Start-up dates and production performance of seven technically challenging oil fields will determine what, if any, growth in Russian supply occurs at the end of this decade.
That is a key conclusion of “Russian Oil Supply-Performance and Prospects,” Oxford University Press, mid-2005, by seasoned Russian analyst John D. Grace of Earth Science Associates, Long Beach, Calif.
Fields already on production are capable of maintaining Russia’s 2004 production level, a bit above 9 million b/d, for several years.
Challenges for the seven Russian projects include offshore arctic or subarctic environments, complex geology, and remote locales in very hostile climates, Grace wrote.
“Whether these fields commence production on the schedules advertised in 2003 and 2004 or they are pushed back will determine what, if any, growth in Russian supply occurs at the end of this decade,” he said. “Start dates for Russian projects are notoriously optimistic.”
Russia’s oil backbone
Fields on line in 2003 will produce almost all of Russia’s oil through 2010 and perhaps more than half the country’s oil in 2020, Grace predicted.
The most important fields that are past their production peaks are TNK-BP’s Samotlor; Tatneft’s Romashkino; Rosneft’s (formerly Yukos’s) Mamontovskoye; Surgutneftegaz’s Fedorovskoye and Lyantorskoye; Khantymansiyskneftegazgeologiya’s Pravdinsko-Salymskoye; Lukoil’s Vatyeganskoye, Povkhovskoye, and South Yagunskoye; and Bashneft’s Arlan fields.
“If world prices of $50/bbl or more persist and there is no corresponding strong increase in operating costs, tariffs, and taxes-all of which would be expected to rise-a decline rate from postpeak fields of 1% annually could be held for several years,” Grace reckoned.
However, he points out that Russia has little hierarchy of operators such as in North America where smaller, lower-cost companies take over larger fields initially developed by majors and inject capital to increase or maintain production.
Growing fields
Five prepeak fields can contribute 900,000-1.5 million b/d/year to Russian supply, said Grace.
They are Rosneft’s (formerly Yukos’s) Priobskoye, Lukoil’s Tevlin-Russinskoye, Surgutneftegaz’s Tyanskoye, and Sibneft’s Sugmutskoye and Sporyshevskoye fields.
These five fields, he pointed out, contributed 35% of the 1.6 million b/d net increase in Russian production between 1998 and 2002.
Several scores of other fields have not hit their engineering maximums and will increase for years, Grace noted.
Meanwhile, a decline in operating costs since the 1998 devaluation of the ruble is still being felt but is unlikely to continue for more than a few years. He also cited tax effects.
“Taxes since Russian independence have consumed one quarter to one third of the export price for oil sold at the border.”
Key new projects
Russia has many discovered but nonproducing fields, Grace said.
Hundreds of fields discovered in the Soviet era that have received virtually no attention contain billions of barrels of oil and condensate and trillions of cubic feet of natural gas.
Most important to supply in the next 3-8 years are these major projects on the verge of production:
Lukoil’s Middle Caspian project, the ExxonMobil PSA’s Sakhalin I project, the Shell Joint Venture’s West Salymskoye project, Lukoil/ConocoPhillips’s Timan-Pechora project, Rosneft/Gazprom’s Prirazlomnoye project, and Rosneft’s Vankorskoye and Komsomolskoye projects.
New-field outlook
With 10 of 30 wells drilled at Sakhalin I, gas production is to start in fall 2005 and oil production in 2006 (OGJ Online, July 13, 2005). The plan is for 250,000 b/d of liquids output by 2010.
For the Russian Caspian to produce 250,000 b/d (liquids only) by 2010 as Lukoil predicted, “it will take three to four times the volume of liquids booked by Lukoil through the end of 2003,” Grace wrote.
In the Timan-Pechora basin, Lukoil et al. aim at a 400,000 b/d increase by 2010. Of more than 200 oil and gas fields in the basin, fewer than 10% have produced commercial oil although many of the undeveloped fields contain gas. Prirazlomnoye field, in 60 ft of water 35 miles offshore in the Pechora Sea, will build toward a 150,000 b/d peak from an as-yet uncertain start date.
In Western Siberia, Komsomolskoye has the potential to contribute more than 100,000 b/d but has produced at low levels since 1988. West Salymskoye and nearby fields aim for 116,800 b/d in 2007. Vankorskoye field, discovered in 1990, likely will produce 120,000 b/d, but the 2008 target appears wildly optimistic.
Russia, Grace reminds, also has billions of barrels of untapped condensate in Neocomian age gas reservoirs in Yamburg, Medvezhe, Yubileyskoye, and Zapolyarnoye fields and dozens of undeveloped gas fields in northern West Siberia.✦