AZERI, CHIRAG and deepwater GUNASHLI (ACG) FULL FIELD DEVELOPMENT PROJECT (FFD) Phase 1

Transcription

1 AZERI, CHIRAG and deepwater GUNASHLI (ACG) FULL FIELD DEVELOPMENT PROJECT (FFD) Phase 1 FRAME WORK DOCUMENT FOR THE PREVENTION AND RESPONSE TO OIL SPILLS ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 1

2 1. THE ACG FFD PROJECT 1.1 Background 1.2 Early Oil Project (EOP) 1.3 ACG Full Field Development 1.4 ACG FFD Phase Relationship to associated activities 2. ACTIVITIES IN THE ACG FFD PHASE Introduction 2.2 Activities in the AGC FFD Phase 1 Project Template drilling Platform drilling Compression and Water injection Platform (C&WP) Production operations Pipelines Terminal expansion Terminal operations 3. POTENTIAL OIL SPILL RISKS AND CONSEQUENCES 3.1 Potential sources of crude oil and fuel oil spills Blow-out Pipeline failure Leaks from an offshore platform 3.2 Summary of potential oil spills from ACG FFD Phase 1 project activities 3.3 Behaviour of spilled Azeri crude oil 3.4 Drift of spilled Azeri crude oil Drift of spilled oil from a catastrophic well blow-out at PDQ Drifting of spilled Azeri crude oil from pipeline failure Drift of spilled oil from a separator failure on the PDQ platform Drift of spilled diesel oil from vessel to platform transfer 3.5 Impact of an oil spill from the ACG Phase 1 project Offshore vulnerability Coastal environments Transboundary impacts Impact of cleanup operations 4. POLICY, LEGAL AND ADMINISTRATIVE FRAMEWORK 4.1 Introduction 4.2 National legislation Azerbaijani regulatory agencies National Oil Spill Contingency Plan 4.3 International Institutions and Conventions Convention on Environmental Impact Assessment (EIA) in a Transboundary Context (Espoo, 1991) 4.4 Other Applicable Regional Initiatives 4.5 Partner Policies and Initiatives ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 2

3 5. EXISTING EMERGENCY AND OIL SPILL RESPONSE ARRANGEMENTS 5.1 Proposed ACG FFD Phase 1 Oil Spill Contingency Plan (OSRP) 5.2 The proposed ACG FFD Phase 1 project OSRP in context 5.3 Existing Incident Management Systems Overview of the BP Crisis and Emergency Management System Outline of the Azerbaijan Business Unit Incident Management System (IMS) BP Azerbaijan Incident Management Plan (IMP) Existing Emergency Response Plans (ERP) Existing Oil Spill Response Plans (OSRP) and additional information 5.4 Existing response resources The tiered approach to oil spill response Tier 1 and Tier 2 Resources in Azerbaijan Tier 3 Resources 6. DEVELOPMENT OF AN OIL SPILL CONTINGENCY PLAN (OSRP) FOR THE ACG FFD Phase 1 PROJECT 6.1 Aims and Objectives 6.2 Developing an OSRP for the ACG FFD Phase 1 project Oil spill risk assessment Oil spill response strategy development Assessing the adequacy of available oil spill resources Response Action Plans 6.3 Linkages between the ACG FFD Phase 1 OSRP and existing plans 6.4 Action Plan for ACG FFD Phase 1 OSRP ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 3

4 Introduction The Azerbaijan International Operating Company (AIOC) is a consortium of Foreign Oil Companies (FOCs) (Figure 1.1) invited by the Azerbaijan government to develop the hydrocarbon reserves of Azerbaijan. A Production Sharing Agreement (PSA), lasting for 30 years, passed into Azerbaijan law in December 1994 granting the consortium rights to develop and manage the hydrocarbon reserves found in the ACG (Azeri, Chirag and deepwater Gunashli) field, termed the Contract Area. In July 1999, BP was appointed operator for the PSA on behalf of AIOC member companies. Figure1.1 Members of AIOC The oil and gas exploration and production activities inherently carry a small risk of causing oil pollution. These risks are minimized at all stages of these activities by the use of stringent design criteria, good engineering practices and the implementation of appropriate procedures. Nevertheless, a very small residual risk of accidental oil spills remains and must be countered by plans designed to respond to oil spills, in the unlikely event that they may occur. This framework document describes how an Oil Spill Contingency Plan (OSRP) for the Azeri Chirag and deepwater Gunashli (ACG) Full Field Development (FFD) Phase 1 project will be developed and integrated into existing OSRPs and other Emergency Response Plans (ERPs). The scope of this document covers oil spill response planning for Phase 1 activities following first oil. The Dada Gorgud template drilling programme and the programme of construction activities leading up to first oil are covered under existing BP Azerbaijan oil spill and emergency response plans. The construction and drilling ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 4

5 activities have been subject to risk assessments to ensure the adequacy of the existing plans and resources. The construction contractors also have their own oil spill response plans to deal with potential site spills, and these plans are linked through bridging documents to the BP Emergency and Oil Spill Response Plans. Any OSRP can be developed as a logical series of steps: (i) (ii) (iii) (iv) The risks of oil spills are assessed by considering the activities being carried out and determining the probability of an oil spill occurring by reference to historical data. The consequences of potential oil spills are then assessed by carrying out computer modelling of spilled oil drift and determining which resources (ecological or economic) might be affected by the spilled oil. This requires that the geographical distribution of sensitive resources has been mapped. A strategy of oil spill response, designed to minimize the damage that might be caused by an oil spill, is then developed by considering alternative oil spill response options. Equipment and personnel needed to implement the preferred oil spill response strategy are the identified, acquired and trained. These steps will be employed to develop the OSRP for ACG FFD Phase 1. It is important to recognize that this process will not take place in isolation of existing oil producing activities in the area. Oil and gas is currently produced from the Chirag platform in the ACG Contract area and transported via a sub-sea pipeline to the Sangachal Terminal. This is known as the Early Oil Project (EOP). The ACG FFD Phase 1 project will involve increased oil and gas production from an offshore site 13 km to the south-east of Chirag, transported by additional pipelines to an expanded terminal at Sangachal. The current arrangements (the BP Azerbaijan Oil Spill Response Plan) regarding the risk assessment and response to potential oil spills from the EOP have been developed to meet the existing needs. The changes in the risks of oil pollution brought about by the expansion of oil production activities by ACG FFD Phase 1 have been assessed and are described. The probable behaviour and drift of spilled Azeri crude oil and diesel oil from incidents that have the potential to result in oil spills has been estimated, and will be further assessed using computer models as soon as a representative crude oil sample is available. The environmental consequences of oil spills resulting from incidents occurring during ACG FFD Phase 1 activities have been assessed. Enhanced oil spill response measures will be needed for the ACG FFD Phase 1 project. BP s global Crisis and Emergency Management (CEM) System has been designed to cope with unplanned events of different types. BP Azerbaijan has an existing Incident Management Plan (IMP) and each of the activities within the remit of the BP Azerbaijan Business Unit has an Emergency Response Plan (ERP). An oil spill from ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 5

6 an activity of the ACG FFD Phase 1 project might be the result of a wider emergency incident and the OSRP will be integrated into the existing system. ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 6

7 Existing ERPs for the sites involved will be revised to reflect the arrangements detailed within the OSRP. The interface and linkages between these existing plans and the proposed OSRP for by ACG FFD Phase 1 are described. There are existing oil spill response equipment stockpiles and contractual arrangements for specialist personnel within Azerbaijan that would be used to respond to oil spills resulting from current oil and gas production and drilling activities. A key element of the proposed ACG FFD Phase 1 OSRP will be to integrate with existing arrangements and with those being prepared for other associated projects such as the Baku-Tbilisi-Ceyhan (BTC) pipeline project. ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 7

8 1. THE ACG FFD PROJECT 1.1 Background In order to stimulate the development of its significant oil reserves, Azerbaijan invited Foreign Oil Companies (FOCs) to invest in the development of its hydrocarbon wealth. The first Product Sharing Agreement (PSA) in Azerbaijan was signed in September 1994 between the State Oil Company of the Azerbaijan Republic (SOCAR) and the Azerbaijan International Operating Company (AIOC), a consortium of FOCs. The PSA, lasting for 30 years, passed into Azerbaijan law in December 1994, and grants the consortium rights to develop and manage the hydrocarbon reserves found in the ACG field termed the Contract Area. The ACG Contract Area (Figure 1) has estimated oil reserves in excess of 5.2 billion barrels of oil and 3.5 trillion cubic feet of associated natural gas, representing roughly half of the proven oil reserves in Azerbaijan s offshore fields. Figure 1. ACG Contract Areas 1.2 Early Oil Project (EOP) The Early Oil Project (EOP) was developed as the first production activity in the Contract Area and has been producing oil and associated gas since The EOP comprises the Chirag platform and transfer of oil through a 24 sub-sea oil pipeline from Chirag to an onshore oil reception terminal situated 38 km south of Baku at Sangachal. Gas export from Chirag is through a 16 sub-sea gas pipeline to SOCAR s Oil Rocks facility to the north west of the Contract Area. Oil may be exported to market from Sangachal by one of two pipeline routes to Black Sea ports; the Northern Export Route (NER) across Russia to Novorossiysk, and the Western Export Route (WER) to Supsa, Georgia. Current EOP volumes are exported via the WER. First oil from EOP was exported from Sangachal Terminal in the fourth quarter of ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 8

9 1.3 ACG Full Field Development Beyond the initial production of early oil, the further development of the ACG Contract Area is known as Full Field Development (FFD). It is currently conceived that FFD will be achieved through the implementation of three further phases of development (Figure 2) resulting in potential oil production rates in excess of one million barrels per day (bpd). Figure 2. ACG Full Field Development (FFD) SWG SWG Deep Water Gunashli To Sangachal Oil pipeline Gas pipeline Phase 3 West Azeri Chirag Chirag Central Azeri East Azeri Phase 2 Phase 1 Phase ACG FFD Phase 1 The Phase 1 project will develop the central part of the Azeri reservoir, to the south east of Chirag, and will consist of a production, drilling and quarters platform (PDQ) bridge-linked to a compression and water injection platform (C&WP) for gas and water injection to the reservoir, a new 30 sub-sea oil pipeline from the PDQ to shore, plus a new 28 gas line to shore. The Sangachal Terminal will be expanded to receive the increased production and export requirements. In addition, the Chirag platform will be integrated with the Phase 1 project by means of interfield gas sub-sea pipelines. First oil production from Phase 1 is scheduled for early Subsequent phases of the ACG FFD project ACG FFD Phase 2 will develop the remaining part of the Azeri reservoir to the west and east of the Phase 1 development and will probably include two fixed production and drilling facilities, a new 30 sub-sea oil pipeline, in-field sub-sea pipelines and further expansion at the Sangachal Terminal. First oil production from Phase 2 is anticipated in ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 9

10 ACG FDD Phase 3 will develop the Deep Water Gunashli reservoir and facility concepts under consideration also include fixed offshore facilities and in field subsea lines. Phase 3 development is planning for first oil production in Relationship to associated activities BP and its partners, other oil companies, governments and commercial entities active in the region are considering a number of significant projects. Those of most relevance to ACG FFD Phase 1 project include the following BP operated projects: - The Baku-Tbilisi-Ceyhan (BTC) pipeline project. - The proposed offshore gas development of the Shah Deniz field. - The proposed gas export pipeline project from the Shah Deniz field to the border with Turkey the South Caucasus Pipeline Project (SCP) Aspects of the ACG FFD Phase 1 OSRP discussed in this document are directly relevant to BTC project since oil will be exported via the BTC Pipeline from Sangachal Terminal across Azerbaijan, Georgia and Turkey to the Mediterranean port at Ceyhan. ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 10

11 2. ACTIVITIES IN THE ACG FFD PHASE 1 DEVELOPMENT 2.1 Introduction The ACG FFD Phase 1 Project is designed to produce oil and gas from the reserves in the central Azeri field and will consist of a number of facilities including: Two fixed platform installations; the Production and Quarters (PDQ) platform and the Compression and Water injection Platform (C&WP) (Figure 3) for drilling and production operations; Sub-sea pipelines for the transportation of oil and gas, and An onshore terminal for the reception and processing of oil and gas. Figure 3. PDQ (left), bridge and C&WP The project activities will include Fabrication and construction of the facilities; Transportation of components to Azerbaijan; Installation and commissioning activities; Drilling operations; Production operations; and Decommissioning of the facilities. ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 11

12 2.2 Activities in the AGC FFD Phase 1 Project The activities in the AGC FFD Phase 1 Project will be: Template drilling A sub-sea template will be installed and a planned nine to twelve wells will be drilled from a semi-submersible drilling rig, the Dada Gorgud. The first of these will be drilled prior to template installation Platform drilling The production and quarters (PDQ) jacket and topsides will be assembled onshore. The topsides will have a centre-bay design, which will enable installation onto the fixed steel eight-leg jacket using a float-over method. The PDQ platform will be installed in mid to late 2004 over the template and drilling will then continue from the platform. Up to 48 wells may be drilled for Phase 1 (including the nine template wells); these wells will consist of oil producers, gas injectors, water injectors and cuttings re-injection (CRI) wells Compression and Water injection Platform (C&WP) As with the PDQ, the C&WP jacket and topsides will be assembled onshore. All equipment will be installed on the topsides in such a manner as to allow for the float over installation onto a fixed steel eight-leg jacket. It is planned that the PDQ installation and hook-up will be completed by early 2005 and the C&WP will be installed approximately one year later in Production operations There will be two trains of well fluid separation on the PDQ. Each will be composed of a two-phase high pressure (HP) separator in series with a three-phase low-pressure (LP) separator. Each production well will be connected via a flow-line to the production and test manifold on the PDQ. Well fluids will be passed from the wellheads along the flow-lines to either the HP or LP production manifolds on the platform. In the early years of field development all wells will tie-in to the HP manifold. LP manifolds will be brought on-line when reservoir pressure declines and/or produced water breaks through Pipelines Oil and gas will be transferred from the offshore location to shore and between the PDQ and Chirag and the C&WP and Chirag by means of subsea pipelines. A new 30 diameter pipeline 188 km long will be installed along the route of the existing EOP 24 oil pipeline from Chirag for the export of oil from the PDQ to the terminal at Sangachal. A new pipeline to export the gas will also be installed following the same corridor. An additional inter-field pipeline between Chirag and the Phase 1 platforms will also be installed. Each pipeline will be externally coated with concrete to provide mechanical protection against impact and the weight required to ensure that the structure remains in place and in a stable condition on the seabed ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 12

13 Pipeline installation The pipelines will be installed using the pipe-lay vessel Israfil Guseinov in water depths of 8 m and greater. The pipe-laying operation is continuous with the barge moving progressively forward as sections of the pipe are welded, inspected, coated and deployed from the from the stern of the lay-barge. In water depths less than 8 m, the pipeline will be pulled onshore using a shore-based winch. A temporary trench will be dug across the shoreline and this will be allowed to flood so that the pipeline can be pulled through the nearshore zone and into the shoreline. The plan is to trench the pipeline in water depths of less than 5 m. The trench will be approximately 3 m wide and will be left to naturally backfill. Burying the pipeline in this way will reduce the risk of it being damaged by the anchors of vessels in shallow water Pipeline operation The pipelines are designed to resist potential damage from seismic movements and require very little maintenance. A pipeline integrity management system will however, be developed for the pipelines. The strategy will consist of a number of inspection and monitoring activities as well as a programme of regular cleaning of the pipelines by pigging Terminal expansion The existing EOP terminal at Sangachal will be expanded for Phase 1 oil and gas reception and processing. The expansion will include; a new oil and gas inlet, two new oil process trains, gas compression and dew-point control packages, two additional oil storage tanks and a tank storage facility for produced water. Construction activities for Phase 1 will start with an early civil engineering work programme (ECEWP) that will prepare the site in readiness for the construction of the terminal facilities Terminal operations Oil received at the Sangachal Terminal will be heated to the temperature required for efficient stabilisation and water removal. It will then be sent to the separators to further remove any residual gas and water from where it will be delivered to the onsite storage tanks prior to pipeline transport. ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 13

14 3. OIL SPILL RISKS AND POTENTIAL CONSEQUENCES AIOC, operated by BP has invested considerable effort in improved project design and implementing high international engineering standards in the ACG Phase 1 project to prevent oil spills. It is AIOC s policy to strive towards a zero spill target in the Company s operations through the use of appropriate design, equipment, prevention measures and training of personnel. Even with the incorporation of comprehensive oil spill prevention measures, the residual risk of an oil spill cannot be totally eliminated. The formulation of detailed oil spill contingency plans (OSRP) appropriate to local environmental sensitivities remains integral to the ACG Phase 1 project operation, and a core part of AIOC and BP s risk management and mitigation system, which it is committed to maintaining as a responsible international operator. 3.1 Potential sources of crude oil and fuel oil spills To assist in this planning, a comprehensive oil spill risk assessment has been conducted based on historical data and on a consideration of the relevant factors for Phase 1. An analysis of the probabilities of various potential incidents was carried out. Potential sources of oil and fuel spills to the marine environment from the ACG FFD Phase 1 project include the following: Release of oil from platform installation caused by: - well blow-out; - operator error; - collision incident and loss of containment; - failure in storage facilities; - refuelling operations; and - failure of oil-in-water treatment system. Release of oil from pipeline failure caused by: - direct impact (vessel grounding, dropped object, fishing interaction) resulting in loss of structural integrity; and - structural failure due to corrosion, manufacturing fault or induced physical stress; Release of oil from vessel caused by: - operator error; - collision incident and loss of containment; - failure in storage facilities; - refuelling operations; and - failure of oil-in-water treatment system; All of these possibilities had also been considered during the preparation of the EIA (Environmental Impact Assessment) for the EOP. ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 14

15 The initial risk analysis examined all these possibilities and concluded that five oil spill scenarios warranted further investigation. These were: Catastrophic blow-out at platform location with surface release of crude oil. Catastrophic failure of sub-sea pipelines to shore with sub-sea release of oil Small leak in pipeline with sub-sea release of oil. Small process equipment leak/spillage. Loss of contents of a diesel storage tank to sea surface Blow-out A well blow-out can occur when sudden changes in well conditions, such as striking localised high-pressure zones, may cause a rapid high-pressure kick. If well control is not retained, this could lead to a blow-out. Whilst the probability of a blow-out is extremely small, the worst-case consequence would be an uncontained flow of oil from the largest well at the full production flow-rate. The potential risks decrease as more information about the geological features of the reservoirs is obtained during the course of drilling operations. The possibility of a blow-out is taken into account during engineering design and by appropriate operating procedures. The reservoirs in the ACG field are normally pressured formations and the wells are designed, monitored and controlled against unplanned influx. Primary well control maintains a sufficient hydrostatic head of weighted drilling mud or completion fluid to balance the pressures exerted by fluids in the formation being drilled. This is an inherently safe approach to maintaining well control. The Blow-Out Preventer (BOP) stack provides secondary well control. The BOP can close well bore, which would prevent oil flow. The statistically probable frequency of oil spills associated with each project activity has been estimated by comparison with historical data for similar operations. The overall risk of a large oil spill (defined as greater than 300 tonnes in the risk analysis) resulting from a blow-out during development drilling was estimated as a total of 2.42% for the drilling of all 48 wells. Since 12 of these wells will be drilled during the current template drilling programme and that is covered by existing oil spill arrangements, the residual risk for development drilling of the remaining 36 wells is 1.82% and 1.28% during production. These percentages refer to the probability of a blow-out occurring during the entire 23 year lifetime of the project. In the unlikely event that a blow-out were to occur if the PDQ was to lose control of a well either during drilling or during a well work-over, the open hole flow-rate of 30,000 bpd (4,770 m 3 / day) would be released into the sea. It would then be necessary to drill a relief well. Since there are only a limited number of drilling rigs available in the Caspian, it has to be assumed that it would likely be working elsewhere. Allowance was therefore made for the drilling rig to cease operations at another location (5 days) and to transit to the ACG location (7 days). It would then take 30 days to drill a relief well. The total time for the worst-case blowout scenario is 42 days at a flow-rate of 30,000 bpd, leading to approximately 200,000 m 3 of crude oil being spilled. ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 15

16 3.1.2 Pipeline failure There are several possible modes of pipeline failure that could potentially occur during the ACG FFD Phase 1 project. Using industry-accepted definitions for pipeline spill sizes, the leaks may be defined as follows: Minor leak. Historically this has been the result of pipeline corrosion, poor fitting flanges, damaged or poor fitting seals or vents. Improved fabrication methods and better protection methods such as those that will be employed during this project will substantially reduce this risk. A minor leak is unlikely to lead to any detectable change in pipeline pressure and may not result in a visible surface sheen. Moderate leak. A leak of greater oil volume that is not detectable by an online leak detection system but will be visible on the sea. Moderate leaks are usually the result of pipeline damage or prolonged corrosion. Detection is by visual identification of the oil on the water after approximately 24 hours of flow. Major leak. Detectable by an online leak detection system (leak loss of >10% loss of total flow rate) and the product of a significant impact and physical damage sufficient to cause a pipeline rupture such as that caused by a vessel grounding onto the pipeline or dropped / dragged anchors. The worst-case scenario for a major pipeline leak at ACG FFD Phase 1 would be a catastrophic failure of the 30 main oil export pipeline linking the PDQ and the Sangachal Terminal and resulting in a complete break of the pipeline. A catastrophic pipeline failure could, in theory, be caused by a heavy object dropped from a vessel or the platform or by a dragged anchor or by advanced corrosion or fittings failure. These possibilities have been taken into account during pipeline design. The pipeline is protected with a concrete coating and is resistant to impact damage from a dropped object or dragged anchor. The risk analysis estimated that the statistical probability of a large oil spill (defined as greater than 300 tonnes of oil spilled in the risk analysis) being caused by accidental damage to the pipeline would be 1.59% during the entire 23 year lifetime of the ACG Phase 1 development. The slightly higher risk of an oil spill resulting from corrosion and fittings failure (estimated as 5.45% over the 23-year lifetime of the project) will be reduced by maintenance activities. The pipeline would not lose the entire contents if it were completely severed. Oil would be lost into the sea while pumping continued, but the flow would ease once the pumps were turned off. Some further oil volume would be released into the sea as the pressure in the pipeline dropped until it was equal to the water pressure at the depth at which the pipeline break had occurred. A small amount of oil would then escape as the gas came out of the partially stabilized crude oil. The pipeline is on two major gradients as it dips down from the platform and then steadily rises again as the pipeline heads towards the shore. Only a small amount of oil would be released and only from that section of the pipeline where there was an upward gradient to the pipeline break. ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 16

17 As described above, minor leaks (from 1 to 100 tonnes of oil) lost from the pipeline are statistically slightly more likely. Causes of a minor leak may be erosion, corrosion or minor damage from, for example, a dragged anchor. Minor pipeline leaks are unlikely to lead to any detectable pressure change within a large capacity pipeline and are therefore inherently difficult to detect with online pressure leak detection systems. Despite their low probability, the potential of pipeline failures needs to be considered, For the purpose of estimating the oil spills that could be caused at the ACG FFD Phase 1 development, two worst-case oil spill scenarios have been considered: Catastrophic pipeline failure If the pipeline were catastrophically damaged it is estimated that the pressure drop would be detected within an hour, followed by production shut-in. The worst case of oil release for a catastrophic pipeline failure is therefore one hour s production of 3,441 m 3, plus another 2,000 m 3 that would escape as the pipeline pressure dropped to be in equilibrium with the water pressure. This would produce a maximum oil release of 5,441 m 3, but some additional amount of oil would subsequently escape as the oil lost gas. The worst-case total oil release would be 8,000 m 3 to 10,000 m 3. A minor pipeline leak A low leak rate of 1 m 3 /hour that was not detected for 30 days would cause a release of a total of 720 m 3 of crude oil. Since the leaked oil may thus emerge on the sea surface outside of normal platform helicopter flights and supply boat routings, an arbitrary figure of 30 days has been taken as a worst case for the length of time it will take for the leak to be detected Leaks from an offshore platform The ACG Phase 1 PDQ and C&WP Platforms have been designed to minimise potential leak sources (e.g. by minimising valves, flanges etc.) and to provide secondary containment and processing systems for residual leak sources and spill pathways. Given the proposed equipment operating and maintenance systems, the offshore shut-in and detection system for production process would be highly reliable and offshore production would be shutdown promptly, if not immediately, should an event occur that could lead to an oil spill. Furthermore, the drain system should contain most of any process area spill. Nevertheless, there are conceivable circumstances that could result in oil being released from leaks or other incidents on an offshore platform. The risk analysis considered two possible scenarios: Separator failure on PDQ platform The worst-case spill scenario for the offshore platforms is the loss of contents from one of the largest separators on the platform. The offshore shutdown and detection system would cause production to be shutdown promptly, if not immediately. The most credible worst-case scenario would be a leak of the crude oil from one of the largest of the separators on the platform, amounting to 140 m 3 (the entire contents of the largest separator) of crude oil spilled. ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 17

18 A diesel fuel spill during vessel to platform transfer The loss of diesel fuel in offshore operations is by far the most common type of oil spill in world-wide operations. The causes of diesel loss can be due to failure of transfer hose or attempts to fill an already full storage tank. Given the rate of transfer of diesel during fuel transfer operations, the amount spilled can often amount to the total storage inventory of one tank. A spill of 100m 3 (entire contents of largest storage tank) of diesel was used in the risk assessment. 3.3 Behaviour of spilled Azeri crude oil Spilled crude oil will undergo changes to its physical properties caused by the evaporation of the more volatile oil components and the incorporation of water in the form of a water-in-oil emulsion. The changes in the physical properties of spilled oil with time and under different environmental conditions of air and sea temperatures, wind speed and sea-state can be studied using small-scale laboratory methods that simulate crude oil weathering. A representative sample of the crude oil that will be produced at the ACG Phase 1 platform has yet to be obtained. A sample will be taken during well testing scheduled for October 2002 and submitted for laboratory testing. Laboratory investigations have been made on the crude oil from the Chirag platform (AEA Technology, 1997) and on an early sample of the Azeri crude oil 1 (AEA Technology, 2001). These studies suggest that the crude oil produced at the ACG Phase 1 platform will rapidly lose approximately 20% to 25% by volume from the sea surface by evaporation of the more volatile components within the first few hours at sea. After one to two days at sea approximately 30% by volume will eventually be lost. However, this loss in volume due to evaporation will be accompanied by an even larger increase in volume caused by water droplets becoming incorporated within the oil to form emulsified oil in the form of a water-in-oil emulsion. The crude oil is expected to form a stable emulsion with a maximum water content of approximately 65% to 75%, causing up to a three- to four-fold increase in volume of the oil residue remaining after evaporation of the more volatile components. The viscosity of the spilled emulsified oil will be much higher than that of the original Azeri crude oil because of the loss of the more volatile components and because of the incorporation of water droplets into the body of the oil. The high viscosity of the emulsified oil, particularly at low temperatures, will cause the spilled oil to persist at sea for a week or more even at high wind speeds, and for several weeks at low wind speeds. The following estimates of the probability of spilled oil drifting ashore and the probable quantities involved have been made on the basis of the currently available information. Computer modelling will be carried out as soon as the results from weathering studies using a reliable sample of Azeri crude oil have been made. The following estimates are only for guidance and will be superseded once the modeling has been conducted. 1 Incorrect storage of the sample for the purposes of future testing render the weathering results unreliable ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 18

19 3.4 Drifting of spilled Azeri crude oil Spilled oil drifts with the sea currents. In the Caspian, the primary mover of spilled oil is the wind. Spilled oil will travel at about 3% of the wind speed in the direction of the prevailing wind. The historical wind speed and direction frequency data has been used to provide an estimate of the probability of spilled oil drifting ashore. The estimates have been made for two seasons (summer and winter), each reflecting a distinct wind regime Drift of spilled oil from a catastrophic well blow-out at PDQ The worst case scenario for a well blow-out considered that every day for 42 days, approximately 5,000 m 3 of oil will be spilled from the blow-out. This would lose some volume by evaporation, naturally disperse to some degree, and the remainder will incorporate some water to form emulsified oil as it drifts. The probability of oil beaching at a particular location is a function of the distance between the release point and the shore, the persistence (natural dispersion versus emulsification) of the oil, and the wind speed. If the wind blows from the south-east at 20 knots, the spilled oil would drift to the north-west for 2 to 4 days before beaching on the Apsheron Peninsula. Considering the statistical likelihood of the prevailing wind directions, oiling of somewhere on the Azerbaijan coastline is likely to eventually happen for 25% to 30% of the time if the blow-out happens during winter. The risk of Azerbaijan shoreline contamination is lower in summer, perhaps 15% to 25% of the time, because the oil is less persistent at higher temperatures. In winter the result would be that every day for 42 days (starting 2 or 4 days after the start of the well blow-out), approximately 2,000 m 3 to 2,500 m 3 of emulsified oil will come ashore on the Azerbaijan coastline. This would produce a total of approximately 85,000 m 3 to 100,000 m 3 of emulsified oil to be cleared up. Oiling of somewhere on the Turkmenistan coastline with smaller amounts of emulsified oil (perhaps 150m 3 to 300m 3 per day, but persisting for several weeks) is likely to eventually happen for 10% to 15% of the time if the spill happens during winter. The likelihood and amount of oil that comes ashore is again less in summer, perhaps 5% to 10% of the time. Oiling of somewhere on the Iranian coastline is unlikely to happen if the spill occurs during summer, but might occur under exceptional circumstances (very high wind speeds prolonged for extended periods) during the winter Drift of spilled oil from a catastrophic pipeline failure A catastrophic failure of the 30 main oil export pipeline could occur, in principle, anywhere along the length of the pipeline from the PDQ platform to the Sangachal Terminal. Spilled crude oil from a pipeline break close to the shore would have less time to drift before impacting the coast than oil spilled from a pipeline break near the platform. Two locations of pipeline failure have therefore been considered: Offshore catastrophic pipeline failure at the PDQ platform Near-shore pipeline failure on the pipeline route south of Baku ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 19

20 The estimated maximum of 8,000m 3-10,000 m 3 of Azeri crude oil spilled from a catastrophic pipeline failure would be released over a period of 3 or 4 hours. The oil would then drift under the influence of currents and prevailing winds in exactly the same way as oil spilled from a blow-out. Approximately 2,500 m 3 would rapidly be lost by evaporation, but the remaining 7,000 m 3 has the potential to be converted into 21,000 m 3 to 28,000 m 3 of emulsified oil. However, a proportion of this would be naturally dispersed as it drifted towards the shore. The further the drift, the smaller the volume of oil that would persist to come ashore. Because of the prevailing wind directions, the most likely oil drift directions in both winter and summer are predominantly to the northwest, to the south, and to the south-east of the location at which the oil was spilled Drift of spilled oil from a near-shore catastrophic pipeline failure The Azerbaijan coastline that could be oiled by a spill of crude oil resulting from a catastrophic pipeline failure at the ACG field occupies an arc from NW through to SW reflecting the proportion of time that the wind blows from the reciprocal directions (SE to NE). From the seasonal wind frequency data the probability of winds blowing from this arc of directions is, on an annual basis, approximately 30% to 40% of the time. Oiling of somewhere on the Azerbaijan coastline is likely to eventually happen for 25% to 30% of the time if the spill happens during winter, but less in summer, perhaps 15% to 25% of the time, because the oil is less persistent at higher temperatures. It is probable that a total of approximately 6,000 m 3 to 8,000 m 3 of emulsified oil would reach some locations on the Azerbaijan shoreline during winter, but less emulsified oil would come ashore in summer. The probability of oiling of somewhere on the Turkmenistan coastline is the same as that for the well blow-out spill scenario: it is likely to eventually happen for 10% to 15% of the time during winter, but 5% to 15% of the time in summer. The total quantity of emulsified oil that may come ashore will be much lower than in the case of the blow-out scenario; a total of 1,000 m 3 to 2,000 m 3 is possible. Oiling of anywhere on the Iranian coastline is unlikely if the spill happens during the summer, but might occur under exceptional circumstances (very high wind speeds prolonged for extended periods) during the winter Drift of spilled oil from a near-shore catastrophic pipeline failure The probability of oiling of the Apsheron Peninsula from a near-shore pipeline spill is greater than that from an offshore pipeline spill at the ACG field. The hypothetical pipeline break is almost due south of Baku and about 30 km from the closest shore. The prevailing wind directions will be modified by the presence of the Apsheron Peninsula; the northerly wind will be less prevalent, leaving north-westerlies as the main component. Oil blown by wind from this direction will impact the coastline south of the Sangachal Terminal. The probability of somewhere along the Apsheron Peninsula coastline being oiled from a near-shore pipeline break is about 40% of the time. The probability of somewhere on the entire Azerbaijan coastline (including the Apsheron Peninsula) being oiled is higher; about 60%. Winter or summer conditions would make little difference; the drift times are so short that natural dispersion would not have much effect. ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 20

21 Oiling of somewhere on the Turkmenistan coastline is likely to happen for 10% to 15% of the time during winter, but less in summer, perhaps 5% to 10% of the time. Oiling of anywhere on the Iranian coastline is most unlikely Drift of spilled oil from a separator failure on the PDQ platform A small proportion (approximately 15 m 3 of emulsified oil) of the volume of a spill of 140m 3 of crude oil from a total separator failure on the PDQ platform might persist long enough in winter to reach the shore, provided that the wind were blowing from the south-east or north-east. The impact would be slight Drift of spilled oil from a diesel fuel spill during vessel to platform transfer Diesel fuel on the sea surface would rapidly evaporate and naturally disperse, typically within 8 hours of a spill. Any impact of a diesel spill is expected to be restricted to the close vicinity of the release point. No shoreline impacts are expected to arise because diesel fuel spilled near the PDQ platform would not persist long enough to reach the shore. 3.5 Impact of an oil spill from ACG FFD Phase 1 Under some circumstances, spilled crude oil or diesel oil can pose serious threats to freshwater and marine environments. Spilled oil can affect a wide range of organisms that are linked through a complex food chain. Harm to the habitat of some species may often lead to negative effects on one or more species in a food chain. An oil spill can harm the environment in two main ways: Physical effects of oil that damage wildlife and their habitats (such as coating birds or mammals with a layer of oil), Toxic effects caused by some oil components, which if ingested can poison exposed organisms. An oil spill from the ACG Phase 1 project may affect both offshore and coastal areas; therefore the vulnerabilities of these environments need to be considered separately Offshore vulnerability Although it has been demonstrated that the probability of large oil spills occurring at the ACG FFD Phase 1 field is very low, the consequences of such events needs to be considered. In open water, mobile marine organisms such as fish and seals have the ability to avoid the oil on and in the water by swimming away or going deeper. This reduces the likelihood that they will be harmed by even a major spill. Evidence from previous major oil spills elsewhere in the world suggests that fish have the ability to detect oil, even at low concentrations, and they swim away to avoid it. As a result, most spills in open water have no, or a very limited, effect on fish populations. Fish populations are often subject to high levels of natural variability. Tainting of fish flesh, giving rise to ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 21

22 an objectionable taste when eaten by humans, may occur as a result of a major spill at sea. This has the potential to impact the local community, through lowered values of fish catches and impact on fish caught for subsistence by the local residents. Organisms with a reduced ability to evade an area of an oil spill, such as plankton, may be expected to experience greater impacts, including direct mortality during the early stages of a spill incident from toxicity of hydrocarbon components. However, these effects will only occur in very localised areas. There will be a rapid dilution of dispersed oil and its soluble components in the open sea to below concentrations in the water that may cause harm. Plankton has a very high natural mortality. The additional impact of an oil spill is highly unlikely to cause significant additional effects or to affect a significant proportion of the total population. The greatest environmental sensitivity offshore at the Azeri drilling location is the potential presence of seabird populations. As these are mainly migratory species, the magnitude of any impact will depend on the species and number of birds present, the season of the year, the amount of time the birds spend on the sea surface, the percentage of the population present, their vulnerability to oil spill and their rates of potential recovery from oil pollution Coastal environments The likelihood of any oil spill having an impact on the coastal environment is related to length of sensitive coastline contaminated by emulsified oil. Coastal environments that are sensitive to oil spills include the habitats of migrating, breeding and overwintering bird populations including shore birds, waders and diver species, and nearshore habitats such as sea grasses; spawning and nursery areas of fish, haul-out areas of seals, and recreational areas. The most sensitive shoreline areas in Azerbaijan have been identified (Table 2) and include coastal wetlands, the most extensive of which are to be found in the Kyzyl- Agach region. These areas are highly productive ecosystems hosting, at various times of the year and in certain localities, large concentrations of birds. The shallow waters also act as feeding grounds for many fish species. In addition, the shallow waters and sea grass habitat identified along the Sangachal Bay and Apsheron Peninsula make the area a biologically productive region which is also of importance for fish and bird species, including resident, migrating, nesting and breeding species at various times of the year. The major impact on these areas from oil spills will be the effects of physical oiling, physical smothering, and coating by oil. The more toxic oil components are also the more volatile and these will have evaporated whilst the spilled oil was floating on the sea surface before the spilled oil comes ashore. Spilled oil on the sea surface will present little risk to underwater species, although oil dispersed in the water column very close to sea grass habitats might have some detrimental impacts on these habitats and the associated communities, through toxic effects. Impacts on the near-shore feeding area for fish and birds may be increased through adverse impacts on the benthos. Benthic organisms may ingest dispersed oil or be physically contaminated by oil that becomes entrained in near-shore sediments. ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 22

23 In shoreline and shallow water environments where there is a reduced potential for evasion, oil spills may impact seal populations through inhalation, ingestion and smothering/clogging of fur, all of which increase stress and reduce insulation. Seal pups are considered more vulnerable to oil pollution than adults because of their lack of mobility and dependence on fur for thermal insulation. The breeding / pupping season is the period of highest vulnerability to oil pollution for the Caspian seal. However, the seals breed and pup predominantly in the north Caspian and very few seals are found in the ACG Phase 1 development location during these times of the year. As a result the potential impact of the ACG Phase 1 development on the Caspian seal is not considered significant. ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 23

24 Table 2. Sensitive sites of the Caspian coast of Azerbaijan that could be impacted in the unlikely event of oil spill originating from the ACG FFD Phase 1 project. Area Azerbaijan Kyzyl-Agach region (Kyzyl- Agach Bay, Kura spit and Kura River Delta) Shakdilli Spit, Yuznaya Kosa Cape on Zhiloy Island and the Dardanelli Reef System around the Apsheron Peninsula Shirvan area Islands of Garasu and Gliniyaniy The coastline from Primorsk to the Kura Delta Coastline and coastal waters of the Apsheron Peninsula south to Kyzyl-Agach Sensitivity Designated site under the Ramsar Convention 1 and State reserve due to its importance as a wetland habitat. Supports large numbers of birds in all seasons (over-wintering, migrating, nesting, breeding and feeding) and acts as an important nearshore fish feeding grounds. The wetland habitat also has restricted access from the land and clean-up operations would be likely to cause significant damage Kura River Delta is an important site for wintering and migratory wader species, some of which are of global conservation importance Main haul-out sites for the Caspian Seal. Highest numbers of seals are present at these locations in spring State reserve. Important for a number of bird species, some of which are of global conservation importance. The site lies inland from the coast, however, birds may fly to the coast to feed in the day and therefore be at risk if there is an oil slick in the area The offshore islands in the study area support large numbers of seabirds during the breeding season Area supports considerable fishing effort along accessible beach front areas Seagrass communities distributed in patches all along the coast, concurrent with fish feeding and nursery areas which form important fishing grounds 1 The Convention on Wetlands of International Importance especially as Waterfowl Habitat (Ramsar Convention) was adopted in Ramsar, Iran, in 1971, and came into force in In 2000, Azerbaijan became a Contracting Party to the convention. The Convention's mission is the conservation and wise use of wetlands by national action and international cooperation as a means to achieving sustainable development throughout the world. ACG Phase 1 Framework Oil Spill Response Plan - Final for Lenders July 3rd 2002.doc 24