Azerbaijan is considering increasing its natural gas extraction at its largest gas and condensate field, Shah Deniz located beneath the Caspian Sea. The State Oil Company of Azerbaijan Republic (SOCAR) announced recently that it is exploring the possibility of launching a third phase of development, known as Shah Deniz 3.
“Opening of gas deposits in deeper layers [at Shah Deniz field] has already been done, and although the reserves have not yet been confirmed, there are indications that production within the Shah Deniz-3 may be higher than the originally expected five billion cubic meters of gas per year,” Deputy Vice-President for Investments and Marketing at SOCAR Vitaliy Beylerbeyov told journalists at the European Gas Conference in Vienna in late January, according to Azerbaijan’s Trend news agency.
"This structure was discovered within the project [Shah Deniz 2] that is currently under development. In the third phase, drilling will be carried out in the deeper layers of the Shah Deniz field. The number of wells is unknown for now,” Beylerbeyov said, according to InterAZtv.
Beylerbeyov said the final decision about investments in Shah Deniz 3 is not expected until 2025.
Shah Deniz is one of the world’s largest gas condensate fields. Located on the deep water shelf of the Caspian Sea, 70 km (44 mi) southeast of Baku, in depths ranging from 50 to 500 meters (55 to 547 yards).
BP, the largest shareholder and operator of the field, identified Shah Deniz as its largest discovery after Prudhoe Bay oil field in Alaska. Its total estimated reserves are about 1.2 trillion cubic meters (42.38 trillion cubic feet) of natural gas and 2.2 billion barrels of condensate, according to data provided by BP.
BP has a 28.8 percent stake in the field alongside the shareholders such as TPAO (19 percent), SOCAR (16.7 percent), Petronas (15.5 percent) and others.
Development of Shah Deniz 1 kicked off in 2006, which currently has a production capacity of 10 billion cubic meters of gas per annum (bcma) and approximately 50,000 barrels of condensate per day. Natural gas extracted from Shah Deniz 1 is delivered to Georgia and Turkey via the Baku-Tbilisi-Erzurum pipeline.
Shah-Deniz 2 went into operation in 2014 as the second stage of development operations at the Shah Deniz gas field and will expectedly increase the production capacity by 16 bcma to bring overall gas extraction up to 26 bcma.
Shah Deniz 2 is the sole supplier to the Southern Gas Corridor pipeline, which will provide Europe with enough gas to electrify about 10 million homes, scheduled to begin in 2020. The corridor will deliver natural gas from Azerbaijan to Turkey and Europe via a 3,500 kilometer-long (2,175 miles) route and cut through five countries before ending in southern Italy and connecting to Europe’s power grid.
Ilham Shaban, head of the Caspian Barrel Oil Research Center in Baku, said the decision to open up a third development stage within Azerbaijan’s deposits beneath the Caspian Sea comes as no surprise.
“Overall reserves at the Shah Deniz 1 field were estimated at 178 billion cubic meters of natural gas when the agreement was signed for its development [in 1996]. However, production reached roughly 200 billion,” Shaban told Caspian News.
“Confirmed reserves at the Shah Deniz 2 field are 400 billion cubic meters,” he added. “These two makes 600 billion. If the total reserves at Shah Deniz field are 1.2 trillion cubic meters of gas, the question is how do we extract the rest? The answer is Shah Deniz 3.”
“Natural gas produced at the Shah Deniz 3 field could be pumped to Europe through the SGC pipeline. We don’t need to build a separate pipeline for this, as the SGC route could be operational for 70 to 80 years,” Shaban said.
“I suppose the sales of Shah Deniz 3 gas to foreign markets should start after 2030. By 2025, we don’t need to send this huge amount of gas abroad because reserves of Shah Deniz 1 and Shah Deniz 2 are enough.”
Armenian sappers commenced on Monday mine-clearance operations in the territories adjacent to the Saint Mary Church in village of Voskepar (Armenia...
Iran and Pakistan have signed eight cooperation documents in various fields, and agreed to strengthen ties to fight terrorism in the region.
As the conflict between Ukraine and Russia escalates, the strategic importance of Kharkiv, Ukraine's second-largest city, has come sharply into focus.
