SOVIET VENTURE MAY INCLUDE TENGIZ

More action on upstream joint ventures with the Soviet Union is surfacing.

Among the latest developments:

A protocol of intentions could add giant Tengiz oil field to a proposed Chevron Corp.-Soviet joint venture in exploration, production, and development in the Northeast Caspian Sea region. Tengiz is the largest oil field discovered in the world in the last 10 years, said Leonid 1. Filimonov, Soviet oil and gas minister.
British Gas plc is negotiating with Moscow on an upstream project covering one or two specific but undisclosed areas. Talks have just started, said Cedric Brown, managing director of British Gas exploration and production.

In addition, British Gas has sent a delegation to East Germany and is assessing the possibility of technology exchange in development of that country's gas industry.

As part of Moscow's beckoning to foreign oil operators, more information on Soviet Union petroleum geology will be available soon from branches of the Ministry of Geology.

France's Ste. Nationale Elf Aquitaine last month disclosed sparse information on the West's first "classical oil development contract" with Moscow (OGJ, May 28, P. 26).

The Soviets expect the pace of joint venture negotiations and international participation to pick up.

Filimonov said officials from Minneftegazprom, the oil and gas ministry, will begin to participate more broadly in areas where their expertise and knowledge can be of use.

The ministry is in close business contact with several U.S. oil companies in addition to Chevron.

TENGIZ STUDY

Chevron's latest accord calls for a feasibility study to determine whether Tengiz field, currently under development by the Soviets, should be added to a proposed joint venture for which an earlier study and related joint venture documents have been compiled. Results of the earlier study and possible terms of the proposed joint venture have not been disclosed.

"Our objective is to determine the feasibility of expanding the scope of the proposed joint venture to include one of the most significant oil provinces in the world," said Richard Matzke, president of Chevron Overseas Petroleum Inc., the Chevron subsidiary involved in talks with the Soviets.

"if our investigation is positive, and if both sides decide to proceed, we would hope to get on with production as quickly as possible."

Signing the agreement June 2 at the Soviet embassy in Washington were officials of the Soviet Ministry of Oil and Gas Industry, Chevron Corp., the Kazakh Soviet republic, and Tengizneftegaz, the potential Chevron joint venture partner.

The proposed project, called the SovChevroil joint venture, would involve exploration and production in an area of about 8,900 sq miles and includes multibillion barrel Tengiz field (see map, OGJ, Apr. 10, 1989, p. 86).

Potential reserves in place at Tengiz have been estimated by some Soviet authorities at more than 25 billion bbl, Chevron said.

Based on incomplete data, Soviet sources said, the field is believed to contain possibly as much as 35-40 billion bbl and 46 tcf of gas in place. At 25 billion bbl of original oil in place, recoverable reserves may be 10-11 billion bbl.

Moscow reports issued more than 2 years ago said Tengiz has about 16 billion bbl of oil in place, with about 6-7 billion bbl believed to be recoverable. Those estimates have been increased. Early this year the Soviets said Tengiz field boundaries have been expanded.

The pre-Caspian basin, focus of Chevron's study, is thought by U.S. and Soviet geologists to hold potential for discovery of other major oil fields.

A Chevron survey team of about 20 technical personnel plans a visit to the Tengiz area to begin the study. After that's complete, start of the proposed joint venture would still require approval by Chevron and the Soviet government.

U.S. TRADE GROUP

Chevron is a member of the American Trade Consortium (ATC), formed early in 1988 to pursue joint ventures for its members with Soviet partners through the Soviet Foreign Economic Consortium (SFEC). Other ATC members are Archer Daniels Midland, Decatur, III.; Eastman Kodak Co., Rochester, N.Y.; Johnson & Johnson, New Brunswick, N.J.; and RJR Nabisco and Mercator Corp., both of New York.

SFEC is made up of the Soviet Union's Ministry of Foreign Economic Relations, Bank for Foreign Economic Affairs, Ministry of Finance, Gosplan, Goskompriroda, nine industrial ministries, and more than 20 enterprises and production associations of those ministries.

ATC and SFEC signed a general trade agreement Mar. 30, 1989, in the Kremlin, covering issues such as currency, legal, tax, accounting, and human resource matters. Since then, ATC members and their prospective Soviet partners have continued working on about 25 joint venture project proposals.

PROCESSING PLANT

Commercial flow from Tengiz wells awaits completion of an oil and gas processing plant to handle highly corrosive well streams.

A plant spokesman told Oil & Gas Journal during a tour there late last month the first train is due on stream in late summer.

At the time of the tour, the train was estimated to be 90% complete.

Construction was delayed for 2 years because of local concerns about handling Tengiz gas, high in hydrogen sulfide. Because the gas contains as much as 25% H2S, a sophisticated air quality monitoring network and a related automatic shutdown system are part of the plant control scheme.

The plant eventually will have three trains, each with an oil capacity of 60,000 b/d. Civil work is nearly complete on the second train, scheduled to begin operation in 1992. A third train is planned for commissioning in 1993.

Full well streams will move to the plant, where each train will include separation and stabilization, gas purification, sulfur production, and gas liquids recovery.

Stabilized oil and dry gas will be shipped by pipelines. Sulfur and LPG will move out by rail.

Expected production from each train, in addition to oil, is 800 million cu m/year of dry gas and 450,000 tons/year of sulfur.

The plant is being built by a contract group made up of Partec Lavalin Inc. of Canada, Lurgi GmbH of West Germany, and Litwin SA of France.

DRILLING, PRODUCTION

With a discovery date reported variously as 1976 and 1979, Tengiz contains about 40 completed wells. Plans call for the field to have a total of 85 wells in 1995.

Described as a massive anticlinal fold, the deposit covers about 140 sq km. Average well depth is about 14,760 ft.

No large amount of testing was done until 1981 for lack of equipment to handle the high H2S wellstreams, and no wells can be produced steadily until the treatment plant is on stream.

Soviet personnel at Tengiz expect average well production to be 2,200-3,300 b/d at an average flowing wellhead pressure estimated at 6,300 psi.

G.N. Gogonenkov, senior deputy director of the Central Geophysical Expedition, said Tengiz wells have flowed at rates of as much as 8,000 b/d of oil.

Officials in the field are reluctant to disclose a reserve estimate. "It's too early to say because we still have not found the oil-water contact ... We don't know the capacity of the formation," said a spokesman.

With no production history and no well defined reservoir limits, estimating the field's potential is difficult.

Norman P. Jokerst, U.S.S.R. exploration coordinator for Chevron Overseas, said Tengiz production could begin in 1991.

TENGIZ RESERVOIR

The Tengiz oil column is at least 4,600 ft thick, Gogonenkov said in a presentation before more than 1,000 geologists and others attending last week's annual meeting of the American Association of Petroleum Geologists in San Francisco.

Production has been found as deep as 17,700 ft, said the paper coauthored by N.N. Lisovsky, director of the oil and gas ministry's geology department, and Yuri A. Petzoukha, head of the laboratory for the Institute of Geology and Exploitation of Combustible Fuels.

The field has no gas cap.

Tengiz crude is 46 gravity with 5.8% paraffin and 0.7% sulfur content. Viscosity is 0.27 cp, pour point minus 36 C.

The oil contains 18% hydrogen sulfide and 5% carbon dioxide. Gas-oil ratio is 2,150 scf/st-tk bbl.

Porosity averages 6.3% and is as high as 25%, and permeability averages 10 md. The reservoir is extensively fractured.

Initial reservoir pressure is 11,110 psig at 12,600 ft.

Reservoir temperature is 223 F., bubble point pressure 3,070 psig.

Existence of such a reservoir in three upper Devonian to middle Carboniferous biohermal and nodular limestones proves that vast liquid hydrocarbon accumulations can be found at great depths, the Soviets said.

BRITISH GAS

British Gas did not disclose the regions covered by its talks with Moscow.

The company is anxious to conduct Soviet exploration programs that would give it access to any reserves discovered, Brown said.

As Britain's largest gas supplier, British Gas could also be in the market for gas produced by the Soviets if the price is right. The company will be looking for new supply contracts in the mid-1990s, and the Soviet Union is seen as a source.

Negotiations for exploration acreage follow an agreement covering technology exchange with Sojuz Promgas, which is responsible for gas storage, research and development, and marketing in the U. S. S. R.

A delegation from Sojuz Promgas has visited British Gas to study storage technology and industrial use of gas in the U.K.

MORE SOVIET DATA DUE

In other Soviet developments, the West Siberian Research Institute and Concern Tyumen Geology, both branches of the U.S.S.R. Ministry of Geology, plan phased release of nonexclusive technical data.

Jebco Seismic Inc., London, said the branches plan release in three stages covering petroleum geology, a basin assessment report, a regional grid of seismic data of about 30,000 line km, and data packages of well and seismic data for specific areas.

The information covers nearly all of western Siberia between Tyumen and the Kara Sea.

Release is scheduled for fourth quarter 1990 and first quarter 1991.

The report will include discussion of the roles of various scientific research institutes, production associations, and branches of the ministry; exploration/production history; maps and cross sections; stratigraphy, source, and reservoir rock data; primary trapping mechanisms; sample field descriptions; and a statement of cumulative production and estimated remaining reserves categorized by area and risk.

Separately, Jebco and another arm of the ministry plan to release another series of reports describing the regional geology and main petroleum characteristics of 11 petroliferous sedimentary basins in former eastern bloc countries.

The data on East Germany, Poland, Czechoslovakia, Hungary, Romania, Yugoslavia, and Bulgaria are compiled from public domain data, much of it unpublished outside Comecon countries. Text, maps, and other enclosures are expected to be available in November.