Kazakhstan discusses scenarios for safe start up of Kashagan oil production

North Caspian project operator (Kashagan) - North Caspian PSA Consortium has begun early consideration of technological scenarios for a safe start up, the consortium said today.

"The scenarios would highly depend on the results of data interpretation as well as many other factors. However, in Operator's view, the dates that have recently been circulated in the media are mere speculations and do not reflect plans and intentions of the Consortium," according to the report.

As stated in the previous communication, the immediate cause for the leaks, being sulfide stress cracking, has been established.

Currently there is an ongoing investigation to establish the cause for the sulfide stress cracking in progress. In response to some views expressed in mass media, Operator states that under no circumstances gas hydrates formation could cause sulphide stress cracking.

The hydrates formation occurs when natural gas components combine with water to solidify at temperatures higher than the freezing point of water and may cause partial or complete plugging of gas transportation lines. Sulphide stress cracking cannot be connected to or may be caused by hydrates formation, according to the report.

Moreover, Operator also states that to date Kashagan production facilities have not experienced hydrate formation.

Verification of each instance of suspicion of a leak / defect by means of excavations and removal, if necessary, of sections of pipeline is in progress, according to the report.

Previous media reports of number of the defects are pure speculations.

The inspection by the so called Intelligent PIG (Pipeline Inspection Gauge) is in progress and goes according to the plan.

This process has been completed for the sour gas line; the raw data are under review and interpretation. As stated earlier, the results of data interpretation are expected to be available in early 2014. These results will be a part of a report, which will be submitted to ROK authorities as appropriate, according to the report.

Preparations to implement the inspection of the oil line are currently in process, according to the report.

Laboratory analysis and simulations of the operational environment with samples from the pipeline have reached a conclusion that the specifications for the pipeline material were appropriate for the conditions of Kashagan field.

The specifications fully meet requirements of the NACE standards (National Association of Corrosion Engineers), respective ISO standards, and best practices in international oil and gas field development. As was previously communicated, the sour gas line was designed to withstand the expected H2S content and the presence of water, according to the report.

Following the start of production from the Kashagan field on 11 September 2013, the operations had to be stopped on 24 September, due to a gas leak in the onshore section of the gas pipeline running from D Island to the onshore processing facility "Bolashak".

The Department of Emergency Situations and the relevant authorities were immediately informed in accordance with the regulations. The access to the line was secured and the respective joint replaced. Production was resumed, but had to be stopped again on October 9th after a detection of a gas leak.

Following repair of the affected joint, pressure tests were performed in a fully controlled environment revealing some other potential gas leaks. A thorough investigation was launched at that time.—0--