PROFITS, PROGRESS ON SOVIET VENTURES OUTLINED

The Soviet Union has singled out Canadian Fracmaster Ltd., Calgary, for special praise regarding quick implementation of its joint venture with the U.S.S.R. and for demonstrating such enterprises can earn profits in a relatively short time.

That stands in sharp contrast with the tentative agreement seen as the flagship of the foreign joint venture movement in the U.S.S.R., Chevron Corp.'s proposal to add supergiant Tengiz field to its Soviet venture, which has stalled amid controversy (OGJ, Aug. 5, p. 14).

Meantime, joint venture deals continue to be pursued even as the Tengiz controversy stirs. Among the latest:

• Canadian Fracmaster, the first foreign company to execute a Soviet joint venture deal, has a protocol involving joint operation of three oil and gas fields in Tomsk province, Izvestia reported.

• A unit of Italy's state controlled Agip SpA joined an international group designed to upgrade the Soviet refining and petrochemical industries, according to press reports. The Soviet refining industry, the world's second largest, has 30 refineries with combined throughput capacity of 10 million b/d.

• Global Natural Resources, Houston, agreed to a joint venture in Tatarstan to install oil and gas field vapor recovery systems.

• Panoco U.S.S.R. AG, a unit of Panoco Inc., Nyon, Switzerland, and Tatneft Oil and Gas Association, Almetyevsk, U.S.S.R., hope by Oct. 1 to register Blue Kama joint venture in Tatar Republic. Blue Kama would develop seven areas in Tataria with combined oil reserves estimated at 1.7 billion bbl in several fields.

• Halliburton Co. reached an interim agreement with Volgogradneftegeophysika (VNG) and PO Prikaspyburneft (PSN), Soviet enterprises based in Volgograd, Russian Republic, to form a joint venture to provide oil field services to international and Soviet exploration and production companies operating in the Volga region of the pre-Caspian depression. Pending formation and startup of the venture, units of Halliburton Energy Services Group, supported by VNG And PSN, will provide services on request.

FRACMASTER SUCCESS

Canadian Fracmaster signed its first joint venture agreement with Tyumen Province's Yugansk Oil and Gas Production Association in March 1989. Fracmaster Pres. Ron Bullen said in March 1991 his company had recouped its initial investment after 2 years and was starting to make a substantial profit from operations (OGJ, Mar. 25, p. 30).

Fracmaster had completed about 150 frac jobs in the U.S.S.R. by last April, and the number was expected to reach close to 200 this summer. The goal is 1,000 frac jobs/year and 100,000 b/d of additional oil production through well stimulation.

The Soviet monthly magazine Neftianoye Khoziaistvo (Oil Industry), official organ of the U.S.S.R.'s Ministry of the Oil and Gas Industry, said well production increased from a minimum of 15 b/d to a maximum of more than 500 b/d following the frac jobs. Average increase per stimulated well was 127 b/d.

The Soviet magazine article placed the average cost of a frac job in Tyumen Province's Yugansk district at $70,000-100,000 (Canadian). It added the period required to recoup expenses for each well stimulation did not exceed 9-10 months.

"This demonstrates the indisputable profitability of hydraulic fracturing as a method of stimulating well productivity," Neftianoye Khoziaistvo said."No decrease in well productivity was observed following any of the first 76 frac jobs."

The Yuganskfracmaster joint venture, owned 51% by the Soviet Yugansk Oil and Gas Production Association and 49% by Fracmaster and Royal Dutch/Shell Group, has its production base in the town of Mamontovo. Initial frac jobs were in giant Mamontovo field, one of western Siberia's largest. It lies just south of the middle reaches of the Ob River in the Surgut district.

Discovered in 1965, Mamontovo field went on stream in 1970. Main target for the frac jobs is a 26-82 ft pay zone (AS-4) at a depth of about 6,234 ft.

Production is mainly from Lower Cretaceous. Porosity is 15-30%, averaging 18.8%. Permeability also is good.

Yield of Mamontovo wells before stimulation ranged from "insignificant" to more than 630 b/d. Water cut is 2837%, and initial AS-4 reservoir pressure is 2,850 psi.

Under the Yugansk joint venture agreement, Fracmaster gets a 25% share of production gains, Shell 25%, and the U.S.S.R. 50%. The increased production is sold abroad for hard currency.

The Soviets have been familiar with hydraulic fracturing technology for 30-40 years. But, according to Neftianoye Khoziaistvo, the methods used frequently provided unsatisfactory results.

"Equipment employed had limited capacity, materials were of poor quality, and the technology was obsolete."

By 1994, the Soviets hope to organize efficient production of proppants and fracturing fluids, They will take other steps leading to a reduction in Yuganskfracmaster's hard currency expenses and to greater profits.

Soviet personnel are being trained in use of Fracmaster's methods. It's expected that Soviet workers soon will be able to plan and carry out hydraulic fracturing operations independently.

NEW FRACMASTER VENTURE

Encouraged by its initial success in Tyumen Province, Fracmaster seeks to expand its operations into neighboring Tomsk Province, Izvestia said.

The Moscow daily newspaper said Canadian Fracmaster Offshore Ltd. (CFOL) has a protocol providing credits and services covering hydraulic fracturing of wells for Tomsk Province's Vakhneft Oil and Gas Production Administration.

The administration has about 1,000 wells. Izvestia said specialists believe Fracmaster's hydraulic fracturing technology will permit a two to three fold increase in well yield after stimulation.

The proposed Tomsk venture is expected to enable Vakhneft workers ,to finally emerge from poverty," said G. Chudinov, head of the enterprise. Income from the Tomsk joint venture, which has been approved by the Soviet government, will be divided half to the Siberians and half to the Canadians, Izvestia reported.

Tomsk oil workers will be permitted to sell the additional crude obtained from hydraulic fracturing for foreign currency. However, potential for increased oil production in Tomsk Province is far less than in Tyumen Province.

Whereas Tyumen accounts for more than 60% of the U.S.S.R.'s crude and condensate production totaling more than 10 million b/d, Tomsk production has remained at about 300,000 b/d in recent years. Much of the new Tomsk flow is coming from remote fields in the huge Vasyugan swamp.

The venture was expedited by Tomsk province transferring ownership and operation of Sobolinoya, Silginskoye, and Severo-Vasyugansloye oil, gas, and condensate fields to the Kargasoksky district.

Other, smaller fields in the region will remain under provincial ownership.

GLOBAL NATURAL VENTURE

Global Natural late last month began shipping the first eight of 55 experimental vapor recovery systems destined for Tatarstan.

They entail 29 tank farm vapor recovery systems and 26 systems for recovering gas hitherto flared at the wellhead.

Tatex registered last November, is the venture Global Natural formed with Tatneft under the umbrella of Texneft, a group Global Natural and other U.S. companies formed earlier to pursue joint ventures with Tatneft.

The venture, registered last November, is intended to recover sour natural gas from wellhead separators and tank vapors lost through emissions.

The condensate rich sour natural gas is boosted into oil gathering lines along with other vapors for later recovery.

In addition to recovering valuable hydrocarbons, the project will slash polluting air emissions.

The deal calls for Global Natural to exchange recovered vapors for the same value in export crudes. The volumes are estimated at 3,0003,500 b/d of liquids.

BLUE KAMA PLANS

Panoco hired L.A. Martin & Associates Inc., Houston, to confirm feasibility of Blue Kama preliminary data and development plans. That study is to be completed by the end of this month.

Panoco and the Tatneft association want to include these areas in Tataria in Blue Kama: Kutush, AksubaevMokshin, Staro-Kadeev, Enoruskin, Melnikov, Cheremuha, and Kiyazli.

Pacono's Herb Rooks expects Blue Kama to drill about 2,000 wells in 10 years to average depths of 1,0001,100 m. Pay zones are expected in Middle and Lower Carboniferous sandstones and limestones.

"Both types of reservoirs are oil saturated, with underlying aquifers," Rooks said. "No gas caps have been identified."

Based on preliminary data, Panoco expects to recover about 260 million bbl of oil through primary production and another 140 million bbl through secondary and tertiary recovery.

Soviet crews have drilled about 160 wells in the seven areas to be covered by the joint venture agreement. Panoco obtained preliminary estimates of oil and gas reserves in Tataria from a data offering sponsored by MD Seis, a joint venture of Professional Geophysics Inc., Houston, and the Central Geophysical Expedition of the Soviet Ministry of Oil & Gas Industry (Minoil).

"A tremendous amount of cores and well logs are available-an almost overwhelming amount of data," Rooks said.

Panoco hired Martin to confirm reserve estimates, evaluate reservoirs, and set economic parameters for developing the fields. Martin's data will be part of a feasibility study submitted with joint venture documentation to Moscow.

A delegation from Tatneft is to visit Panoco in Switzerland the first week in September. Panoco expects to finalize plans then and submit the joint venture application shortly after the meeting.

Panoco and Tatneft signed a protocol last December to pursue the joint venture and hammered out joint venture documentation last March.

Tatar Republic produces about 800,000 b/d of oil, mostly from Romashkino field. Rooks said Tatneft has 140 drilling units.

HALLIBURTON VENTURES

Halliburton's interim agreement to offer oil field services in the pre-Caspian depression is its second this year with a Soviet partner.

in March, the company concluded an interim agreement with PGO Kazgeofizika and Gurievneftgasgeologia to form a joint venture to provide oil field services to companies operating in Kazakh Republic. As with the current proposal, Halliburton Energy Services agreed to provide services to foreign and Soviet firms operating in Kazakh Republic. Halliburton expects both joint ventures to be approved by yearend.

Halliburton Geophysical Services is a partner in a joint venture formed last year with Dalmorneftegeophisika Trust (DNG), a subsidiary of Minoil, to offer geophysical services in the Soviet sector of the Chukchi Sea to international oil companies.

In that venture, a Soviet U.S. crew using Halliburton equipment aboard Akademik Kreps, a Soviet seismic vessel, last summer collected 8,000 line km of seismic data. The crew expects to collect another 13,000 line km of data by summer's end.

Copyright 1991 Oil & Gas Journal. All Rights Reserved.