Russia sets ambitious targets

June 14, 2013

Russian tugboats tow the Prirazlomnaya platform 450 miles from Severodvinsk to Murmansk. Photo: GazpromRussia’s campaign to sell its energy wares throughout the Asia Pacific region continued at several US energy conferences this spring: IHS CERAWeek (March) and LNG 17 (April). Russia reiterated that it can curb production declines and ramp up exploration efforts in key areas such as West Siberia and the Arctic.

At IHS CERAWeek, representatives from Gazprom, Lukoil, and TNK-BP joined Fergus MacLeod of BP and Thane Gustafson of IHS for a panel discussion on advancing tight oil and Arctic energy.

Gazprom Neft’s Head of Strategy Sergey Vakulenko outlined the company’s ambitious plan to double production from 1MMboe to 2MMboe by 2020, with technological advances and international expansion.

Vakulenko says Gazprom plans to deploy technologies that are more commonly used for unconventional oil and gas production to help unlock Russia’s conventional resources, by extending the life of mature fields and allowing access to stranded and tight oil formations.

One such technology, ASP Flood, which Gazprom developed with Shell, involves a surfactant flood of chemicals (usually baking soda or dishwashing liquids) to increase recovery by a factor of two, Vakulenko says. Gazprom expects to implement this in West Siberian fields by 2017-2018. 

“We believe these new technologies will be main driver of improving efficiencies of existing assets and making new fields production possible,” Vakulenko says.

In terms of international expansion, Gazprom bought stakes in Venezuelan, Iraqi, and Kurdistan-based projects. In Venezuela, Gazprom partnered with other Russian firms (Lukoil, Rosneft, and TNK-BP) on the Junin-6 project, in the Orinoco River basin, which may have 50 billion bbl of oil in place with 10 billion bbl recoverable. Production has begun, with two wells already drilled. 

Vakulenko also discussed Gazprom’s role in Arctic exploration, saying that he expects drilling to begin on the Prirazlomnoye field by this month. Gazprom plans to drill 40 slanted wells at the field, which is located on the Pechora Sea in 19-20m of water. The company estimates the field holds up to 72 million tons of reserves in place, which will enable production of 6.6MTPA. Prirazlomnoye was discovered in 1989. Gazprom expects to produce 460,000 bbls from the field between 2014 and 2020.

Drilling is expected to begin soon at the Dolginskoye field, similarly located in the Pechora Sea. Currently there are two appraisal wells planned between 2013 and 2014. Vakulenko says Gazprom will begin building production facilities in 2015, with first oil from the field expected by 2021.

Elena Burmistrova, Gazprom’s deputy general director of oil and gas products, LNG and new markets, speaks at LNG 17 in Houston.Lukoil’s Andrei Gaidamaka says he is glad technological developments are improving in the Russian industry, which could help the country’s energy companies explore tight oil in Siberia and in the Arctic offshore regions.

Boris Zilbermints, senior vice president, international projects and new business development at TNK-BP, discussed Russia’s need to urgently develop its Arctic resources, saying that it must be done in the next seven years.

“It hasn’t been done in this time frame,” he says. “[An] average offshore project takes 10-15 years. Russian companies have never been proficient working offshore. We’re accustomed to those challenges and we can increase reserves with new technology.”

Speaking at LNG 17 in Houston this past April, Jason Bennett, Moscowbased Baker Botts partner in the global projects practice, told reporters that he expects at least one Russian Arctic LNG project to begin production in the next 10 years. 

Vakulenko’s counterpart at Gazprom Elena Burmistrova, the deputy general director of oil and gas products, LNG and new markets, told delegates at LNG 17 that despite delays at Sakhalin-2, the company ramped up production efforts last year, operating the LNG plant at 114% capacity. The company is now producing over the 9.6MTPA design capacity. 

Burmistrova says Gazprom is looking to expand at Sakhalin and is currently moving through the pre-feed phase for a third LNG train, with completion to follow in July. The company expects to make an investment decision in 3Q 2013.

LNG investments continue with Gazprom’s Vladivostok project, located on the west coast of Amur bay on the Lomonosov peninsula. It will be sourced through the company’s fields off Sakhalin. Gazprom estimates that Sakhalin-3 contains 49 Tcf of gas resources and 323Bcm of proven reserves. Burmistrova says that the area is a prime location considering its mild climate with no ice in the jetty area, and it already has infrastructure such as direct railway and road access. Neither Vakulenko nor Burmistrova see Russia pursuing unconventionals within the next decade.

“Conventionals are much more attractive,” Burmistrova says. OE


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