number of SPE papers presented at both conferences make clear the Caspian’s critical importance. While all five Caspian nations were the subject of papers, presentations, and panel discussions, the works devoted to the three young Central Asian republics bordering the sea provide a glimpse into the widening development, and the ambitious goals, of Azerbaijan, Kazakhstan, and Turkmenistan.
Azerbaijan: Many Hands, One Goal
Since the historic signing of the 1994 multiparty production-sharing agreement (PSA) better known as the “Contract of the Century,” Azerbaijan’s oil and gas sector has concentrated on diversifying, and thus maximizing, the economic muscle behind its production efforts. The opening of the Baku-Tbilisi-Ceyhan (BTC) pipeline in 2006 opened the door to solving the considerable problem of how to export Azerbaijani oil to Europe, a process that must overcome not only political realities but daunting geophysical ones as well. In a short period of time, Azerbaijan’s geopolitical profile rose dramatically, as it, like its fellow newly-minted Central Asian republics, offered the market an alternate source of petroleum.
The effect on the nation of more than 9 million was powerful enough that the anniversary of the signing of its PSA, 20 September, is celebrated as “Oil Workers’ Day,” and even Western popular culture took note of the nation’s new importance, as a fictional stand-in for the BTC pipeline played a central role in the 1999 James Bond film The World Is Not Enough. But the nation’s reality has been eventful enough, as it has weathered conflicts with neighbors and a location in a region only growing in geopolitical significance.
Azerbaijani oil production currently focuses on the offshore Shah Deniz natural-gas field and the Azeri–Chirag–Guneshli (ACG) oilfield complex, also offshore in Caspian waters. The latter complex alone provides 80% of Azerbaijan’s oil production, while the former offers neighboring states viable alternatives to their current limited access to oil. But both resources have experienced technical and infrastructure difficulties that are only exacerbated by the Caspian’s demanding waters, which are sometimes battered by major storms and often freeze over in the northern reaches. The fire last December on Platform No. 10 of the Guneshli field was a tragic reminder to the industry of the importance of facility integrity in a meteorologically volatile environment; the stricken platform provided much of the nation’s production, and it is likely that output will be hindered for some time. As the region comes to emotional and economic terms with the disaster, more attention will focus on the ACG, emphasizing the need to make production more efficient and safe.
Technical complications also prevent optimal production in Azerbaijani assets; the more frequent of these presented a common theme for many conference papers. Among these issues are the need to enhance the output of mature wells and to reduce their nonproductive time (NPT), as well as the necessity of reducing cost-intensive hindrances such as sand and clay deposits in wells.
CTCE papers based upon the experience of Azerbaijani oil production understandably centered upon the country’s primary resources, the Shah Deniz and ACG. In paper 177359, Aliyeva and Novruzaliyev (2015) present a novel method of introducing gas lift to existing ACG wells in the form of a gas-lift-insert system (GLIS) installed along with additional measures to prevent annular gas release. The authors describe the speedy installation of the system with the result of a productive well restart. While the GLIS does have associated downsides, such as a heightened risk of tubing-to-A-annulus communication and a nonpermanent nature, it can reduce the rig time required for installation significantly (in approximately 7–11 days) compared with a conventional tubing retrofit (approximately 30 days).
The task of reducing NPT in another major Azerbaijani field is addressed in paper 177400. Price et al. (2015) describe the establishment of a team dedicated to providing an integrated subsurface description of the field, followed by the implementation of a 3-year plan to reduce NPT by a variety of means.
Finally, several papers deal with the topic of sand control in oil fields. Kazimov and Ahmed (2015) explore a variety of techniques in paper 177338 to increase the effectiveness of dispersed-solids removal. The aspects of sand control examined in this paper include adaptation of gravel-slotted filters, drilling-in with no perforation, producing sand consolidation, and sand-plug removal by means of tools.
Kazakhstan: Strengthening Infrastructure, Overcoming Hostile Environments
Kazakhstan’s promise, and the technical and environmental difficulties it has faced, are well-documented, from the early difficulties faced in the enormous Kashagan field to the problems encountered in working in a sensitive and highly variable environment that ranges greatly in both water depth and temperature. It has sometimes been difficult to match limited facilities with the physical requirements needed to transport oil (as was the case with faulty pipelines in Kashagan’s early years). In addition, the lack of a large domestic core of highly trained workers, exacerbated by the age gap between retirement-age professionals and those just joining the workforce, has meant that the nation has struggled to create an infrastructure with the degree of autonomy it desires, despite its extensive agreements with international stakeholders. The CTCE papers written about the experience of the industry in Kazakhstan center largely on these points, and on recent advances that bring the nation closer to its goal of efficiently producing and exporting its hydrocarbon resources.
Paper 177355 (2015) by a consortium of writers from Russian institutions, delves into the creation and refinement of a system to model and predict pollution patterns in territories belonging to Belarus, Kazakhstan, and Russia. As the paper asserts, there is a need to create specialized environmental expert systems (EESs) to assess the impact of oil pollution and support appropriate environmental management decisions. The use of EESs in the event of accidents involving oil spills is the key to the efficiency of their localization and liquidation of consequences. An EES provides efficiency in obtaining the necessary information in the required form with the level of response and the evolving situation. The methodology covered in the paper creates an effective information base to solve these problems by reducing the time for the development of management decisions, and allowing the optimal use of information for modeling and forecasting of contamination of the geological environment.
Etuhoko et al. (2015) discuss the use of electrohydraulic robotic tools that perform well interventions on electric line (e-line) in paper 177388. Having come of age in recent years, the tools can now be used to accomplish tasks previously done with the use of jointed pipes and coiled-tubing-conveyance systems. Surface real-time monitoring and control features are required to ensure that such tasks done by robotic tools are successfully achieved with high accuracy. As the demand has increased to use this type of powered device in more-hostile well environments such as those seen in Kazakh waters, service companies have developed technologies to expand their operating range. Starting in late 2013, the robotic-technology solution has been used in Karachaganak Petroleum Operating’s horizontal sour wells to close stimulation sleeves when required for reservoir fluid management, to convey perforation guns and production logging tools, and to mill fracturing balls and ball seats.
Turkmenistan: Seeking Partnerships in Gas Production
While Turkmenistan, the least populated of the three republics, has significant oil reserves, estimated by the United States Energy Information Administration to be 600 bbl as of early 2015, its future economic strength is closely tied to its vast natural gas reserves. Although many multinationals are already involved in Turkmen operations, including Eni, Dragon Oil, and Petronas, in recent years China, rather than Russia, has emerged as the most successful foreign investor in Turkmenistan’s gas sector.
The nation nevertheless seeks in-creased partnerships in its efforts to create an adequate pipeline network. Given that the country is home to the Galkynysh gas field, the world’s second-largest, it is no surprise that a number of huge pipeline ventures are under way, from the Turkmenistan-Afghanistan-Pakistan-India line to the East-West line to the Caspian coast. Recent steps have been taken to extend existing agreements; at the end of 2014, for instance, the PSA covering Eni’s involvement in the Nebit Dag (an onshore area in the west of the country that contains five developed oil and gas fields) was extended until 2032, a 10-year extension.
Even as the nation strives to improve its infrastructure and to offer increased investment scenarios, operators work to optimize the exploration and development of existing gas fields to spur on that growth. Among the papers oriented toward Caspian E&P at the SPE Russian Petroleum Technology Conference was 176626. Yalalova et al. (2015) addressed the need for improved modeling techniques for a large gas-condensate field in the Amu Darya basin, situated in the central and eastern parts of Turkmenistan, the western part of Uzbekistan, and the north of Afghanistan and Iran. The targeted carbonate deposits are characterized by high heterogeneity, greatly complicating the prediction of reservoir-rock distribution. The authors pose the methodology of constructing a geological model of the field based on the climate-stratigraphic method, and offer recommendations for gas stimulation depending on the lithofacies features of productive deposits. The proposed approach enables the calculation of the gamma ray and gamma-spectrometry spectral trends sensitive to the conditions of sedimentation.
For Further Reading
SPE 177359 Gas Lift: Fast and Furious by F. Aliyeva and B. Novruzaliyev, BP.
SPE 177400 Understanding a Complex Overburden To Deliver Safe and Productive Wells at the Giant Shah Deniz Gas-Condensate Field, Offshore Azerbaijan by G.R. Price, D. Hall, and K. Kaiser, BP et al.
SPE 177338 Sand Control in the Wells of SOCAR Oilfields by Sh.P. Kazimov, Oil Gas Scientific Research Project Institute, and F. Ahmed, SOCAR.
SPE 177355 IT for the Remediation of the Geological Environment Polluted With Petroleum Products: Experience of the Kazakh-Belarus Russian Joint Project by A. Khaustov and M. Redina, Peoples’ Friendship University of Russia; and S. Mamchik, Research Centre on Geology et al.
SPE 177388 Hostile Environment Electric-Line Well Interventions Optimize Operations in Kazakhstan by M. Etuhoko, M. Viti, and S. Zmeyevskiy, KPO et al.
SPE 176626 Pay-Zone Distribution of CSR Field Using the Climate-Stratigraphic Approach by V. Yalalova, I. Volnov, and A. Ermilov, Lukoil.
Uncovering the Caspian. 2014. Supplement to J Pet Technol 66 (11).
