HUGE SOVIET GAS INDUSTRY SET FOR PARTICIPATION, MAJOR EXPANSION
Nikolai I. Belyi
Gazprom
Moscow
An increase in natural gas production of more than 400% in the past 2 decades reflects the dynamic level of development of the gas industry in the Soviet Union.
Even in 1990, a year of economic recession, gas production in the U.S.S.R. reached 815 billion cu m (28.8 tcf), an increase of 19 billion cu m over the previous year.
Natural gas accounts for 43.5% of the total consumption by volume of organic fuels in the U.S.S.R., compared to 16% in Western Europe and 22% in the U.S.
Such a rapid rate of development has come primarily from the discovery in recent decades of major gas and gas-condensate fields in Western Siberia, Turkmenistan, and the Caspian lowlands.
GAS INDUSTRY ORGANIZATION
"Gazprom," the state gas concern, accounts for 92% of gas production in the U.S.S.R. Enterprises of the petroleum industry belonging to the U.S.S.R. Ministry of the Oil & Gas Industry produce some 67 billion cu m of associated gas and natural gas.
Gazprom carries out geological prospecting work in certain regions. It completely handles the drilling of gas wells and the production, transportation, and processing of gas and condensate, as well as the underground storage of gas.
In 1990, Gazprom produced 748 billion cu m of gas and 17 million tons of condensate. This amount makes up about 40% of world gas production.
In 1960, the Soviet Union started to build up the "United Gas Supply System of the U.S.S.R.," which in its size and structure has no comparison in world terms.
The United Gas Supply System (UGSS) is a technological complex ensuring continuous regulation and monitoring of the gas supply within the system.
It extends from the well through the pipeline to the consumer. The UGSS has 210,000 km (126,000 miles) of trunklines with diameters from 1,020 to 1,420 mm, or 40-55 in. (Fig. 1).
In addition, UGSS has 376 compressor stations, more than 500 gas fields, 46 subsurface storage facilities for gas, and six gas processing plants.
In addition, 94 gas fields are ready for development, and 349 fields are being appraised.
REGIONAL ENTERPRISES
Gazprom includes regional enterprises for gas production, transport, processing, and other operations, assuring gas deliveries to industrial and municipal household users, as well as for export.
Underground gas storage plays a major role in making gas supply more reliable. Storage areas are located in major gas-consumption regions. Depleted gas fields, water-bearing layers, and salt deposits are used.
The largest territorial gas-producing enterprises of Gazprom are Urengoygazprom, Yamburggazdobycha, Nadymgazprom in Western Siberia, Turkmengazprom, Sredazgazprom in Uzbekistan, Ukrgazprom, and many others (Fig. 2).
In all, 25 industrial amalgamations for gas production and transportation are functioning within Gazprom. Eighteen of them are in the Russian Federation and one each in the Ukraine, Byelorussia, Turkmenistan, Uzbekistan, Georgia, Azerbaijan, and Armenia.
Those enterprises look after the gas supply, not only for each republic, but also for entire economic regions of the country. Thus, for instance, the Zapadtransgaz enterprise, located in Byelorussia, delivers gas to the Baltic Republics as well.
ORGANIZATION
The supreme body of Gazprom which makes the most important decisions dealing with gas industry development and which examines problems of financing and management is the Gazprom Council.
It is made up of heads of enterprises involved in gas production, transport, and processing, as well as directors of research and design institutes. The Council of Gazprom meets at least twice a year.
For day-to-day coordination of the activities of the enterprises, the solution of current production issues, and the detailing of development prospects in the various sectors, Gazprom has a working staff of 450 persons, supervised by the board headed by the chairman.
Victor S. Chernomyrdin has been elected chairman of Gazprom.
The Gazprom staff is funded by the member production enterprises.
Gazprom operates on a self-sufficient basis, without state participation in funding investment. It provides gas on contractual terms for domestic consumers and meets the Soviet Union's obligations to supply gas to foreign buyers.
Thirty years' experience in gas industry development under the conditions of this country has shown that central control of the sophisticated sectoral system over the vast area of the Soviet Union has quite a number of merits.
First, this ensures effective management and regulation of gas production, processing, and transport, and of gas injection into and production from underground storage facilities.
Second, a comprehensive evaluation of the gas industry's development prospects can be made for 5-year and longer periods. Finally, it enables us to carry out research projects and introduce new equipment and technologies for boosting the efficiency of gas production, processing, and transport.
At the same time, it should be noted that, side by side with the centralized control of the gas industry, the member entities of Gazprom enjoy economic and financial independence.
Controlling and regulating the gas supply of the country from one dispatching center makes it possible to quickly adjust gas flows. Gas deliveries can be increased to regions where there is additional demand, to close the fuel gap, particularly in the period of sharp cold snaps in winter when gas consumption rises by 40 million cu m/day for each degree Centigrade of ambient air temperature drop.
Dispatcher services exist in all the industrial enterprises for gas production, transportation, and processing and distribution in their respective regions, and constantly remain in touch with the main dispatching center of Gazprom, whose instructions are compulsory for all gas suppliers and consumers.
GAS-PRODUCING REGIONS
The main gas-producing region of the country is Western Siberia, which is known for its complicating climatic conditions that are similar to those of the Alaska North Slope. The explored reserves of that oil and gas-bearing province amount to 37.7 trillion cu m (1,053 tcf).
The bulk of the explored gas reserves (about 63%) are concentrated in major fields, each with reserves exceeding 300 billion cu m. Examples are gigantic fields such as Urengoy, Yamburg, Bovanenkovo, Medvezhye, and Kharasavey, each with reserves in excess of 1 trillion cu m .
Four gas fields are presently being exploited in Western Siberia, namely Urengoy, Medvezhye, Vyngapur, and Yamburg. In 1990, they yielded 537 billion cu m (19 tcf) of gas, which is 66% of total gas production in the U.S.S.R. (Fig. 3). It should be noted that production in Western Siberia has grown by 147 billion cu m within the past 5 years alone. Gas is transported via pipelines with mostly 1,420 mm in diameter and under a working pressure of 7.4 MPa.
The annual throughput of a gas pipeline 1,420 mm in diameter is up to 32 billion cu m. Gas pipelines 1,220-1,420 mm in diameter account for 41% of the U.S.S.R.'s gas transportation system.
Novel engineering solutions have been implemented in the development of the Siberian gas fields. Production wells are drilled in clusters located in the central portion of fields, where the yield is highest. A cluster contains up to nine directional wells.
The diameter of production casings is 6-8 in., and the average daily production of wells runs into 1.5 million cu M.
Gas is prepared for long-distance transportation in facilities with a high single-unit capacity reaching 27 billion cu m annually. Prefabricated large-block processing equipment weighing 300-1,000 tons is used for construction. The units are factory-assembled and transported by water during the navigation period to the northern regions.
CENTRAL ASIA
The second major region of gas and condensate production is Central Asia. In Turkmenistan, 83 billion cu m of gas were produced in 1990. Twenty-five gas fields are under exploitation there, but the main yield comes from the Sovietabad field, whose reserves exceed 1 trillion cu m.
In contrast to Western Siberia, where it is very cold, gas fields in Turkmenistan lie in the Kara-Kum desert, where the summer temperature may be as high as 50 C. (122 F.). Gas from Turkmenistan is handled via a system of gas trunklines to the central regions of the country, to Uzbekistan, and for export.
Forty-four gas fields are exploited in Uzbekistan. The biggest are Zevardy, Shurtan, Kultak, and others. In 1990, gas production in Uzbekistan reached 40 billion cu m. Gas from the Uzbek fields is characterized by a high content of hydrogen sulfide (up to 6%) and condensate (up to 600 g/cu m); therefore, it is processed in a gas processing complex that produces sulfur, LPG, and other components.
A sizable share of gas from the Uzbek fields is consumed within the republic, and some 5 billion cu m are supplied to users in Kazakhstan, Kirghizstan, and Tajikistan.
A major area of gas production and processing is the Orenburg region of the Russian Federation. There, in 1974, the Orenburg gas-condensate field with gas reserves of more than 1 trillion cu m was put under commercial exploitation. A gas-processing plant producing sulfur and other products has been built on the basis of imported (predominantly French-made) equipment (Fig. 4). The gas output of the Orenburg field amounted to 40 billion cu m in 1990.
In 1984, a large gas-condensate field, Karachganak, was commissioned in Kazakhstan. The field is characterized by large reserves of hydrocarbons: over 1.3 trillion cu m of natural gas, 640 million tons of condensate, and 170 million tons of petroleum.
The field is unique in its reserves, hydrocarbon composition, and thermobaric characteristics, and many important problems of efficient extraction and processing of liquid hydrocarbons will have to be solved for its development.
In the first phase of exploiting the Karachaganak gas field, all the hydrocarbons produced are channelled to the Orenburg gas-processing plant for treatment.
In the second phase, the Uralsk oil and gas-chemical complex will be built for processing approximately half of the products received from the field (primarily condensate and petroleum). The Karachaganak gas field can become a highly efficient object of international cooperation.
UKRAINE
A significant region of gas production and transport is the Ukraine. At present, in the east and west of the Ukraine, principal gas fields occurring at a relatively shallow depth have been discovered but are now in the phase of decreasing yields. Within the past 5 years, gas production in the Ukraine has decreased from 35 to 24 billion cu m per year. At the same time, the potential natural gas resources in the Ukraine are considered highly promising.
The discovery of new fields is associated with a depth of more than 4,000 m (13,000 ft), where commercial gas-condensate fields with a high potential may be located.
CAUCASUS
One of the oldest gas-producing regions of the Soviet Union is the northern Caucasus, where the annual gas production amounted to more than 40 billion cu m in the 1960s. The major gas fields of the northern Caucasus have since been depleted, and the yearly production of natural gas there does not exceed 3 billion cu m.
On the other hand, in the northern Caucasus there are areas with an enormous thickness of the sedimentary complex of rocks that occurs at a depth in excess of 5 km (16,000 ft) and may contain considerable reserves of hydrocarbons. However, to effectively explore for them, detailed geophysical surveys are needed, because drilling deep wells under complicated geological conditions entails substantial investments.
GAS INDUSTRY PROSPECTS
The potential resources of natural gas in the Soviet Union are, according to recent assessments, 250 trillion cu m (8,825 tcf). This includes various confidence levels from proved to probable reserves.
Of that amount, of initial potential resources, 40% are concentrated in Western Siberia and 23% on the U.S.S.R. shelf. The degree of exploration is assessed as 29% on land and 1.4% on the shelf. The proved gas reserves account for a tremendous figure of 51 trillion cu m (1,800 tcf) of which 22 trillion cu m carry substantial amounts of condensate and LPG, while 8 trillion cu m are notable for a high content of hydrogen sulfide.
These gas reserves represent a dependable foundation for the development of gas/chemical production. The peculiarity of the proved reserves is their concentration in gigantic and large fields.
There are 18 large fields with reserves exceeding 0.5 trillion cu m (accounting for 71% of natural gas reserves), 106 gas fields with reserves over 30 billion cu m (accounting for 22%), and small fields accounting for only 7%.
More than 72% of natural gas resources are associated with depths of less than 3,000 m.
A characteristic feature of the composition of the U.S.S.R. natural gases is that 55% of the total volume of the proved gas reserves are represented by dry (predominantly methane) gases. Some 45% of the natural gases contain 3% or more of ethane, and about 16% of the natural gases carry hydrogen sulfide.
In the future, the composition of gas reserves will undergo a substantial change: the share of dry gases will go down, while the volume of condensate and ethane-carrying gases will increase because the fields of Western Siberia are in lower Cretaceous and Jurassic deposits.
Currently, the U.S.S.R. processes only 71 billion cu m of gas annually, but within the next decade the processing volume is going to be doubled. In that period, the principal area of increasing gas production in the Soviet Union will be Western Siberia. The proved gas reserves there amount to 35.7 trillion cu m. Great potential exists for discovering new gas, particularly gas-condensate fields primarily in Neocomian and Jurassic deposits.
By the mid-nineties, it is anticipated that gas production in the Soviet Union will be increased to 1 trillion cu m (Fig. 5). The growth will be achieved primarily by commissioning major gas fields in the Yamal Peninsula (Bovanenkovo and Kharasavey). In that peninsula at present, 9 trillion cu m of gas reserves have already been set for exploitation.
It should be mentioned that, in addition to a high feasibility of discovering new gas fields on land, the gas-bearing capacity prospects of the peninsula shelf are attractive. Before the year 2,000, seven gas pipelines will be constructed, with a size of 1,420 mm in diameter and a pressure of 7.4 MPa, to transport gas to the central and western regions of the Soviet Union, as well as for export.
In all, before the turn of this century, we have to construct some 75,000 km of gas trunklines and distribution piping networks.
The proved gas reserves of the northern parts of Western Siberia, including Yamal, enable us to count upon raising the production of natural gas there to 850 billion cu m by 2005 (an increment of 300 billion cu m as compared to present-day yields).
SIBERIAN GAS FIELDS
The gas fields of Western Siberia are characterized by multilayer gas pools within a broad range of deposits from the upper Cretaceous to the Jurassic age.
The upper gas-bearing horizon is associated with gas reservoirs of the Senoman stage, basically containing methane. The Senoman gas reservoirs are large pools connected with water-drive basins and having a large gas-producing area.
The terrigenous reservoirs of those pools feature high filtration-capacitive properties and highly productive wells,
The medium oil and gas-bearing horizon incorporates gas-condensate and oil pools of the lower Cretaceous. Those reservoirs are materially smaller in gas reserves than the Senoman ones, but they are important in the production of liquid hydrocarbons and LPG. The lower Cretaceous gas condensate and oil pools of the Urengoy field are now under exploitation. In the future, gas condensate pools of the Yamburg and Zapolyarnoye fields are going to be commissioned.
The lower gas-bearing horizon is represented by Jurassic reservoirs at depths in excess of 4,000 m. The inferred natural gas resources of the Jurassic deposits are more than 7 trillion cu m. The Jurassic deposits will, in the next few years, be the principle object of survey/prospecting operations.
CASPIAN DEPRESSION
The second promising region in terms of development prospects is that of the Caspian depression, where the gas fields of Orenburg, Karachaganak, and Astrakhan have been discovered and are being exploited. The advantages of the region adjoining the Caspian Sea are that the reserves there are concentrated in large pools, the region occupies a favorable economic position, and there are major reserves of condensate, sulfur, ethane, propane/butanes, helium, and paraffins.
Typical of the Caspian fields are a high gas-bearing horizon, a low-permeable carbonate reservoir, and the presence of high H2S and CO2 concentrations in the natural gas. Large gas/chemical complexes have been set up for developing those fields.
In promising regions of Turkmenistan and Uzbekistan, geological prospecting operations are to be intensified for commercial gas reserves with a view to maintaining gas production at the high level attained.
THE EAST
Of great interest are the regions of Eastern Siberia and the Far East, where the inferred gas resources are estimated at 48 trillion cu m, while the proved reserves stand at only 1.6 trillion cu m. Those regions are highly promising for building commercial gas reserves and large-scale production and processing of gas for supply to Far East users and export.
The proved gas reserves of the Sakhalin Island shelf are already sufficient to support gas production for local needs and export.
Thus, the Soviet Union is fully in a position to boost gas production 1.5-fold from 1990 to 2010.
Increasing gas production in the Soviet Union in great volumes will require massive investments. The need for geological prospecting will grow as increments in proved reserves are predominantly associated with complex gas fields occurring at great depths.
The rising proportion of gases with ethane and hydrogen sulfide will require processing in gas/chemical plants.
We are faced with the need to develop gas fields on the continental shelf. As a result, the outlay will grow for the construction of new gas field facilities and gas transport systems.
Gazprom with its seven research and five design institutes has the scientific base to solve such large-scale problems.
MARKEL DEVELOPMENT
While the national economy of the U.S.S.R. undergoes a transition to a market economy, state regulation is preserved in gas recovery, distribution, and gas pricing.
This will be a major factor in the functioning of the United Gas Supply System of the country as an integral mechanism.
At the same time, in order to enhance the social and economic efficiency of gas supply for customers under market conditions, there is an immediate need to switch over to a corporate form of state ownership in the gas industry of the U.S.S.R.
A joint-stock gas corporation may be founded with different participation shares of the state administration bodies. With regard for the high capital intensity of the gas industry, however, the bulk of the share capital must belong to the state, especially in initial stages of privatization.
The state policy in managing the energy sector is based on identifying the priorities and strategic challenges of energy supply for the country in accordance with a system of economic measures which ensures their most efficient implementation with due regard for the resource potentialities of the state as a whole and of each of its member republics.
At the same time, the change over to a market economy calls for framing appropriate agreements.
According to the legislation adopted in the U.S.S.R. and union republics, the latter are recognized as the owners of land and mineral resources.
It is necessary to work out the legislation on mineral wealth, to lay down the procedure of granting licenses for land and mineral wealth that would enable the execution of geological prospecting operations and the development of mineral resources. A tax system for land, mineral wealth, etc., must also be worked out. These and many other problems are presently under study.
WESTERN OPPORTUNITIES
In our opinion, many European countries should be interested in the intensive development of the Soviet gas industry. Natural gas from the U.S.S.R. could lessen their dependence on the Organization of Petroleum Exporting Countries and enhance the demand for western power equipment and technologies. Soviet gas deliveries may also be important for improving the environment in Europe.
Gazprom has broad international relations in the gas industry sphere. More than 30 years ago, the Soviet Union began exporting gas to European countries. It now exports over 100 billion cu m of gas annually from the northern parts of the Tyumen region and has had relations with major European gas importing companies as well as with western suppliers of oil and gas field and pipeline equipment (Fig. 6).
The Soviet Union's transition to a market economy and the change of economic conditions in Eastern Europe create favorable conditions for the further development of mutually advantageous economic and scientific-technological cooperation in the gas industry sphere with Western Europe.
The joint venture "Asetco-Novyi Urengoy" for the construction and operation of the Urengoy gas/chemical complex has already been established together with John Brown and Morgan-Grenfell. Negotiations on setting up joint ventures are under way with other major western companies.
Opportunities for international cooperation with the Soviet Union in the gas industry sphere are varied and attractive.
In Western and Eastern Siberia, Turkmenistan, the Ukraine, and other regions, vast, promising exploratory tracts are available.
The exploitation of the unique gas fields of the Yamal Peninsula, the Caspian lowlands, and the continental shelf requires sizable investments, but at the same time guarantees profitability for the parties involved.
There are major opportunities for employing efficient drilling techniques, particularly the horizontal drilling of pools.
Another important area for enlisting the assistance of western capital and technologies is the modernization of the gas transport system of the Soviet Union.
There are good opportunities in gas production, processing, and energy conservation.
The main principle professed by Gazprom in selecting partners for cooperation is reciprocal benefit. Countries that are interested in importing natural gas and related products from the U.S.S.R. should participate with their capital in the development of gas fields, in the construction of gas transport systems, and gas-processing plants. Settlements for the investments of western companies could be effected through gas deliveries and products of gas/chemical factories.
The world-wide demand for natural gas will grow in the next few years, which will spell gain for participants in the development of Soviet natural gas fields.
The U.S.S.R. gas industry, it is clear, rests upon a dependable raw material foundation and has a great industrial and scientific potential.
BIBLIOGRAPHY
- Gas Industry of the U.S.S.R., No. 6, Moscow, 1991.
- Chernomyrdin, V.S., "The Soviet Gas Industry: Modern State and Outlook for the Forthcoming Century," National Paper, 18th World Gas Conference, Berlin, July 1991.
Copyright 1991 Oil & Gas Journal. All Rights Reserved.