Altered offshore drilling targets pay off for Dragon on Caspian field

Offshore staff

ASHGABAT, Turkmenistan – Production from Dragon Oil’s Cheleken Contract Area in the Turkmen sector of the Caspian Sea grew 10% last year, averaging 67,600 b/d compared with 61,500 b/d in 2011.

Growth was achieved despite sand control issues, which took several weeks to resolve.

Fifteen wells were drilled during the year on the Dzheitune (Lam) field. After scrutinizing subsurface targets, Dragon mapped out a different approach to extract crude oil from the Dzheitune (Lam) C, 28 and 13 platform areas, and targeted mostly shallow layers with either single or dual completions using available rigs. This cut drilling time and gave the option to return at a later date to drill deeper targets.

Initial flow rates from the completed wells varied due to depth of completions, maturity of the area, and completion type (dual or single completion or a side track). However, results were mainly in line with expectations.

This year modules for the new Dzhygalybeg (Zhdanov) A platform will be mobilized to the field and the assembled structure should be ready to start drilling using a platform-based rig during the second half of the year.

The Dzhygalybeg (Zhdanov) B platform is coming together at Dragon Oil’s yard in the harbor area in Hazar, Turkmenistan, and is expected to be installed this spring, with drilling starting from the facility soon afterward.

Dragon is preparing to issue contracts to build and install the Dzheitune (Lam) D and E platforms and associated pipelines, with construction likely to take up to two years. Both platforms will be built for drilling by jackup rig, with eight slots each initially.

Tendering continues for construction and installation of a further two platforms for the Dzheitune (Lam) field and associated pipelines, with contracts likely awarded before mid-year.

An engineering, procurement, installation, and construction contract should also be issued by mid-year to increase crude oil storage capacity at the central processing facility. Construction is expected to take two years with various tanks built on a priority basis.

Additionally, Dragon expects to award during the second half of this year an EPIC contract for a gas treatment plant, with construction likely to take two to three years.

The processing capacity of the plant will probably be 360 MMcf/d (10 MMcm/d), allowing the company to strip out about 3,600 boe/d of condensate.

CCA oil and condensate 2P reserves have been upgraded to 677 MMbbl, up from 658 MMbbl at end-2011. The 2P gas reserves are 1.5 tcf (42.5 bcm), with contingent resources of 1.4 tcf (40 bcm).

Dragon believes that 15% of total proved and recoverable oil reserves are in the Dzhygalybeg (Zhdanov) field, although flow rates are expected to be lower than those in the Dzheitune (Lam) West area. Once drilling starts on Dzhygalybeg (Zhdanov) later this year, the field’s deliverability should become clearer.

Last year’s development capex totaled $382 million, compared with $351 million in 2011. About 58% was spent on new infrastructure and the remainder on drilling.

The company continues to target production growth of 10-15%/yr, by putting into production 13 to 15 wells and two workovers, based on rig availability. By 2015, the company is targeting 100,000 b/d, and it aims to maintain that plateau for a minimum of five years.

1/21/2013

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