Tengiz gamble starts to pay off

Oct 23, 2001 02:00 AM

by Christopher Pala

Like giant gold bars, the slabs of canary-yellow sulphur reflecting the merciless desert sun dwarf the processing plants of the world's sixth-largest oil field, set on the desert shores of the Caspian Sea. The accumulated sulphur, a by-product of Tengiz' oil, is a measure of the huge amounts of crude the field already has produced.
It's a visual demonstration of why Chevron made a huge gamble on this politically risky and logistically challenging environment eight years ago. It was common knowledge in the oil business that the region held world-class oil reserves, but when Chevron arrived, equally monumental problems also became apparent.

When the Chevron-led partnership took over the field in 1993, only 15 of the 90 wells were working. Total production from the field that had then been producing for 14 years was 25,000 bpd of crude, a fraction of its potential. The natural gas, which was loaded with poisonous hydrogen sulphide, was all burned off in flares because there was no local market.
The only outlet to outside markets was a small pipeline to Russia -- a fraction of what was needed. Chevron and its partners on this field have since spent billions to deal with problems that have demanded novel solutions. Now that gamble is beginning to pay off.
The first tanker ship laden with Tengiz oil left the gleaming new terminal near Novorossiisk, on the Russian coast of the Black Sea. The oil travelled there through a new 990-mile pipeline costing $ 2.8 bn, known as the Caspian Pipeline Consortium, or CPC. Chevron invested $ 750 mm in the partnership that built a 990-mile pipeline around the top of the Caspian and across the North Caucasus to the Black Sea.

Source: HoustonChronicle.com
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