Large-scale Construction Begins At Massive Tengiz Oil Field

TCO To Enter Into 2bln Tenge Contracts With Local Smes

Before the end of this year, production from Tengiz may grow up to 25 million to 27 million tonnes.

TENGIZ, Kazakhstan – In spite of the plunging oil prices, the international consortium TengizChevroil has embarked on a massive construction endeavor under the Future Growth Project – Wellhead Pressure Management Project (FGP-WPMP) at the Tengiz field in Western Kazakhstan.

When the project is completed, oil production there will grow by 12 million tonnes a year from 27 million tonnes to 39 million tonnes. The total new investment in the Tengiz project is expected to range from $37 billion to $40 billion.

A decision on such serious cash infusions at a time of low oil prices was made in the summer of 2016 by the shareholders of TengizChevroil (Chevron – 50%; KazMunaiGas – 20%, ExxonMobil – 25%, and LukArco – 5%).

Even though it has only been three months since that decision was announced, the works at the field are progressing at full throttle.

A group of journalists from several regional and national media outlets could see it for themselves during a press-tour specially organised for them by TengizChevroil. The company even provided a corporate jet, so the journalists could get a bird’s-eye view of just how big this project on the Atyrau semi-desert really was.

One construction site was a new rotation camp for the workers of a future plant. A bit further was the site of the future Third Generation Plant itself. On Caspian shallows, man-made islands were being constructed on which future oil loading and oil storing sea terminals would be built.

Looking through the jet’s windows, the journalists could see multi-ton dump-trucks carry dirt for a new causeway that would go through the flood land of the Prorva River, and excavators dig trenches for a future sea-level canal with a dredged channel.

They later learnt that the dredging works on the sea sector adjacent to the future port (Tengiz expansion is geographically directed towards the Caspian Sea) were already 25% complete.

“The Future Growth Project is a truly grandiose project,” said TengizChevroil’s public and government relations manager, Rzabek Artygaliev, who became the journalists’ guide on the press-tour.

According to his information, the construction site for all the units of the Third Generation Plant alone will be 1.5-kilometre long and 1.2-kilometre wide, which makes it half kilometre longer and wider than the already completed and operating Second Generation Plant.

After landing, the journalists were taken on a road tour of all the sites of the new project and visited the site of the Third Generation Plant.

“Presently, as you can see, piles are being driven for the future plant foundation. There will be over 23,000 of them all in all. Each pile is driven until it hits the clay layer, to ensure stability of the structure. In addition, piles are made of extra strong concrete,” Artygaliev told the journalists.

All of the 23,000 piles are made in Kazakhstan, partly in Atyrau, and partly in Almaty. The main Future Growth Project – Wellhead Pressure Management Project (FGP-WPMP) equipment will be fabricated in Kazakhstan, South Korea, and Italy.

To save time and resources, all of the two projects’ (FGP-WPMP) operational and ancillary facilities will be built simultaneously.

“Concurrently, we are building a new rotation camp Orken. Thirty percent of the metal structures of the future buildings are already installed. The uniqueness of this camp is that it’s going to be a “city within a city”. Living quarters, food courts, cinemas, swimming pools, gyms will all be located within the same enclosed space. Passes will be built between the buildings to make it comfortable for the people to move around in the winter and in windy weather,” Artygaliev said.

The rotation camp under construction is designed to simultaneously house 5,000 people who will be working here 24/7 to produce oil. The construction of Orken rotation camp should be completed in 12 to 18 months.

At peak construction and fabrication, the Future Growth Project will create about 20,000 jobs in Kazakhstan.

According to the experts, $37 billion investment in future development of Tenguz is one of the most expensive projects in the world’s oil business to-date.

So why, in spite of such low oil prices, the overseas partners have decided to make such serious investments in the Kazakh field? This is not an idle question, and there are a number of reasons for that.

Firstly, by experts’ measure, Tengiz is a young field that not just flows oil but pushes it to the surface at a pressure of 400 atmospheres.

Over the nine months of the current year, Tengiz has produced 20 million tonnes (160 million barrels) of oil. Before the end of this year, production from Tengiz may grow up to 25 million to 27 million tonnes. According to the Ministry of Energy of Kazakhstan, total oil production in 2016 is expected to reach 75 million tonnes.

By simple mathematical calculations, it’s not difficult to see that Tengiz provides almost one third of the country’s total production of oil.

Secondly, Tengiz oil is light – that is of high quality – and it is highly priced in the world markets. Such attractiveness is important to the American giant Chevron, which, as has been mentioned before, is the 50% shareholder of TengizChevroil.

Out of the 13 major investment projects that Chevron owns all over the five continents, Tengiz is the most important one. It is responsible for one fifth of Chevron’s global oil production.

Last year, Tengiz produced approximately 78,000 tonnes of oil per day. Under the growth project, TengizChevroil with receive additional 32,000 to 39,000 tonnes of oil per day (equal to Libya’s total production when its fields were working in an uninterrupted and tranquil regime).

Thirdly, Tengiz is not just oil, but also gas and sulfur. Over the nine months of this year alone, TengizChevroil sold 970,000 metric tonnes of LPG, 5.25 billion cubic metres of dry gas, and 1.67 million tonnes of sulfur.

Sulfur, as Artygaliev told the journalists, had turned out to be not production waste but rather a popular commodity that sells very well in the world. The sight of the empty sulfur storage facilities confirmed his words.

Estimated oil in place in the Tengiz field is 3.2 billion metric tonnes (25.5 billion barrels) with 200 million metric tonnes (1.6 billion barrels) in the Korolev field. Total recoverable crude oil in the Tengiz and Korolev fields is estimated to be 800 million to 1.3 billion metric tonnes (6.4 to 10.7 billion barrels).

Tengiz, the world’s deepest producing super giant oil field, was discovered in 1979.

By Kulpash Konyrova