Kazakhstan's Kashagan Oilfield Halts Output // EIA: 1/5 of America Saw Energy Production Decline

Kazakhstan's Kashagan Oilfield Halts Output

The most expensive oilfield in the world, Kazakhstan's Kashagan, has halted its output removing 300,000 barrels per day from the global market. A gas leak is to blame.

“NCOC, the Operator of the North Caspian Project, confirms that on 3 August 2022, Bolashak Onshore Processing Facility was safely shut down as a result of the detection of a gas release within the perimeter of the site. As per standard procedure, following the gas detectors activation, the facilities have been depressurized to the flare system,” the operator said in a statement.

No one was harmed during the incident.

Last month, Russia suspended most of Kazakhstan’s crude oil exports to Novorossiysk, which sits on the Black Sea near the Russia/Ukraine border. The decision was overturned by a Russian court of appeals.

"In the first quarter of this year, oil production from the Kashagan oilfield dropped to an average of 317,000 bpd, down by 2 percent compared to the same period of 2021," reports Oilprice.com.

However, the reduction at Kashagan means that the oil volumes flowing into the Caspian Pipeline Consortium have been reduced. The map below, though dated (it's an EIA map from 2013), gives you a picture of the route the CPC runs toward the Black Sea.

The CPC pipeline moves over 60% of all Kazakhstan export oil along with crude from Russian fields across a whopping 932 miles. Its flows also include oil and crude from the Caspian area.

"The exports take place from the Russian port of Novorossiysk on the Black Sea. While the port is in Russia, CPC exports consist of 90 percent crude from Kazakhstan and just 10 percent of Russian oil," reports Oilprice.com.

Officials did not mention when they thought the pipeline would come back online. Most of Central Asia's crude comes from the CPC pipeline. It supplies about 1.2% of global oil demand.

EIA: 1/5 of America Saw Energy Production Decline

The news cycle works like an Etch-a-Sketch that makes it hard to hold the recent past in our heads. 2020 was a tough year for most sectors; energy was no exception. In America, energy production dropped down an elevator shaft compared to 2019.

"Wyoming had the largest drop in total energy production among the states, decreasing by 1,264 trillion British thermal units, mostly due to decreased coal production. Seven states saw their largest annual energy production decline in at least 60 years," reports the Energy Information Administration.

Coal dropped a full fourth down to levels not seen since 1965. "Coal production during 2020 fell by 37% in Indiana, by 33% in Kentucky, and by 21% in Wyoming, as several coal mines closed. In absolute terms, coal production in Wyoming, the nation’s largest coal producer, decreased by more than 1,000 trillion Btu, the most of any state. In 2020, coal production in Arizona stopped entirely with the closure of its last coal mine."

American crude production slipped by 8% in 2020. "Production fell in 29 of the 32 states that produce crude oil, in part because of reduced demand for transportation fuels during the pandemic." New Mexico's the only place where crude production increased turning it into 2021's second-largest crude oil-producing state.

Even natural gas took a hit, though only a small one: 1%. Oklahoma's shale production, however, fell by one-fifth.

Renewables only increase by 1% whereas nuclear dropped by 2% due to the closures of Duane Arnold in Iowa and Pilgrim in Massachusetts.

Two years later and we're still hungover from the covid energy lurch.

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Conversation Starters

• Nigeria's oil output has fallen by 6%. "Nigerian crude oil output fell 6% month on month in July as pipeline closures and maintenance at major fields continued to impede Africa's largest oil producer, industry sources said Aug. 8. A senior official from the country's oil ministry told S&P Global Commodity Insights the field that feeds the major export grade -- Bonny Light -- remains heavily disrupted."

• UK water utilities have asked Britons to stop showering to conserve energy. This bodes ill for Britain as it heads into winter. "Huge swathes of the British public aren't going to be able to afford their bills this winter. Average families with two working parents will be in fuel poverty," Gemma Berwick, Senior Consultant at BFY Group, said.

• Another domino has fallen: Turkey has agreed to pay Russia's Gazprom in rubles for natural gas. As part of their new deal, "which would increase cooperation in the transportation, agriculture, finance, and construction industries and present a seemingly united front against 'terrorist organizations' in Syria, Turkey agreed to change how it pays Russia for natural gas," reports Oilprice.com.

• Radiation safety expert DJ LeClear has made a brief video summarizing what's happening at ZPP in Ukraine.

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