1.5. Gas resources on Russia’s Euro-Arctic shelf
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In sum potential resources structure of the Barents Sea, gas-forming hydrocarbons predominate (21.6 trillion cubic metres), with liquid resources (oil and condensate) accounting for 1.1 billion tonnes. On the shelf of the Pechora Sea, liquid hydrocarbons amount to 2.2 billion tonnes, gas-forming hydrocarbons - 2.7 trillion cubic metres.
For your information:
Casing-head gas - found in the oil seams as a solute in the oil (unlike free gases in the gaseous cap) which is discharged from these seams in the event of a reduction in pressure.
Petroleum gas - a natural gas accompanying the oil in the form of a gaseous cap above the oil seam or which is found in the oil in the form of a solute.
Gas condensates - a natural system of mutually soluble, gas-forming and liquid petroleum hydrocarbons having a low boiling point which are to be found in thermodynamic conditions in the earth’s subsoil in gaseous or vaporous phase states.
Five gas fields have been identified for development in the Barents Sea: the Shtokman gas condensate field (with reserves in excess of 3.6 trillion cubic metres), the Murmansk gas field, the Ledov gas condensate field, and the Severo-Kil’din and Ludlov gas fields.48
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Fig. The Shtokman gas condensate field.
The Shtokman gas condensate field
The Shtokman gas condensate field is located in the central part of the Barents Sea, 650 km north-east of Murmansk, 920 km north-east of Arkhangelsk and 290 km to the west of Novaya Zemlya. 49
The hydrocarbon seams are situated at a depth of 1,900-2,300 m. It is suggested that the stable extraction of gas may be possible for 50 years, with 91% of the field’s reserves concentrated in two seams. The field covers an area of 1,400 km2 and the sea is 300-380 m deep. 50
The field’s reserves total 3.66 trillion cubic metres of gas and 30 million tonnes of condensate. When operating at maximum productivity, the planned volumes recovered from the Shtokman gas condensate field may be anywhere from 71 - 94.6 billion cubic metres per annum depending on the development option.
Sevmorneftegaz has the license to develop the Shtokman gas condensate field.
Offshore installations:
• a gas extraction system;
• main underwater pipelines for transporting natural gas and condensate to the shore;
On the territory of Murmansk oblast:
• a complex for manufacturing liquefied natural gas (including receiving and unloading terminals; a port; port structures and a port fleet);
• the Vidyaevo-Volkhov gas pipeline (extending 450 km over Murmansk oblast);
• a branch pipe of the gas pipeline to supply consumers in Murmansk oblast.
For your information:
The Sevmorneftegaz private company, a subsidiary of Gazprom, is involved in the infrastructure development and exploitation of oil and gas fields on the Continental shelf of the Arctic Ocean and in adjacent mainland regions.
Sevmorneftegaz was founded in 2002 on an equal footing with Gazprom and Rosneft - the “Rosshelf” private company and the Rosneft-Purneftegaz state oil company. In December 2004, Gazprom’s subsidiary bank, Gazprombank, agreed to acquire from Rosneft all of its shares in Sevmorneftegaz, a 49.95% participation in the project aimed at developing the Arctic shelf in the Barents and Pechora Seas, and also 26% of the shares in Rosshelf for USD 1.7 billion.
The basic variant for developing the infrastructure on the Shtokman gas condensate field proposes arrangement of underwater offshore recovery complex equipment.
Depending on the volume of gas supplied, provision is made for two options in terms of transporting gas beneath the Barents Sea:
• Option one: 4 gas pipeline branches from the field to the liquefied natural gas factory on the shore of Ura Bay and 2 gas pipeline branches from the field to the terminal on the shore of Nasha Bay.
• Option two: 4 gas pipeline branches from the field to the liquefied natural gas factory on the shore of Ura Bay and 4 gas pipeline branches from the field to the terminal on the shore of Nasha Bay.
Here’s a thought…
The amount of capital expenditure for construction of the planned system facilities, disregarding the tanker fleet, is in the region of USD 41-70 billion. Capital expenditure for facilities located in the Murmansk oblast amounts to USD 12-17 billion.
The route adopted by the marine pipeline between the Shtokman gas condensate field and Vidyaevo (or Teriberka) will extend about 571.5 km, of which 571 km is on the sea bed. The sea depth in sections through which the pipeline passes is up to 374 m.
Here’s a thought…
In 5 municipal establishments in Murmansk oblast, public hearings have been held in relation to evaluating the effects on the environment of the Shtokman field infrastructure development project and the construction of the gas transport system from Shtokman to Volkhov via Murmansk oblast and Karelia.
According to data from Gazprom:
94% of the population supported the project.
44% of the population were worried about ecological issues,
In the area of the Vidyaevo settlement (or Teriberka), construction of a transport and technological complex at the port is proposed, comprising:
• a factory for producing liquefied natural gas,
• a depot for liquefied natural gas,
• a terminal for unloading,
• port structures,
• installations for preparing the gas for transport overland, and
• a system for servicing the extraction complex.
The phased development of the production of liquefied natural gas makes provisions for the factory to produce 13.6 million tonnes of liquefied natural gas per annum in the first stage. As regards the extraction of natural gas amounting to 71 billion cubic metres per annum, the factory proposes producing liquefied natural gas amounting to 30-45 million tonnes per year. In 2006, it was suggested that the initial commissioning of the liquefied natural gas factory will occur in 2011.
Commissioning of the main overland gas pipeline between Vidyaevo and Volkhov, extending approximately 1,335 km depending on the field development options, was proposed for the period 2014 – 2016 by plans elaborated in 200651. According to authorities in the Murmansk oblast, the region will receive 4.7 billion cubic metres of gas per year following the launching of the gas pipeline, which will allow the oblast’s energy complex to switch to gas in the future.52
In July 2006, Sevmorneftegaz (a wholly-owned subsidiary of Gazprom) carried out drilling of exploratory well number 7 on the Shtokman gas condensate field, and confirmed an increase in gas reserves by more than 600 billion cubic metres. The sea depth at the point of drilling is 340 m. The drilling was conducted by the semi-immersed Deepsea Delta drilling rig, in cooperation with the Norwegian company Hydro.
Here’s a thought…
Potential reserves from the Shtokman and Prirazlomnoe fields amount to 3.66 trillion cubic metres of gas and 250 million tonnes of oil.
The work was carried out on the orders of Sevmorneftegaz which owns the licenses in relation to the exploration, geological study and extraction of gas and gas condensate on the Shtokman field. The general contractor is the Gazflot limited liability company (a wholly-owned subsidiary of Gazprom).53
Here’s a thought…
We do not believe there will be any development of the Shtokman field in the near future. Russia is lacking experience and technology in the offshore industry. There are dozen of other offshore fields more accessible, and cheaper to develop. Furthermore, in Russia there is a general lack in willpower to make long-term investments. Why would Russia begin with the most expensive and difficult project, when their offshore oil and gas development is only in the making? It would be like eating the cake from the middle - Kristin Jørgensen, Bellona Foundation.
Foreign company participation in the development of the Shtokman field
Thus far, Russia has not had any offshore experience in extracting gas under such difficult environmental and climatic conditions. Implementation of the project will require application of advanced technologies with regard to underwater extraction and the transport of gas, as well as a huge amount of capital investment.
The project for developing the Shtokman gas condensate field suggests implementation on the basis of the production sharing agreement. Such an agreement allows the rights to extract and sell gas to be transferred to an international consortium of enterprises, 51% of which would be owned by Gazprom.54
In September 2005, Gazprom drew up a list of possible participants in the consortium for developing the Shtokman field. This shortlist included five foreign companies: the US companies ConocoPhillips and Chevron Texaco, the French company Total, and the Norwegian companies, Statoil and Hydro. Gazprom’s chief executive declared that the final composition of the consortium of developers for the Shtokman field would include two or three companies. However, at the beginning of October 2006, Gazprom’s chief executive, Aleksey Miller, declared that Gazprom had decided to develop the Shtokman field project independently, and the participation of foreign companies was reduced to the role of subcontractors. 55
On July 13 2007 Gazprom chose the French company Total as its main partner to develop the Shtokman gas field. The deal was announced one day after French President Nicolas Sarkozy and Russia's Vladimir Putin spoke on the phone about energy cooperation and other issues.
Here’s a thought…
“Statoil is rejoicing, calling it the day of its entrance into the project a happy day for the Braent’s Sea,” said Bellona President Frederic Hauge. - It’s a sad day for the Barents Sea. The Arctic and Barents Sea ecosystem is experiencing a colossal load, which will only increase with the development of the Shtokman field.” 56
Russia's state-controlled natural gas giant Gazprom announced on October 25 2007 the second partner of the project; StatoilHydro. Again, Vladimir Putin himself announced the deal between Gazprom and StatoilHydro by phone to the Norwegian Prime Minister, Mr. Jens Stoltenberg. During this conversation the Russian President Vladimir Putin his hope that Russian-Norwegian cooperation through the large-scale project would provide a boost for bilateral ties in other areas.
StatoilHydro and Total will not own any of the gas resource, but they will have a share in the Shtokman Development Company that will finance, own and build the infrastructure of the Shtokman field. The plans will include construction of wells, infrastructure, LNG-plant and pipelines. In the Shtokman development company Gazprom has a 51 % interest, and Total and StatoilHydro will have 25% and 24%, respectively. The implementation of the Shtokman project is dependant upon the final investment decision which will be taken in 2009. At that time it will be decided if, and how, the field will be developed. Total and StatoilHydro are expected to pick up the bill. According to Samuel Goldsmith in the Russian consultant group 2K Audit Gazprom will not invest in the Shtokman project prior to 2009.57
Here’s a thought…
“There is no doubt this is a political deal between Vladimir Putin and Jens Stoltenberg. The bilateralization of the relationship between Norway and Russia can create problems for the Norwegian government and StatoilHydro. StatoilHydro is very small compared to Gazprom. There is a danger the Russians may trample on the Norwegians, says Jakub M.Godzmirski, senior researcher in the Norwegian Institute of International Affairs (NUPI) to Teknisk Ukeblad.58
From the outset of discussions relating to the Shtokman project, there was an intention to transport large-scale supplies of liquefied natural gas to the North American market, particularly to the USA. However, these plans changed in the autumn of 2006. In October that year, Gazprom decided to prioritise the European market in supplying pipeline gas from the Shtokman field as compared with liquefied natural gas. The Shtokman field will, according to Gazprom, become the resource centre for Russian gas exports to Europe through the existing Nord Stream submarine gas pipeline (the North Europe Gas Pipeline)59. The supply of liquefied natural gas to the USA is proposed as part of the progressive development of the Shtokman field.60
For further reading about transportation we recommend chapter two of this report.
Future production sharing agreement:
Russia is inclined towards rejecting the production sharing agreement plan. At a meeting of the Security Council of the Russian Federation in December 2006, it was declared, in particular, that the practice of concluding production sharing agreements for offshore fields is not in keeping with Russian national interests61. This is linked to the fact that investors participating in such agreements own a part of the raw materials recovered. The argument behind the decision in the Security Council is that, since raw materials prices may increase, an agreement of this nature may become unprofitable for the State.
Gas resources in the Kara Sea
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Fig. Fields in the Kara Sea.
Natural gas has become a serious foundation for the Russia power industry, in connection with which the preparation of the gas industry’s raw materials base has become one of the main components of economic policy. Gas export and “energy security” is also a main component in Russian foreign policy.
All the gas condensate fields surveyed on the Yamal Peninsula and the adjoining shelf of the southern part of the Kara Sea belong to the category of large-scale areas of oil and gas accumulations.
On the shelf of the Kara Sea, seven large-scale structural folds have been established. These are connected with the formation of the Rusanov and Leningrad gas fields which have already been opened, as well as the Nyarmey and Skuratov structures arranged 25 km off the coast of the Yamal Peninsula which are potential exploration sites. They are situated between the Malygin field (on the Yamal Peninsula) and the Rusanov and Leningrad fields (on the shelf) where up to 30 gas-bearing sites have been located.
According to several estimates and calculations of the category C3 reserves, the seams of several sites may each contain up to 2.5 trillion cubic metres of gas.
According to data obtained from a seismic survey, areas have been singled out 20 km to the west of the Kruzenshtern gas condensate field, opened on the west coast of the Yamal Peninsula, and within the limits of the Sharapova Koshka Islands and the surrounding shallow water shelf, which form the local structure in Sharapova. If preliminary data is confirmed by a detailed seismic survey, the opening of fields with reserves of up to 1 trillion cubic metres is considered possible.
The shelf of the southern part of the Kara Sea adjacent to the western coast of the Yamal Peninsula is considered a large-scale hydrocarbon reserve. This is despite the fact that the structure of the shelf in the oil and gas-bearing region of the Kara Sea has not been studied in detail. The contours of the first wells opened in the 14 gas sections on the Rusanov and Leningrad fields where total category C2 gas reserves are estimated at 9 trillion cubic metres remain uncertain.
Here’s a thought…
The oil and gas-bearing region of West Siberia has prospective resources totalling 56 trillion cubic metres of standard fuel. There is a high probability of prospecting not less than 15 trillion cubic metres of gas here by 2015. At the same time, creation on the basis of offshore gas fields arranged not far from the western coast of the Yamal Peninsula in the gas production centre of the Kara Sea could ensure the extraction of not less than 300 billion cubic metres of gas per year in 2015.
The western sea-based half of the multilayer (11 seams) Kruzenshtern gas field, the land-based reserves of which were affirmed by the State Committee on Mineral Resource Reserves as totalling 1,231 billion cubic metres, is also not much explored on the coastal shelf of the Yamal Peninsula.
At the large-scale structures of Nyarmey, Skuratov and Severo-Kharasav on the west coast of the Yamal Peninsula, which were revealed by a seismic survey, potential gas reserves total 4 trillion cubic metres.
The strategic programme for developing gas reserves in the south of the Kara shelf drawn up by the Gazprom State concern makes provision for the following phases:
• conducting a detailed field appraisal in preparation for development of the offshore part of the Kruzenshtern and Kharasav fields with a growth in reserves of 3 trillion cubic metres of gas;
• prospecting the Nyarmey, Skuratov, Morsk, Severo-Kharasav and Sharapov structures, studying the gas and oil areas which have been revealed, and an increase in С1+С2 reserves of not less than 7 trillion cubic metres of gas;
• conducting detailed field appraisals of the established Rusanov and Leningrad fields and an increase in С1+С2 reserves of 9 trillion cubic metres of gas.
Thus, the explored gas reserves in the southern part of the Kara Sea, together with the explored reserves contained in the Bovanenkov field, total 19 trillion cubic metres of gas. Such large reserves will, according to Gazprom, motivate companies in the oil and gas sector to establish a gas production centre in the Kara Sea which will allow an overall increase in gas extraction in the country to 800+ billion cubic metres per annum by 2025. 62
For your information:
The Kara Sea region
This region poses a challenge in terms of hydrometeorological and glacial conditions. The water depth exceeds 60 - 80 metres where the main part of the field is located. On the whole, the fields are largely gas-bearing and are situated 100-150 km from the shore.
The region around the Bays of Obsk and Tazov
This region differs from the preceding regions in terms of the extreme shallow water, the difficult ice conditions and the hydrological conditions which involve 50% salt water and 50% fresh water. The gas fields are located about 40 km from the coast.
According to data compiled by the All-Russian scientific research institute concerned with natural gases and gas technologies, the total potential resources in the waters of the Bays of Obsk and Tazov are estimated at 7.4 trillion cubic metres of gas. The central portion of the Bays of Obsk and Tazov has been studied in the greatest detail. An estimate of the localised resources and reserves in this section of the waters is 2.4 trillion cubic metres of gas. As of today, industrial category C1 gas reserves added by Gazprom in the waters of the Bays of Obsk and Tazov are estimated at 819 billion cubic metres.
The average annual increase in gas reserves over the period when work was carried out in the bays between 2000 and 2004 amounted to more than 200 billion cubic metres. Today, as a result of geological exploration work, 4 gas fields - Kamennom Sea, Severo-Kamennom, Obsk and Chugoryakhin - have been confirmed. The Severo-Kamennom and Kamennom Sea fields have been prepared for development. In order for Gazprom to carry out further exploration work in the waters of the bays, applications to obtain licenses to undertake geological study within the South Obsk, Aderpayutin, North Obsk, Tamba-Obsk and Sabet-Obsk sections have been drawn up and forwarded to the Russian Ministry of Natural Resources.
Realisation of the development of gas production on the resource base of identified and predicted fields in the Bays of Obsk and Tazov is planned jointly with fields located on the adjacent land. Equatorial and coastal fields are regarded as a single resource base for developing the gas production complex in the region. Gazprom considers the fields in the waters of the Bays of Obsk and Tazov to be facilities for immediate development in this region. The fact that fields have been revealed allows licenses to be obtained for exploration and extraction without holding auctions.
According to data compiled by the All-Russian Scientific Research Institute for Natural Gases and Gas Technologies, total gas production in fields in the first stage of development is estimated at approximately 30 billion cubic metres of gas per annum. Taking this figure as a basis, it is estimated that gas could be produced on a continual basis for a period of 15 years. The development of hydrocarbon resources on the shelf of the Bays of Obsk and Tazov will be realised taking into account the proximity of the Yamburg gas production complex. The proposed scenarios for developing facilities envisages the construction of installations for integrated gas treatment on which the complete, field-based preparation of well production is carried out, after which the gas is transported on to the gas compressor station in Yamburg for supply to the existing system of main gas pipelines.63
Oil and gas reserves in transit zones
In order to achieve an increase in offshore oil and gas reserves on the Arctic shelf, the Russian government instructed the Ministry of Natural Resources and the Federal Agency for subsoil regulation to develop new prospective fields on the European Arctic Continental Shelf.
Shelf transit zones (shallow areas of water with depths below 20 m and their low-lying shores) are considered significant for accelerated study. An analysis of their long-term prospects in terms of oil and gas-bearing capability was initiated by the “Sevmorgeo” State scientific production enterprise in 1999 when an expert appraisal of the oil and gas potential of the transit zones of all of Russia’s seas was conducted together with the All-Union Scientific Research Institute for Geological Exploration.
Here’s a thought...
In many large State companies, new technologies, by means of which oil may be pumped out from fractures and folds in old seams, also progress slowly. To rehabilitate the demolished infrastructure, and for the purpose of technological innovation, companies in Libya, Venezuela and Russia urgently require foreign assistance. In Russia private companies usually recover up to 50% of the oil contained in the well, as far as State companies are concerned, this figure is only 20%.
The unexplored oil and gas resources in the transit zone make up around 28% of the unexplored resources in the Pechora Sea. The ultimate potential resources in the transit zone have been determined as 3.7/1.6 billion tonnes of oil equivalent, of which 1.5/0.7 billion tonnes of oil equivalent is to be found at a sea depth of less than 10 m, and 2.1/0.9 billion tonnes of oil equivalent at a depth of 10 m. The proportion of oil in this predicted volume is estimated at 80%. Oil deposits in this transit zone, apart from the Varandey-Adz’vin zone, where they have already been revealed, are forecast to the east of Khoreyver hollow and at the Malozemel’-Kolguev monoclinal fold.
To the west of the Khoreyver hollow, as well as in the Pechoro-Kol’vin avlakogene, oil and gas condensate deposits are anticipated, while in the Korotaikhin hollow, the deposits are primarily gas. Not all the ultimate potential oil and gas resources in areas with depths of less than 10 m have been explored and belong to category D2, while amongst the resources from deeper sections of water (10 m), unexplored resources total 57% and belong to category С3+D1.64
Footnotes:
[48] “OIL AND GAS RESOURCES IN RUSSIA’S NORTH-WEST REGION AND THE FUTURE PROSPECTS FOR ITS DEVELOPMENT”, M.D. Belonin, O.M. Prishchepa (All-Union scientific research and geological exploration institute Back
[49] The “Giprospetsgaz” public company “Basis for investing in the project for developing, in the first instance, the Shtokman field involving the production and transportation by sea of liquefied gas”, vol. II - Technical solutions for producing liquefied gas. Book 8. Evaluation of the effect on the environment. Section 8.1 Offshore structures. Part I, archive number 6851.101.001.13.44.02.08-I St. Petersburg 2005 Back
[50] “ACTIVITIES UNDERTAKEN BY THE Sevmorneftegaz PRIVATE COMPANY IN THE DEVELOPMENT OF OIL AND GAS FIELDS ON RUSSIA’S ARCTIC SHELF”, Ivan N. CHERNOV, Sevmorneftegaz private company. RAO/CIS OFFSHORE 2005 Back
[51] The Giprospetsgaz public company - “Basis for investment in the integrated development of the Shtokman gas condensate field”. Back
[52] http://www.murman.ru/themes/oil-22092006.shtml 22.09.2006 Back
[53] http://www.lenta.ru/news2/2006/07/25/gazprom/ (2006 year) Back
[54] The challenge facing Shtokman, Pavel Prokhorov: http://www.expert.ru/world_business/2006/06/vyzov_Shtokmana/ (2006 year) Back
[55] GAS FROM THE SHTOKMAN FIELD WILL BE SUPPLIED TO THE EUROPEAN MARKET BY PIPELINE, report on Gazprom’s website, 09.10.2006, http://www.gazprom.ru/news/2006/10/091755_21270.shtml (2006 year) Back
[56] http://www.bellona.org/articles/stateoil_comment (2006 year) Back
[57] http://www.tu.no/offshore/article121290.ece (2006 year) Back
[58] http://www.tu.no/offshore/article118680.ece (2006 year) Back
[59] See above. Back
[60] Interview given by the President of the Russian Federation, V.V. Putin, 07.12.2006, http://www.kremlin.ru/text/appears/2006/12/115090.shtml (2006 year) Back
[61] Grib, N., “Vot kompaniya kakaya” - “Kommersant”, 11.12.2006. Back
[62] PRINCIPAL DIRECTIONS IN ESTABLISHING A UNIQUE OIL AND GAS PRODUCTION CENTRE ON THE SHELF OF THE KARA SEA Boris A. Nikitin, Gazprom, Lev I. ROVNIN, the Russian State oil and gas university named after I.M. Gubkina. RAO/CIS OFFSHORE 2005 Back
[63] RESULTS OF THE WORK CONDUCTED BY GAZPROM AND PREPARATION FOR DEVELOPMENT OF GAS RESOURCES IN THE WATERS OF THE BAYS OF OBSK AND TAZOV IN THE KARA SEA AND THE PROSPECTS FOR FIELD DEVELOPMENT, Boris A. Nikitin, Vladimir S. Vovk, the gazprom public company, Ya. MANDEL’, Valentin A. KHOLODILOV, the “Gazflot” limited liability company. RAO/CIS OFFSHORE 2005 Back
[64] STUDY OF THE TRANSIT ZONE - THE STRATEGIC TREND OF GEOLOGICAL EXPLORATION WORK ON THE RUSSIAN SHELF Gennadiy I. IVANOV, Mark L. VERBA, Yuri I. MATVEEV, Sergey A. NECHKHAEV, the “Sevmorgeo” State scientific production enterprise Yuri N. GRIGORENKO, All-Union scientific research and geological exploration institute. RAO/CIS OFFSHORE 2005 Back
