US OIL giant Chevron has approved a US$36.8bn expansion of the Tengiz oilfield in Kazakhstan, the largest single investment by the sector since the oil-price crash in 2014.
The expansion will increase oil production by 260,000 bbl/d, adding around 50% to the current 514,000 bbl/d output of capacity of the oil field.
The field is run through a joint venture called Tengizchevroil (TCO). Chevron controls 50% of the TCO joint venture, with partners Exxon Mobil (25%), KazMunayGas (20%) and LukArco (5%). The expansion project will raise TCO’s total production to approximately 1m bbl/d oil equivalent. First oil from the expansion is expected by 2022.
The funding will include US$27.1bn for facilities, US$3.5bn for wells and US$6.2bn for contingency and escalation. The project will be split into two parts, the “wellhead pressure management project”, to maintain output from the field through its existing equipment, and the “future growth project” to boost production by injecting gas into the reservoir.
The project will maximise the value of existing TCO facilities by extending the production plateau and keeping existing plants producing at full capacity. It will use sour gas injection technology, which was developed and proven during TCO’s previous expansion in 2008, to enhance oil recovery.
“This project builds on the successes of prior expansions at Tengiz and is ready to move forward,” said Jay Johnson, executive vice president of upstream for Chevron. “It has undergone extensive engineering and construction planning reviews and is well-timed to take advantage of lower costs of oil industry goods and services.”
The oil price hit a low of around US$27 /bbl in January, down from a high of US$115 /bbl in mid-2014. It has been recently holding steady at US$48 /bbl, and is forecasted to remain stabile until 2017.
Wood Mackenzie said in January that 68 major projects worth US$380bn had been shelved as a result of the lower oil prices. Chevron’s plans to invest follow on the back of BP’s announcement earlier this month that it will create 10,000 jobs in Papua Barat, Indonesia to expand the development of the Tangguh project.
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