Production operation progress
After start-up in 2016, production quickly and safely ramped up in early 2017 to the first target capacity level of 180,000 barrels of oil per day. The safe and timely start-up of sour (or “raw”) gas reinjection in mid-August was the most important technical achievement of 2017, allowing NCOC to gradually increase and optimize the amount of gas being re-injected so that more oil can now be produced from Kashagan. The Company reached a capacity of 270,000 barrels of oil per day by the year-end 2017, and continues the ramp-up to 370,000 barrels of oil per day. NCOC’s approach has been a sequence of steady and planned steps to build confidence in its equipment, processes, and the reaction of the reservoir – with safety, as always, the first priority.
Production reliability has met or exceeded expectations, thus keeping flaring to a minimum, in accordance with the RoK legislation. In 2017 the Company continued to bring on-line new wells and to commission additional drilling islands adjacent to D Island (EPC-2, 3 and 4). Another important achievement was the startup of additional water processing capacity at the Bolashak Onshore Processing Facility, which has increased Company’s industrial water recycling and allowed to halve the amount of fresh water withdrawal from the pipeline that serves Atyrau and Mangystau regions. NCOC completed work on the dedicated rail loading facility at Eskene West and began export of commodity sulphur with the dispatch of a first train on October, 2017.
Sour gas reinjection
Kashagan as a reservoir is characterized by high pressure (more than 700 bar), and a high concentration of hydrogen sulphide (H2S), making the gas "sour." Sour gas is treated to remove the H2S and this process produces elemental sulphur. The amount of oil which can be produced is limited by the amount of sour gas the Company can process. A positive feature at Kashagan is that sour gas at these high pressures, when re-injected, can actually enhance oil recovery. Thus sour gas re-injection is an optimal solution from both an environmental and production standpoint, allowing NCOC to increase Kashagan’s oil recovery ratio while minimising Sulphur production. The light, gaseous components are separated from the heavier oil offshore on D Island and about half of it may be re-injected under high pressure back into the reservoir, into the same rock formation from which it is produced.
The remainder of the gas is sent to the Bolashak Onshore Processing Facility where hydrogen sulphide is removed from the "sour" gas. Some of the processed, or “sweetened”, gas is used for onshore and offshore power generation, and some is marketed as Sales Gas. Sales Gas is shipped through a dedicated pipeline to Makat and then onward via KazTransGas infrastructure.
Processing sour gas and managing sulphur safely and effectively is of crucial importance to NCOC. An average of around 1.1 million tonnes per year of elemental sulphur will be produced during the life of the Project (3,800t of Sulphur per day).
Sulphur is exported to these markets by rail through a dedicated loading facility at Eskene West. Each shareholder is independently responsible for transporting and marketing its own share of production. Sulphur is stored only on a temporary basis. The storage area is lined and provided with drainage to prevent seepage into groundwater, and fully equipped with fireand gas-detectors along its perimeter. On October 28, 2017, the first Sulphur loaded train was shipped from NCOC’s Onshore Sulphur Facility. Since then over 600 thousand tonnes has been exported and sulphur quickly has become a regular export product of NCOC. Current export rate is seven trains per week.