GAZPROM OUTLINES LONG TERM SOVIET GAS PLAN

The U.S.S.R.'s Gazprom Konstern has drawn up a comprehensive, long term plan for the Soviet natural gas industry, Eastern Bloc Energy (EBE) reports.

EBE is a publication of Eastern Bloc Research Ltd., Newton Kyme, England.

Gazprom, responsible for more than 90% of Soviet gas production, predicts Soviet gas production will continue to increase beyond 2030 and expects the resource base ultimately will total more than 330 trillion cu m, EBE said.

Soviet Central Asia will begin to decline as a major source of gas during the early years of the next century, but western Siberian production will continue to grow after 2030. The continental shelf, mainly the Barents Sea, will eventually become a very large supplier of gas, EBE reported.

Gazprom said development potential of the Soviet gas industry is not constrained by geological factors, only by economic and technical problems.

GAS RESERVES

EBE noted the U.S.S.R. has published detailed data on its gas reserves for the first time since 1977.

As of Jan. 1, 1988, what Gazprom calls A+B+C1 reserves, which correspond to proved and probable reserves in the western world, totaled about 49 trillion cu m, or 45% of the world total (Table 1). Western Siberia accounted for 71.7% of the U.S.S.R.'s proved and probable gas reserves.

Estimates of C3+D1, or possible, reserves jumped by 50 trillion cu m in 1984-87 as a result of geological studies in western Siberia and on the Outer Continental Shelf. This allowed the level of proved and probable reserves to climb to 52 trillion cu m by 1990, during which time cumulative production had risen to 10 trillion cu m, EBE reported.

Gazprom believes the estimate of C3 + D1 reserves underpins a likely doubling in A + B + C1 reserves the next 30-40 years while still allowing gas production to rise to 1.12 trillion cu m in 2000, 1.26 trillion cu m in 2010, and 1.38 trillion cu m in 2030.

However, EBE notes, Gazprom's estimates are very tentative because only 12.5 trillion cu m of this gas is in the C3, or prospective, category--including 8.1 trillion cu m in western Siberia--while 206.8 trillion cu m comes under D1, or forecast reserves.

Gazprom expects much of the increase in Soviet gas reserves in the next century will come from deepwater areas and onshore horizons deeper than 7,000 m.

PRODUCTION PLAN

The U.S.S.R. currently has 1,097 gas fields, including 142 in western Siberia, of which 500 are on stream or under development.

Cumulative production has totaled 4% of potential reserves for the Soviet Union overall and only 2.5% in western Siberia.

Gazprom officials dismiss the view of Gosplan's O.K. Makarov that much of the potential gas reserves cannot be exploited economically until a market develops for their large volumes of condensate and natural gas liquids, EBE reported.

Gazprom contends to the contrary that the presence of large volumes of liquids will give added incentive to expand the Soviet petrochemical sector.

The share of dry gas in total Soviet production will fall from 77.3% in 1990 to 62.9% in 2000, 48.4% in 2010, and 23.2% in 2030 (Table 2).

Gazprom also predicts western Siberia gas production will peak in 2030, and Central Asia and Kazakhstan production will peak in 1995-2005. The big jump in estimated offshore production reflects the huge size of expected strikes in the Barents Sea, EBE said.

PIPELINES

The U.S.S.R. hopes to boost the natural gas share of the nation's energy mix to 55-60% through a sharp increase in residential use, especially in rural areas (Table 3).

During the next 20 years, it will be necessary to lay 16-20 large diameter pipelines from western and eastern Siberia, Yakutia in the Far East, and from the Kara and Barents Seas, EBE reported.

The new lines must be built with improved safety and reliability factors, as spelled out in the official Highly Reliable Pipeline Transport scientific program to be implemented in 1991-95.

The program involves Gazprom, the Ministry of Oil and Gas, Neftegazstroi Association, and the Ministry of Metallurgy. Its head is B. Ye. Paton, whose electrowelding institute in Kiev has played a major role in development of automatic pipewelding machines, EBE reported.

The reliability of gas supply will be improved by the plan to double capacity of underground gas storage.

COSTS

The cost of Soviet gas production also is expected to grow significantly the next 40 years, EBE reported (Table 3).

Gas exploration and production typically has accounted for only 15-20% of its delivered cost with pipeline transport costs accounting for the rest. However, transport costs are expected to be fairly stable. The delivered cost of gas in the Central U.S.S.R., namely the Moscow area, is not expected to rise by more than 1%/year.

A big increase in capital investment during 1995-2000 will stem from development of Bovanenkovsk, Kharasavei, and possibly other big gas/condensate fields on the Yamal Peninsula, EBE said.

There will be another big rise in 2015-2025 when deepwater fields in the Barents Sea and gas hydrate fields in the Yakutsk Republic of the Far East will be developed.

Gazprom believes condensate and NGL production could jump from 16.8 million metric tons/year in 1990 to 100-120 million tons/year during the forecast period, equal to 150-180 million tons/year of light oil products.

GAS INDUSTRY WOES

The long term Soviet gas plan is in danger of being knocked off course by the U.S.S.R.'s current economic difficulties, EBE said.

Although a number of gas production associations, such as the one operating supergiant Urengoi field, have performed extremely well during the past 2 years, the gas industry has not been immune from turmoil in the rest of the economy, the publication reported.

Demand for gas is rising very slowly despite a push to back out oil with gas. In 1990, exports rose by 6.8 billion cu m, and domestic sales, including stock gains, increased by only 11.9 billion cu m. That allowed a rise in production of only 18.7 billion cu m to 814.7 billion cu m vs. a target of 843 billion cu m.

In addition, the continuing shift to the more productive fields of western Siberia resulted in a decline in drilling footage in 1990 of 436,000 m from 1989, despite the rise in gas production.

CONDENSATE

EBE notes the decline in condensate production is especially worrisome to the Soviets.

The 5 year plan target for 1990 was 27.4 million tons, and the annual plan target was first set at 22.4 million tons, then reduced to 19.6 million tons.

"Even this modest requirement was badly underfulfilled," EBE said.

The main reasons were serious shortfalls in two large gas/condensate fields. Orenburg failed to meet its gas production target by 5.2 billion cu m, and Astrakhan--where first stage work is going slowly and the second 6 billion cu m/year stage has been badly delayed--produced 4.9 billion cu m less than plan.

The first spread of the condensate pipeline from Yamburg to Urengoi was not completed, which meant huge reserves of condensate at Yamburg could not be placed on stream.

1991 PLAN

Gazprom plans capital outlays of 14.3 billion rubles for installation of facilities for production, transportation, and processing of gas in 1991, EBE reported.

The construction plan includes four gas processing plants not completed last year: Yamburg No. 7 serving 85 wells, Yamburg No. 1B, Karachaganak No. 2 in northern Kazakhstan, and Kotelevsk. Three new plants are planned for completion in 1991, including Sovetabad No. 1 in Turkmenia.

About 5,300 km of trunk pipeline is to be laid. Lines scheduled for completion this year include:

The second line from Gryazovets on the Siyanie Severa corridor to Leningrad.
Yamburg to the Urals, 1,500 km.
Makat-North Caucasus.

Other projects include completion of:

Gas processing plants with a combined capacity of 13 billion cu m/year, including the No. 11 plant at Mubarek, Uzbekistan, and the No. 4 plant at Orenburg, which is designed to process Karachaganak gas. The 1991 target calls for processing 74 billion cu m of gas well gas and casinghead gas and producing 3.3 million tons of sulfur, 2 million tons of unstable gasoline, 787,000 tons of motor gasoline, 1.1 million tons of diesel fuel, and 818,000 tons of liquefied petroleum gas.
The Orenburg helium plant.
Twenty-three wells to be drilled into the oil rims in Urengoi gas field.
The Urengoi ethane recovery plant.
Gas cooling plants at Yamburg for the Yamburg-Yelets No. 1 and Progress pipelines.
The Surgut motor fuel plant, which will produce gasoline and diesel from Urengoi condensate.
Fifty-nine compressed natural gas refueling stations for vehicles.
The last 12 compressor stations on the two pipelines from Yamburg to Tula.
Four compressor stations and 300 wells for underground storage reservoirs in the Ukraine, Volga, Central, and North Caucasus regions.

1991 HOPES

Gazprom hopes fulfilling the 1991 construction plan will cut the backlog of uncompleted work from the record 9.6 billion rubles at the end of 1990.

However, sketchy reports on progress so far indicate few of the projects will be completed this year, and despite their huge gas reserves, the Soviets will not be able to increase production much beyond last year's level, EBE reported.

A shortage of finances and failure of engineering plants to supply vital equipment are creating bottlenecks in the processing and transportation sectors that continue to shut in production, the publication said.