BP vice president: Long future ahead for BP's Azeri fields

An article by Jon Mainwaring dedicated to Azerbaijan's oil and gas potential has been published on the Argus pricing agency website. Caliber.Az reprints the article.

BP's Azeri offshore oil and gas fields still have a "long future", upstream executive vice-president Gordon Birrell tells Argus. BP is working to boost production at the 1.2 trillion m³ Shakh Deniz field and on initiatives to slow natural output decline at the Azeri-Chirag-Gunashli (ACG) oil development.

European interest in Azerbaijan's gas reserves has grown since pipeline exports from Russia were slashed last year, and BP-operated Shakh Deniz is the main source of Azeri exports, which increased by 7pc on the year to 12bn m³ in January-June. The September start-up of Shakh Deniz's West South flank project helped to raise output by nearly 5pc on the year to 13.2bn m³ in the first half of 2023, driving overall Azeri production growth of 3pc to 24.1bn m³.

Shakh Deniz should reach its 26bn m³/yr plateau this year and BP is keen to boost output further. Infill drilling is under way to enhance recovery and BP is drilling a deep gas well beneath the main production horizon. "Clearly, if we have a big new deep discovery there, we'll look at developing it," Birrell says. "And it's good quality gas. It's now piped all the way to Italy, through Azerbaijan, Georgia, Turkey, Greece and Albania."

Active in Azerbaijan for more than 30 years, BP also operates ACG. Production peaked at around 820,000 b/d in 2010, but natural decline is accelerating. Output of just over 350,000 b/d in the first six months of 2023 was down from 424,000 b/d a year earlier. Associated gas production fell by 5.8pc to 6.5bn m³ over the same period — most of this is reinjected to maintain reservoir pressure.

But BP and its partners in the AIOC consortium are doing what they can to boost ACG's longevity, Birrell says. "There's a long future for ACG. It's a giant oil field, it's great geology," he says, while acknowledging that its "prolific" reservoirs decline over time. "Our job is to flatten that decline out, and that's exactly what we're doing right now." Azeri state-owned Socar, an AIOC partner holding 25pc, estimated recoverable reserves at around 7bn bl in 2009.

BP is working on "two big thrusts" at ACG. "Number one is the new Ace [Azeri Central East] platform," Birrell says. The platform is designed to process up to 100,000 b/d and will enable drilling of a series of wells to the east of the ACG contract area — the underdeveloped side.

The Ace platform has been completed and is "in the yard in Baku, waiting to float out offshore. We have an up-and-over technique in Azerbaijan, the jacket is in place and it is being piled right now. Then we take the big topsides as a single unit offshore, float it out, ballast it down, and then you're off and ready to go".

Maximum thrust

The second thrust involves maximising full life-of-field recovery at ACG. "That means a couple of big things. The historical reservoir we've developed — the world-class Fasila reservoir — is now pretty mature," Birrell says. "We are starting to develop the upper Balakhani reservoir and that needs more energy… requiring more gas injection, more water injection to flatten out the decline."

The focus on enhanced gas and water injection began 18 months ago and BP is "starting to see encouraging signs that that decline is flattening out". This is "a great example of BP's petro-technical capability" because it needs to get the balance "absolutely right" — neither letting production drop too much nor failing to achieve full recovery from the fields, Birrell says.

BP has a 30.37pc stake in AIOC alongside Socar, Hungary's Mol 9.57pc, Norway's Equinor 7.27pc, ExxonMobil 6.79pc, Turkey's TPAO 5.73pc, Japanese firms Inpex 9.31pc and Itochu 3.65pc, and India's ONGC 2.31pc. BP holds 29.99pc in Shakh Deniz, Socar has 21.02pc, Lukoil 19.99pc, TPAO 19pc and Iran's Nico 10pc.