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Kashagan ‘Cash All Gone’ Pipeline Debacle

Shell has been a key participant in the Kashagan project consortium which includes Eni and ExxonMobil. Given its notorious track record of over-promise and under delivery, having Shell involved is a bad omen for any elephant project.

By John Donovan

The latest news from the “Cash All Gone” project (as it is widely known) is that due to the need to replace fatally flawed leaking pipelines, the oilfield may not restart until 2016. 

The project is already years behind schedule and countless billions over budget.

I have received some related comment and questions from a retired Royal Dutch Shell EP expert that deserve to be put into the public domain.

Shell has been a key participant in the Kashagan project consortium which includes Eni and ExxonMobil. Given its notorious track record of over-promise and under delivery, having Shell involved is a bad omen for any elephant project. 

Comment received from an old EP hand

On Kashagan, I would like to know who signed off on the design of the pipelines that apparently were of the wrong specs and unable to handle H2S?

I guarantee you that there will be a document (detailed design) that is signed off by everyone and on the basis of which the piping has been ordered.

It is not important to know the individual who did so, but to which company did he (or she) belong? That company is presumably keeping a very low profile now.

And perhaps they were clever enough to have all the partners sign off on the design and purchase orders. I wonder who will pay the bill for this cock-up?

And this actually was a simple one to avoid. The composition of the fluids was known so there is no excuse to come up with the wrong specs for the pipework.

If I were a director I would be very nervous on the quality control of all the welding that was done. And will all the valves be replaced too or will there be a solution by injection corrosion inhibitors?

In that case you save on Capex but saddle the operator with higher Opex and with a high chance (read certainty) this corrosion inhibition will go wrong one or more times. Can anyone make a suggestion?

RELATED COMMENT FROM “RELIEVED” POSTED ON SHELL BLOG 22 MAY 2014

To Old EP Hand: Having had to deal with sour service issues when I worked for Shell on the ‘P’ side of the business I am as appalled as you are at the level of incompetence displayed on the Kashagan project, and by all parties. You are correct, someone signed off on all of this, and I suspect that some technical ‘expert’ at Shell signed-off as well. Probably a 2 year engineer who got saddled with processing incoming paperwork from the operator. If Shell management was as competent as LondonLad appears to have been in his time at Shell it is no wonder that the obvious was overlooked and ignored. Probably for ‘political’ reasons. Who would want to create a stink by claiming the Italians didn’t know their own rear ends from a hole in the ground ??? Maybe the Shell staff assigned to the project had the same problem.

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