Sakhalin-area developments move forward

Drilling and development plans for two major offshore Sakhalin Island development projects are advancing.

Exxon Neftegaz Ltd., operator of the Sakhalin I project, recently revealed results from its 1997 operations, as well as its development plans for 1998. The Sakhalin I partners are expected to spend as much as $200 million this year.

The project group plans to continue an extensive program of appraisal drilling and seismic operations this year to evaluate the field and development options. Total expenses for the field evaluation program, started in 1996, will exceed $400 million.

Meanwhile, the Sakhalin II consortium, Sakhalin Energy Investment Co. Ltd., has selected Arctic Pacific Contractors, a 50/50 joint venture of Fluor Daniel Inc. and Brown & Root Energy Services, to provide major project management services.

Both projects are off eastern Sakh- alin Island in the Sea of Okhotsk in Russia's Far East.

Sakhalin I

The Sakhalin I project group includes: Rosneft-Sakhalin and Sakhalinmorneftegas-Shelf, both of Russia; Sakhalin Oil & Gas Development Co. Ltd. (Sodeco), a combine of Japanese companies; and Exxon Corp. affiliate Exxon Neftegas Ltd.

Exxon Neftegas and Sodeco hold 30% shares each, Sakhalinmorneftegas-Shelf holds 23%, and Rosneft-Sakhalin holds 17%.

Last year, the group drilled three appraisal wells in Arkutun-Daginskoye field with two drilling rigs belonging to Rosneft-Sakhalinmorneftegas (RN-SMNG).

The first well, Dagi-6, was drilled in the central portion of the field to a depth of 2,500 m, encountering formations with a high water cut.

Dagi-7 was drilled to 2,616 m total depth and discovered oil in four main zones, three of which had been previously identified as gas-bearing. In two other zones, gas was discovered.

Dagi-8 was drilled to 2,500 m TD, and all zones encountered appeared to be oil-containing. Long-term production tests were then scheduled, although no results have been reported.

The partners also have completed a 600 sq km 3D seismic survey on the Arkutun-Daginskoye and Chaivo structures. Preliminary interpretation of the Arkutun-Daginskoye data reveals a field with an extremely complicated structure and numerous faults.

Additional analysis of 3D seismic data, appraisal drilling, and supplemental research is required to prove reserves sufficient to make Arkutun-Daginskoye field development profitable.

This year, the consortium plans to drill two additional appraisal wells in Arkutun-Daginskoye and, if possible, implement productivity testing in two wells that were drilled last year.

The new wells will be drilled with two jack up rigs, Okha and Ekhabi, belonging to RN-SMNG. The offshore operations will be carried out during the ice-free navigation season (mid-June through mid-October).

This year's plans for the Chaivo structure, where five wells have been drilled, will be aimed at completing the analysis of 3D seismic data. Additional information is needed to determine the feasibility of developing this field.

Sakhalin II

The Sakhalin II project centers on Piltun-Askotskoye and Lunskoye fields, 13-16 km off the central east coast of Sakhalin Island in water depths of 30-60 m.

The development is expected to involve multiple offshore oil and gas production platforms, subsea pipelines, and onshore facilities including oil and gas pipelines, processing facilities, terminals, and other infrastructure.

The $40 million contract for this work, let to Arctic Pacific Contractors, includes project engineering, procurement, construction planning, and other associated support services for the basic design concept and definition phases of the project.

Piltun-Askotskoye holds 750 million bbl of oil and 1.9 tcf of gas, while Lunskoye holds 11.1 tcf and 326 million bbl of condensate. Production from the two fields will be exported to shore by pipeline and transported 625 km to an export point at Progordnoyy for shipment by carrier or tanker. An LNG terminal has been proposed at this export point, with completion slated for 2004.

Piltun-Askotskoye is due on stream next year at an initial production rate of 90,000 b/d of oil. Sakhalin Energy Investment Co. Ltd. is owned by Marathon Sakhalin Ltd., Shell Sakhalin Holdings BV, Mitsui Sakhalin Development Co. Ltd., and a subsidiary of Mitsubishi Oil Co.