UK oil and gas giant BP is planning to launch an ambitious two-year exploration and drilling program in Azerbaijan's sector of the Caspian Sea aimed at confirming new oil and gas reserves for export, a spokesperson for BP in Baku has confirmed to Eurasianet.
The company's plans for this year involve drilling four new exploration wells in three separate blocks, all of which are thought to hold substantial gas reserves, and to conduct seismic surveys of a fourth block, thought to hold either oil or gas.
Another three exploration wells are planned for 2020, added the spokesperson, Tamam Bayatli.
The spokesperson cautioned that all the exploration wells are by their nature "exploratory" and there is no guarantee that commercial volumes of oil or gas will be discovered.
However, BP and Azerbaijani officials have long predicted that some of the fields to be explored hold substantial reserves of gas, with seismic surveys of one of them, the Shafag-Asiman block, suggesting reserves of up to 500 billion cubic meters. If those projects are borne out the block would be the second-largest gas field discovered the Caspian, behind only the Shah Deniz field and its estimated 1.2 trillion billion cubic meters of gas. Related: This Is How Much Each OPEC+ Member Needs To Cut
“Alongside Brazil, Azerbaijan stands out in terms of the areas of focus for the next few years,” Gary Jones, BP’s regional president for Azerbaijan, Georgia and Turkey, recently told Bloomberg. “It’s a very significant exploration program for us, which demonstrates the confidence and the role that we see in the Caspian.” BP potentially could “take this source of supply of gas well into the middle of the century,” Jones added.
Two of the planned wells will be drilled this year in the Shallow Water Absheron Peninsula block, about 30 kilometers southeast of Baku, which BP owns in an equal partnership with the Azerbaijani state oil company, SOCAR. A third well in that block is slated for exploration next year.
A third well planned this year is in the Shafag-Asiman block in deeper waters about 125 kilometers southeast of Baku, which BP also shares with SOCAR. The fourth well slated for this year is the Gobustan block, in an inland field about 50 kilometers west of Baku, in which BP owns a 61 percent share, with SOCAR and the Geneva-based Vitol owning the rest.
In addition, BP will this year conduct seismic surveys of Block D230, a deepwater area 135 kilometers north of Baku, with a first exploration well slated for 2020. Related: Low Oil Prices Are Not The Only Problem For The Permian
Also planned by BP for 2020 is a first exploratory deep well into the existing Shah Deniz gas field. Shah Deniz has been producing gas since 2006, now exporting it to Turkey via the South Caucasus Gas pipeline. Exports onward to Europe, via the Trans-Anatolian Pipeline (TANAP), are due to start in 2020.
However, BP officials have long predicted the existence of a second "deep" gas reservoir below the existing Shah Deniz field, which the planned well is expected to confirm.
While company officials emphasize that the drilling is only exploratory, well-drilling – in particular deep-water drilling – is an expensive business, and the new program indicates some confidence that new reserves can be located. The new reserves would seem to be earmarked for export to Europe, given the excess capacity available in TANAP. That pipeline, constructed at a cost of $8.5 billion, has a total capacity of 31 billion cubic meters per year and Azerbaijan currently is producing only enough gas to fill half of it
More Top Reads From Oilprice.com:
- What’s Behind Oil’s Slow Flash Crash?
- U.S. Oil Outlook Slammed By Lower Prices
- Oil May Never Return To The Triple-Digits