Sakhalin Energy Investment Co. Ltd., the joint venture established to develop two fields off Russia's Sakhalin Island, plans to use an ice-class drilling rig to quickly develop one of the fields.
Venture partner Shell International Petroleum Co. Ltd. last week said the Russian government has approved a request to start work on development of Piltun-Astokhskoye (PA) field.
Early production
"The plan is based on a phased approach to developing the PA field," said Shell, "which could lead to first production of oil in 1999, considerably earlier than under other development options."
Sakhalin Energy plans to use the Molikpaq arctic caisson design drilling rig to produce oil, which would be loaded via a short pipeline to a single anchor leg mooring buoy and into a storage tanker for removal by shuttle tankers.
Shell said the development plan requires formal technical approval by Russian authorities and further progress in establishing production-sharing legislation before shareholders will make final commitments.
Sakhalin Energy consists of Marathon Sakhalin Ltd. 30%, McDermott Sakhalin Inc. 20%, Mitsui Sakhalin Development Co. Ltd. 20%, Shell Sakhalin Holdings BV 20%, and Diamond Gas Sakhalin BV-a wholly owned subsidiary of Mitsubishi Corp.-10%.
Encouraged by elections
Frank Duffield, president of Sakhalin Energy, said, "We had been encouraged by the progress on legal stabilization prior to the presidential elections.
"With the election completed, we hope legal stabilization will proceed positively. We anticipate that key enabling legislation will be reintroduced and passed early in the new session of the Federal Assembly, and this will expedite future decisions about the project."
Sakhalin Energy secured the Sakhalin II project to develop PA and Lunskoye fields in the Sea of Okhotsk. They have combined reserves of 750 million bbl of oil and condensate and 14 tcf of gas.
Shell said PA is an oil field with associated gas, while Lunskoye is a gas field with associated oil and condensate. Appraisal work on Lunskoye continues.
Sakhalin II development is expected to cost $10 billion. Exxon Corp. and Japan's Sodeco are pursuing a $12.7 billion plan to develop oil and gas fields under the Sakhalin I project (OGJ, Oct. 30, 1995, p. 15).
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