Lukoil to Commission Drill Cuttings Disposal Site in Uzbekistan

Lukoil Uzbekistan Operating Company, a subsidiary of Lukoil Overseas, has completed the construction a temporary storage and waste management facility for drilling cuttings on Khauzak and Shady blocks (Bukhara Region, Southwestern Uzbekistan) within the framework of implementation of the Kandym-Khauzak-Shady-Kungrad PSA.

At present commissioning work is being completed on the site. The facility is the first of its kind in Uzbekistan. It will handle 12,000 tons of drilling cuttings per year. Capacity of the base disposal unit is 10 tons per hour.

The most modern technology as well as the best global manufacturers' equipment is used at the site. It will provide for separate collection, transportation and disposal of drilling waste (drilling wastewater and drilling cuttings), as well as regeneration and re-circulation of used drilling mud. The stabilization and solidification method has been selected for the disposal of drilling cuttings – i.e. mixing with an absorbent and cement as result of which the components of the cuttings turn into low soluble hydroxides.

The processed mix of used drilling mud with drilling cuttings will be used at the facility to produce material for construction, repair of field roads and build drilling rig foundations. Part of processed cuttings will be used to produce cinder blocks, a popular decorating and wall building material. Thus, the modern concept of waste-free production will be implemented during the development of Khauzak and Shady, positively influencing both project economics and environmental performance.

Work on the disposal of drilling waste, as well as all other oil & gas operations under the PSA will be accompanied by environmental monitoring carried out by a specialized organization. Construction of a network of 12 monitoring wells and four control stations is planned to ensure control of ground water level and its physical and chemical properties and bacteriological composition within the sanitary protection area.

The PSA for the Kandym-Khauzak-Shady-Kungrad project was signed on June 16, 2004 in Tashkent and went into effect on November 24, 2004. The project is being implemented by a consortium of investors, which includes LUKOIL Overseas (90%) and Uzbekneftegaz, the national holding company (10%). The duration of the PSA is 35 years. Commercial production of natural gas is planned to be launched in the fourth quarter of 2007. Peak annual production will reach around 10 billion cubic meters of gas.