Eugene M. Khartukov
World Energy Analysis & Forecasting Group
Moscow
The poorly explored and mostly undeveloped hydrocarbon resources of the Russian Far East (RFE) are large enough to support several large scale projects, with an aggregate exportable surplus of as much as 30 billion cu m/year of gas.
However, implementation of these new development projects will depend heavily on invited foreign participation. At the same time, the relatively high investment risks and questionable profitability of these megadollar schemes, which require sizable discoveries to pay off, are likely to delay the envisaged projects which will hardly yield by the year 2000 more than 10 bcm of Russian gas for export.
RESOURCE BASE
The RFE hydrocarbon resource base is made up of fields located mainly on or near Sakhalin Island, including shelf areas of the Sea of Okhotsk, and in central and southwestern Yakutia (Fig. 1).
A number of prospective but relatively small areas for oil and gas exploration are in the Khabarovsk and Maritime Territories and the Amur and Kamchatka regions. However, exploration maturity of those areas is as a rule quite low since they do not present significant commercial opportunities currently and, most probably, until the year 2000.
One of the RFE features is that the most promising hydrocarbon-prone areas are located on the continental shelf. Estimates show that about half the total prospective offshore areas of the former U.S.S.R., or more than 4 million sq km, are in the RFE. However, so far exploration has been conducted mostly on the Sakhalin shelf and mainly in its northern part. Prospecting activities in other areas are in their initial stage.
The following characteristics of the hydrocarbon resource base of the RFE is based on the resource classification adopted in Russia.
CRUDE OIL
At Jan. 1, 1993, 59 oil fields were known in the RFE, including 11 in Yakutia, three in the Magadan region, and 45 in the Sakhalin region, five of which are on the shelf of the Sea of Okhotsk.
Initial potential resources in the RFE were estimated as of Jan. 1, 1992, at 8,922.3 million tons, including 94.6 million tons of cumulative production since the start of operations.
Reserves of A + B + C1 categories made 327.8 million tons; C2 category had 283.7 million tons; C3 had 79.3 million tons; and D1 + D2 had 8,137 million tons.
Remaining oil in place balance reserves in the RFE (A + B + C1 + C2) were estimated at about 2.8 billion tons, of which more than 50% accounted for the C2 category. In Yakutia, oil in place balance reserves were estimated at 1.1 billion tons, of which around 60% accounted for the C2 category; in the Sakhalin region correspondingly about 1.6 billion tons and 45%; in the Magadan region 40 million tons and 65% (Table 1).
RFE's total recoverable balance oil reserves (A + B + C1) were estimated at 327.8 million tons, of which 293.8 million tons account for C, category, including 131.4 million tons in Yakutia. The RFE's recoverable balance oil reserves of C2 category are estimated at 283.7 million tons which are shared approximately equally by Yakutia and Sakhalin Island.
So far, 11 oil fields, 14 oil and gas fields, 17 gas and oil fields, and 17 oil, gas, and condensate fields have been discovered in the RFE. Of those, 24 are being developed. They are all located in the Sakhalin area.
Seven fields are prepared for commercial development, including three in Yakutia and four in Sakhalin; 15 fields are under exploration (six in Yakutia, six in the Sakhalin region, three in the Magadan region).
The other nine fields, all in the Sakhalin area, are under conservation. About 95 million tons of oil have been produced in the RFE since the start of operations until Jan. 1, 1992.
The 170,000 sq km Sakhalin continental shelf has the highest exploration maturity and petroleum potential among the RFE offshore territories. Oil and gas exploration on the island's shelf was carried out since 1976 jointly with Japan's Sakhalin Oil Development Cooperation Co. under the general agreement signed by Soviet and Japanese officials in January 1975.
The operations conducted during 1976-82 in the northeastern part of the Sakhalin shelf resulted in discovery of two oil, gas, and condensate fields, Chaivo and Odoptu-More. Later two comparatively large oil, gas, and condensate fields, Piltun-Astokhskoye (1987) and Arkutun-Daginskoye (1989), were discovered in the same area without foreign participation.
The reserves of the only two oil, gas, and condensate fields, Odoptu-More and Chaivo, considerably exceed oil and gas reserves onshore Sakhalin, whereas well flow rates here are many times higher than at onshore fields. The density of predicted recoverable reserves on the Sakhalin shelf is estimated at 25,000 tons/sq km.
As of Jan. 1, 1992, 18 prospective areas were prepared for deep drilling in the RFE. Prospective oil in place reserves of category C3 in the RFE are estimated at 79.3 million tons and predicted reserves (D1 + D2) at 8,137 million tons. Undiscovered oil resources are mostly bound with prospective areas of the Sakhalin region (36%) and Yakutia (54%).
NATURAL GAS
The RFE had 92 known gas fields as of Jan. 1, 1992, including 30 in Yakutia, 55 in the Sakhalin region, four in the Kamchatka region, two in the Magadan region, and one in the Khabarovsk territory.
Of those, 26 were in commercial production (22 in Sakhalin and four in Yakutia), 15 were prepared for commercial development (seven in Sakhalin, six in Yakutia, two in Kamchatka), and 30 were under exploration/appraisal (15 in Yakutia, 10 in the Sakhalin region, two in the Magadan region, two in the Kamchatka region, and one in the Khabarovsk territory (Table 2).
Potential initial gas resources in the RFE were estimated at 24,210.5 bcm, including cumulative gas production and losses of 44.9 bcm. Remaining reserves of categories A + B + C1 made 1,597.6 bcm; category C2 had 614.1 bcm; category C3 had 255.1 bcm; and D1 + D2 had 21,698.8 bcm.
Balance reserves of natural gas concentrate mainly in Yakutia (0.96 trillion cu m of categories A + B + C, and 0.38 tcm of category C2) and in the Sakhalin region (600 bcm and 220 bcm, respectively). Reserves of these categories in the Magadan region and in Kamchatka, taken together, did not exceed 1.5% of the total RFE's gas reserves (Table 2). By the beginning of 1992 balance reserves of categories A + B + C, in the RFE were depleted by less than 3%.
Virtually every relatively large gas field in the RFE contains stable condensate in volumes sufficient for commercial production. Gas condensate content in Yakutia's gas fields varies from 570 kg/cm and in Sakhalin fields 9-160 kg/cm. As of Jan. 1, 1992, total recoverable condensate reserves of categories A + B + C1 were estimated at around 25 million tons onshore, mainly in Yakutia, and 40 million tons offshore (off Sakhalin).
At the beginning of 1992 prospective gas resources of category C3 were estimated at 255 bcm and predicted reserves D1 + D2 at 21.7 tcm. More than 20 gas prone areas were prepared for deep drilling, with their estimated prospective reserves amounting to about 220 bcm (Table 3).
The prospects for new oil and gas discoveries and major reserve additions are definitely bound up with sedimentary basins of the RFE continental shelf. In addition to the most explored areas off northeastern Sakhalin, fairly high geological perspectives are offered by the North Okhotsk (or Magadan) shelf with thickness of sediments ranging from 2,500-5,000 m.
Total prospective area of the shelf, which is about 300 km wide, amounts to 175,000 sq km. Within the North Okhotsk shelf there have been identified numerous vast structures of high amplitude (75-100 m). However, none of them has been prepared for drilling. Potential hydrocarbon resources of this area have been estimated at 1 billion tons of liquids and 1.5-2 tcm of gaseous hydrocarbons.
Even less explored is the West Kamchatka shelf with its prospective areas of 115,000 sq km. No wells have been drilled on this shelf so far. However, commercial gas discoveries in adjacent onshore area of the Kamchatka peninsula and similarity of its Paleogene-Neogene sediments with those of the Sakhalin shelf make this offshore area one of the most attractive. Potential recoverable resources of liquid hydrocarbons on the West Kamchatka shelf are estimated at 500 million tons and those of natural gas at 750-1,000 bcm.
Substantial discoveries of hydrocarbons are expected also on the shelf of the Bering Sea, especially in the Anadyr, Khatyr, and Navarin troughs, where density of predicted recoverable reserves of oil is estimated at 14,800 tons/sq km. The Karagin-Olyutor zone of the Bering Sea's shelf with thickness of its sediments from 3,000-4,000 m is also considered a fairly promising oil and gas prospect.
DEVELOPMENT, PRODUCTION
Despite substantial hydrocarbon reserves, oil and gas production in the RFE is relatively low and concentrates almost entirely in the northern part of Sakhalin and the basin of the Vilyui River in Yakutia.
Crude oil production has been declining for several years and dropped from 2.61 million for is in 1985 to 1.67 million tons in 1992 (Table 4). output of condensate increased from 0.03 million tons in 1985 to 0.15 million tons in 1992. Natural gas production increased from 1.8 bcm to 3.4 bcm in 1991 but slipped to 3.3 bcm in 1992.
In Sakhalin hydrocarbons are extracted by Sakhalinmorneftegaz, which exploits around 35 onshore oil and gas fields scattered along the northeast coast of Sakhalin island.
Crude oil is produced at 28 fields, including four pilot projects. The largest oil producing fields include Okha Tsentral'naya, Mongi, and Mirzoyeva, each of which yielded in 1992 about 0.3 million tons of crude and condensate and provided altogether 55% of total oil production in Sakhalin that year.
The first two fields are already fairly exhausted (Table 4) and are mainly operated by pumps. Crudes are mostly low sulfur, low paraffinic, and resinous with specific gravity ranging from 0.8-0.9 kg/cm (26-45 API) and viscosity from 100-3,000 centistokes.
At the end of 1992 total oil well stock operated by Sakhalinmorneftegaz stood at 2,292, of which 1,839 were producing wells. Average flow rate per producing well has been continuously declining and dropped to less than 2.5 tons/day in 1992 compared with 3.8 tons/day in 1985.
More than four fifths of current oil production is provided by pumping methods with a share of flowing (natural drive) output having fallen from 34% in 1985 to 13% in 1992. At the same time, due to intensive waterflooding, water cut of lifted oil water mixture increased to 82% from 70%.
Sakhalin's natural gas is produced both from pure gas wells, which provide 90% of total gas output, and in association with crude oil from major oil/condensate and oil/gas fields such as Mirzoyeva, Ust-Evay, Mongi, and Volchinka, which accounted altogether for almost 1.5 bcm in 1992 or more than 85% of Sakhalin's gas output.
In particular, the recently commissioned Mirzoyeva oil-condensate field, 2 km west of Okha, yielded more than 850 million cu m of gas, and Ust-Evay condensate field, discovered 60 km north of Nogliki in 1986 and not yet put on production by yearend 1992, produced nearly 300 million cu m.
At the beginning of 1993, total gas well stock of Sakhalinmorneftegaz was 80, of which 51 were producing.
Average flow of gas wells increased from 54,000 cu m/day in 1985 to more than 85,000 cu m/day in 1991 and 1992. At the same time, due to a fuller utilization of associated gas (more than 61% in 1992 vs. less than 18% in 1985) the volume of flared gas decreased to 125 million cu m/year from 1.1 bcm/year. By 1995 Sakhalin associated gas is expected to be entirely utilized.
In Yakutia oil and gas are produced by two state enterprises: Yakutgazprom and Lenaneftegazgeologiya. The former produces oil and gas from the following fields under development: Ust-Vilyuiskoye, Sredne-Vilyuiskoye, Severo-Nelbinskoye, and Tolon-Mastakhskoye.
During 1985-92 the enterprise increased its natural gas production from 995 million cu m to 1.538 bcm; crude output from 9,000 tons to 58,000 tons, and gas condensate production from 25,600 tons to 74,000 tons.
As of yearend 1992, gas well stock of Yakutgazprom was 52 wells, of which 26 were producing wells. Operating oil well stock was four wells, all producers.
Lenaneftegazgeologiya is mainly engaged in geological prospecting in Yakutia. At the same time it produces small quantities of oil and gas on fields that are being prepared for development. Its crude oil production in 1992 was as low as 5,000 tons.
Developed oil reservoirs in Yakutia are characterized by low initial formation pressures and high viscosity of oil, which complicates exploitation and requires maintenance of formation pressure.
More than 85% of gas production in Yakutia comes from the following four producing fields: Ust-Vilyuiskoye, Tolon-Mastakhskoye, Sredne-Vilyuiskoye, and Severo-Nelbinskoye. In addition, around 170 million cu m/year of gas is produced at Sredne-Botuobinskoye oil-gas-condensate field, which is exploited concurrently by Lenaneftegazgeologiya and Yakutgazprom.
FUTURE HYDROCARBONS
Future hydrocarbons production in the RFE depends basically on further exploration and development of oil and gas fields on the Sakhalin shelf and in Yakutia. This requires substantial material and financial resources for an appropriate development of transport infrastructure and oil processing facilities.
The study assumes that, under the base scenario by means of mobilizing domestic resources and attracting foreign investments, production of liquid hydrocarbons can be increased by 2005 to 8.5 million tons/year and natural gas to 20 bcm/year (Table 5).
As before, production of liquid hydrocarbons will mainly come from the Sakhalin region, which will provide by 2005 around 6.4 million tons/year of crude and 0.6 million tons/year of condensate. Liquid hydrocarbons output in Yakutia will grow more than 10 fold compared to 1992, up to 1.5 million tons/year, of which 0.3 million tons will account for condensate.
The bulk of liquid hydrocarbons produced in the Sakhalin region (5 of 7 million tons in 2005) will be transported for processing to the Khabarovsk territory. This will allow to better satisfy the RFE's oil demand with its own supplies and to curtail oil deliveries from West Siberia (from 8.2 million tons in 1992 to 4.5 million tons in 2005).
Since large oil processing facilities will unlikely be built in Sakhalin before 2005, virtually all the remaining oil output of 2 million tons will be available for export to outside the RFE. As regards Yakutia, all the projected production of liquid hydrocarbons will be used for local needs.
Natural gas production in the RFE will also come mostly from the Sakhalin region, where it will grow from 1.7 bcm in 1992 to 16 bcm in 2005. The bulk of it, 13.5 bcm, will be transported to Khabarovsk, including 10 bcm in transit for export. Gas production in Yakutia in 1992-2005 will increase from 1.54 bcm/year to 4.0 bcm/year. All the gas produced will be consumed internally.
Under the optimistic scenario, the RFE indigenous production of liquid hydrocarbons would enable the region to reduce its oil dependence from West Siberia and to increase its export potential. Besides, incremental production of liquid hydrocarbons could be processed at module plants in Sakhalin and Yakutia and at upgraded refineries in Khabarovsk and Komsomolsk-on-Amur.
Natural gas production will reach 37 bcm in 2005 and will be shared more evenly between Yakutia and Sakhalin: 20 bcm and 17 bcm, respectively. Such substantial gas production growth is possible in case of successful realization of the earmarked export-oriented projects of developing gas resources of both Yakutia and Sakhalin.
Under the pessimistic scenario, liquid hydrocarbons production in the R.FE will rise by 2005 to 6 million tons/year, including 5 million ions in Sakhalin and 1 million tons in Yakutia. Gas production will increase to 14 bcm in Sakhalin and 3 bcm in Yakutia. This will palpably limit the exportable surplus of both crude oil and natural gas and will restrict the RFE consumption of both liquid and gaseous fuels.
It is noteworthy that in 1991 a concept of a large-scale, export-oriented development of Yakutian and Sakhalin gas was worked out in the then-U.S.S.R. (the Vostok project). This scheme envisaged construction of a pipeline system that would pass through the western and central Yakutia, the Sakhalin, and the Amur regions, the Khabarovsk and the Maritime Territories, North and South Korea, and reach Japan.
The projected gas system was to be 6,735 km long with pipe diameter of 1,420-1,020 mm and throughput of separate sections varying from 23-16 bcm/year. The gas pipeline was anticipated to satisfy RFE requirements in gas and to facilitate annual export of up to 20 bcm of gas by 2005.
At present a feasibility study is being conducted on a similar gas export scheme. Like the Vostok project, it envisages exports of up to 20 bcm of Yakutian and Sakhalin gas a year to North and South Korea and Japan. China may possibly be included in the importers' list. However, a possibility is considered of supplying Japan with liquefied natural gas instead of using a subsea pipeline. This would require construction of a large gas liquefaction plant with capacity of around 6 million tons/year of LNG and an appropriate export terminal.
In our opinion, such a project is difficult to get off the ground due to a number of problems such as political and economic instability in Russia, a need of large frontend investments, divergence in interests of possible partners, etc. Therefore, the probability of its implementation is quite low and it is considered only within our optimistic scenario of the region's oil and gas developments.
A more plausible case of securing gas export from the RFE is the projected construction by 2000 of an export pipeline to transport gas produced in Sakhalin. Under our base scenario, exports of about 10 bcm/year will be handled by 2005 along the route Lunskoye to Komsomolsk-on-Amur to Khabarovsk to Dalnerechensk to Russia's state border with North Korea.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
