Milestone Achievement for AGR’s Drilling Technology in Chirag Field, Azerbaijan

Oil & Gas industry solutions provider AGR is celebrating a milestone achievement for its drilling technology.  Its Riserless Mud Recovery system (RMR™) and Cutting Transportation System (CTS™) have now been deployed on more than 500 wells.

This achievement is not only an indication of AGR’s experience but also of the continued need from the industry for the technology devised by the Norwegian firm’s Enhanced Drilling Solutions division.

David Hine, EVP Enhanced Drilling Solutions, said: “This achievement is a reflection of the ground-breaking technologies that we pride ourselves at AGR and confirms their continued popularity with operators the world over. It also demonstrates the hard work, dedication and ingenuity of the people who work here.

“AGR will continue to further its reputation for step-change technological solutions into 2012 with our EC-Drill™ managed pressure drilling system. This will be deployed for the first time early next year.”

Well number 500 was on the Caspian Sea’s Chirag Oil Project field, located 120 km (75 mi) east of Baku, Azerbaijan and a part of the larger Azeri-Chirag-Guneshli (ACG) project. It was drilled using RMR™ in order to solve the challenge of the area’s weak clay formation. The client was BP, which was the first user of RMR™, again in the Caspian, in 2003.

RMR has been an industry changer since it was introduced. It allows engineered mud to be used in the top-hole section of a well, enabling a much more stable foundation for successful drilling, with all mud and cuttings being returned to the rig.

The top-hole section can be drilled more safely, quickly and with far less impact on the environment, says AGR on its website.

CTS enables operators to take cuttings, cement, mud, clay and other deposits away from the well area, keeping templates debris free. Because of this, it has had a major impact on the validity of drilling operations in areas that have been deemed is being particularly environmentally sensitive. The system was first used by Statoil on the Gullfaks field in 1998.

EC-Drill™ solves the challenge of the narrow-pressure window in deep-water well drilling, where too much bottom hole pressure (BHP) can cause the formation to fracture; too little may cause an influx. EC-Drill offers greater control of the BHP as it is not regulated by mud-weight but the level of fluid in the riser.

Not only is there the potential to reduce the number of casings, saving time and money, but safety is also enhanced thanks to improved kick/loss detection, improved hole stability and the possibility of drilling with riser margin.

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Tensions Brew In The Caspian Sea With Russia’s Latest Move

Since the collapse of the USSR in 1991, the nations that border the Caspian Sea – namely Russia, Iran, Azerbaijan, Turkmenistan and Kazakhstan – have quarreled over how to properly divide its waters. With as much as 250 billion barrels of recoverable oil, 200 billion barrels of potential reserves and 9.2 trillion cubic meters of recoverable natural gas, at stake, tensions have risen over recent moves by Russia to develop its offshore resources.

A Geo-Political Storm Could Be Brewing Over The Caspian Sea’s Energy Resources
Photo Credit: mwanasimba

On 16 November in Astrakhan Lukoil president, Vagit Alekperov told journalists that his company will spend over $16 billion over the next decade to develop the country’s Caspian offshore Korchagin and Filanovskii oil and natural gas fields in the Caspian, at the signing of a cooperation agreement with the Astrakhan Region.

An equitable division of the Caspian’s offshore resources have bedeviled the region since the December 1991 implosion of the USSR, putting the Soviet Union’s previous cozy arrangements with the Shah’s Iran “into the dustbin of history,” to quote Leon Trotsky.

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Before the collapse of the USSR, the Soviet Union and Iran effectively divided the inland sea amongst themselves, according to the terms of the 1940 Soviet-Iranian treaty, which replaced the 1921 Treaty of Friendship between the two countries, which awarded each signatory an “exclusive right of fishing in its coastal waters up to a limit of 10 nautical miles.” The treaty further declared that the “parties hold the Caspian to belong to Iran and to the Soviet Union.”

Since 1991 three new nations have arisen in the Caspian basin to contest this bilateral arrangement – Azerbaijan, Turkmenistan and Kazakhstan. For the past two decades the five nations have wrangled about how to divide the Caspian offshore waters, and little has been achieved.

Amidst the disagreements Azerbaijan, Turkmenistan and Kazakhstan have tentatively moved cautiously to develop their offshore reserves in sectors that they believe would be indisputably within their future assignations under an eventual five-state agreement.

Even within these cautious offshore margins, Azerbaijan and Kazakhstan have increased their output in the last 15 years by 70 percent.

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But at issue are the diametrically opposed positions of Iran and the Russian Federation about how to develop an international Caspian consensus beyond the now moribund 1921 and 1940 treaties. Iran insists that all Caspian nations should receive an equitable 20 percent of the Caspian, while the Russia Federation has consistently maintained that the five Caspian riverine nations should receive their portion based on the length of their coastline. Under the Russian formula, Iran’s sector would consist of 12 percent to 14 percent of the Caspian’s waters and seabed.

 

The stakes are high – in 2009 the U.S. government’s Energy Information Administration estimated that the Caspian could contain as much as 250 billion barrels of recoverable oil along with an additional 200 billion barrels of potential reserves, in addition to up to 9.2 trillion cubic meters of recoverable natural gas.

Accordingly, all five Caspian nations have been delicately developing their offshore Caspian reserves in areas that will undoubtedly remain theirs whatever eventual agreement is hammered out between Azerbaijan, Iran, Kazakhstan, the Russian Federation and Turkmenistan. The Russian Federation and Iran are the last two nations to move “offshore.”

Alekperov said, “Five hundred billion rubles ($16 billion) will be invested in development. This huge amount will provide an opportunity for sustainable development in the region.”

Astrakhan Region Governor Aleksandr Zhilkin waxed lyrical on the importance of the agreement for the long-term development of Astrakhan’s shipbuilding industry, situated on the lower Volga, the Russian Federation’s major river emptying into the Caspian.

Zhilkin commented, “All shipyards in Astrakhan Region will have work for the next ten years. Vagit Yusufovich (Alekperov) mentioned that Lukoil is investing more than 500 billion rubles ($16 billion) over the decade.

Zhilkin’s remarks to reporters are hardly an idle boast, as he stated that Lukoil had paid more than $16.1 million in taxes last year to Astrakhan’s regional budget.

So, the Russian Federation, like its four Caspian neighbors, is now beginning to tiptoe into its offshore waters, all the while insisting that its vision of divvying the inland sea prevails.

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The last two decades have seen an apparent pragmatism slowly evolve over the Caspian offshore resources, first in Baku, followed by Astana, Ashgabat and more recently and reluctantly, Tehran and Moscow. While the issue of a final disposition of the Caspian’s offshore waters remains significant if for no other reason than the various proposed undersea pipelines such as Turkmenistan-Baku, which could be an influential element in the European Union’s projected $15 billion Nabucco natural gas pipeline reverie, all five nations seem to be moving cautiously towards planting their offshore flags in areas unlikely to arouse their neighbours.

It will be interesting to see if they meet in the middle.

By John C.K. Daly, OilPrice.com

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