Russian Offshore: Tapping the Potential Part 2: The Caspian
Mark Thomas
While the Arctic region is only now opening up its doors, another Russian offshore sector is already forging head with projects – the northern part of the Caspian Sea.
The shallow waters here have seen companies like Lukoil establish itself as a major force in the region, in many sectors such as Azerbaijan as well as Russia’s. With eight large fields discovered and 16 prospective structures identified, recoverable reserves are already put at more than 1 billion tons of oil equivalent.
Last year Lukoil produced first oil from the Yury Korchagin field, discovered in 2000. The ice-resistance production facility is expected to produce recoverable reserves of nearly 29 million tons of oil and 63 Bcm of gas. The operator has invested around $1 billion in this project so far. This pioneering field will be followed by the planned development of the Vladimir Filanovsky field in 2014, and 2 years later the two gas-condensate discoveries Sarmatskoye and Khvalynskoye, all of which will add to the growing logistical infrastructure being established in Astrakhan.
Lukoil estimates a requirement for up to 28 new platforms and more than 1,000km of pipeline to develop these and other oil fields in this area over the next 10 years, representing several billion dollars more of investment.
Many observers now see the Caspian as Russia’s proving ground for testing its capabilities for operating large-scale offshore projects, which can then be transferred to the offshore continental shelf.
Other players have also recognised this. Sweden’s Lundin Petroleum is aiming to resume appraisal of its Morskaya oil discovery in the Russian sector of the Caspian once discussions with potential new partners are complete. The field, discovered in 2008, lies in the Lagansky block where Lundin has recently completed its work program for the year, including the acquisition of 103 square kilometers of 3D seismic.
Far East
Russia’s highest profile offshore sector thus far has of course been Sakhalin, where the Sakhalin I and II projects have established production from this harsh-environment region, and with the required foreign contributions in terms of investment and technologies.
The shelves of the Far East and also Eastern Siberia are known to have highly-promising prospects for large-scale developments, with potential recoverable resources put at billions of tons of oil equivalent. These reserves are mostly concentrated in the Sea of Okhotsk and the Chukchi, Bering and East Siberian Seas. More than 20 oil and gas bearing basins have been identified.
But the Sakhalin shelf very much leads the way, with Exxon, Shell, Marathon and others have already accomplished much to establish producing projects in the eastern and north-eastern areas. ExxonMobil subsidiary Exxon Neftegas Limited recently started up production from the Odoptu field at the Sakhalin-1 project, with the field expected to add up to 11 million barrels (1.5 million tons) to Sakhalin-1 oil production this year (2011). The startup is on schedule and within development cost expectations, it says.
Development of Odoptu has included world-class performance in the drilling and completion of seven extended-reach wells. The Sakhalin-1 project utilises one of the world’s most powerful land-based rigs, which drilled horizontally under the Sea of Okhotsk to the Odoptu oil reservoir more than 9 kilometers offshore.
The Sakhalin-1 project includes the phased development of the Chayvo, Odoptu and Arkutun-Dagi fields, with an estimated total resource of 2.3 billion barrels (307 million tons) of oil and 17 trillion cubic feet (485 billion cubic meters) of natural gas. Chayvo, which was the initial phase of the project, began producing in 2005. Odoptu will produce around 30,000 barrels per day in 2011, with total output at Sakhalin-1 expected to hit 156,000 b/d.
Future project phases will see the development of the Arkutun-Dagi field as well as expanded gas production and sales from the Chayvo field. These later phases will sustain production well into the future, says the operator.
The main immediate development activity going forward in this area is on Gazprom’s Sakhalin III project, where as part of the project it has opted for a subsea production system to develop the Kirinskoye field.
Significantly, this will be the country’s first all-subsea (subsea-to-beach) development, to be carried out by FMC Technologies. FMC recently signed a letter of intent for the Grenland Group to fabricate and deliver a manifold and foundation plus two protection structures for use on the field. Delivery is scheduled to start in the second quarter of 2011 and the total weight of the hardware will be around 450 metric tons.
The field lies in water depths of approximately 90 metres within the Kirinsky block of the Sakhalin III project, 28 kilometres offshore Sakhalin Island. Gazprom plans to perform follow-up exploration drilling and studies over the next 3 years, it says.
Sakhalin III is also made up of the Vostochno-Odoptinsky and Ayashky blocks. Gazprom estimates current discovered gas reserves within the Sakhalin III area at 1.4 Tcm. The gas will be exported through the Sakhalin-Khabarovsk-Vladivostok pipeline system.
On top of the above offshore sectors, Russia’s emerging plays also include other high-potential areas including the Baltic Sea, Black Sea and Azov Sea, where exploration has been carried out or is underway, and where in some cases developments have taken place.
The number of potential upcoming development projects throughout Russia’s offshore sector are almost too numerous to mention. But the sector looks set to become one of the world’s necessarily most innovative and industrious offshore plays, where the adaptation of existing technologies and the adoption of new breakthroughs will both be required if Russia’s offshore future is to match its breathtaking onshore past.