The Shah Deniz gas and gas condensate field is located offshore Azerbaijan in the Caspian Sea and lies in water depths between 164 and 1,969 feet (50 and 600 meters). BP serves as the operator of the project, holding a 25.5% interest. Partners on the project include Statoil (25.5%), State Oil Company of Azerbaijan Republic (10%), LukOil (10%), NICO (10%), Total (10%), and TPAO (9%).

Shah Deniz is estimated to hold approximately 30 Tcf (1 Tcm) of gas-in-place and condensate-in-place of more than 1.5 billion barrels in an area spanning 212,511 acres (860 square kilometers).

Exploration

In 1997, a 3D seismic data acquisition was conducted by the Caspian Geophysical Company, which acquired the data using the MN Baki ship. Following the data results, the partners began exploring the area in 1999, and discovered the first well. The well, SDX-01, was drilled by the Istiglal semisubmersible and spudded on April 21, 2003. Then, the area was appraised by two additional exploration and appraisal wells (SDX-02, SDX-03).

The three wells were designed to appraise and delineate the northern flank area of the field, specifically the Fasila Suite and Balakhany VIII structures. These two structures formed the basis of the Shah Deniz field's first stage of development.

In 2007, another high-pressured reservoir in a deeper structure beneath the northern flank was discovered. A fourth well, SDX-4, was drilled to a record depth in the Caspian Sea of 23,950 feet (7,300 meters) in the southwestern area of the field. Production tests showed the well flowed at a rate of 1.2 Bcf/d (35 MMcm/d), and results confirmed there was sufficient gas available to develop the field in two stages.

Phase I

Phase I consisted of developing the Shah Deniz field by tying-back three wells to a 15 well-slot TPG 500 type production, drilling and quarters platform moored in 344 feet (105 meters) of water. The field development also included installing three 56-mile-long (90-kilometer-long) pipelines connected from the platform to the Sangachal terminal in Baku, and building and installing gas and condensate processing facilities in the onshore terminal.

In June 2001, a contract was awarded to Technip to perform a FEED for the project's offshore production and drilling facilities. In addition, Technip-Coflexip received a $300 million contract to design, engineer, procure, assemble, install and hook-up a TPG 500 drilling and production platform.

The TPG 50 platform, or Shah Deniz Alpha Platform, is a jack-up compromising drilling, production and accommodation for personnel, with a total weight of 32,000 tons (29,030 tonnes). The drilling facilities are capable of drilling wells with a length of more than 4 miles (7 kilometers), while its production facilities are capable of processing 1 Bcf (28.5 Mcm) and 60,000 barrels of condensate per day. The platform was installed at its permanent location on May 3, 2006.

The overall cost of the first stage of development was estimated at US $3.2 billion.

Pipelines and Production

During the course of 2006, two offshore gas transportation pipelines from the Shah Deniz Alpha platform to the Sangachal onshore terminal were installed on the field. J. Ray McDermott performed the installation, and also installed the pipeline tie-ins to the platform.

The Shah Deniz field commenced production in December 2006. A year later, the field reached a peak production of 110 Bcf (3 Bcm) and 9 tons (.8 tonnes) of condensate. The gas is transported from the platform to an onshore facility, which then transports it through a 429-mile-long (690-kilometer-long) pipeline named the South Caucasus Pipeline.

Phase II

Phase II of the Shah Deniz gas field is estimated to cost roughly $16 billion and will add 12 Bcm to the field's total gas output.

In 2007, the multi-component seismic company Reservoir Exploration Technology ASA (RXT) received a contract to conduct a survey in the Caspian Sea. Under the contract, RXT will acquire 4D seismic data of the field to appraise it further and bring the second stage into development.

In 2012, the operator gave the OK to commence the second phase of development. The plan calls for two new bridge-linked production platforms; 26 subsea wells to be drilled with two semisubs; 311 miles (500 kilometers) of subsea pipelines built in 1,804 feet (550 meters) of water; a 16 bcma upgrade for the South Caucasus Pipeline (SCP); and expansion of the Sangachal Terminal. Further pipelines will be built and expanded to transport Shah Deniz gas through Turkey and Europe.

The second stage of development should commence in 2013 with production expected in 2016.