Gazprom makes Arctic advances

March 27, 2014

A rendering of Kirinskoye's subsea processor, a first for a Russian company.

Sarah Parker Musarra examines the offshore developments that helped make 2013 a banner year for Russia's Gazprom.

Located in one of the richest hydrocarbon countries in the world, a cursory glance at Gazprom's performance in the second half of 2013 shows it aggressively pursuing more difficult, technically advanced projects.

Russia is home to the world's largest natural gas reservers, according to the US Energy Information Administration. It is the world's second-largest producer of the dry natural gas and the third-largest producer of liquid fuels. Yet, with two last year's larger projects, the company went to great lengths—and depths—to draw first oil.

In the case of the Sakhalin III project’s Kirinskoye field, that meant Gazprom became the first Russian company to install and successfully test a subsea production facility.

In the case of the Prirazlomnoye field, that meant Gazprom Neft Shelf (Gazprom’s wholly-owned oil subsidiary) ground through a grueling 10-year development before striking first oil on 20 Dec 2013.

As one of only two companies currently eligible to operate on the shelf under Russian Federation law, and as the holder of 30 licenses on the Russian Arctic Shelf, Gazprom then became the first Russian company to produce in the Russian Arctic.

“In every area of our activities we are aiming for the future, for the long term,” Gazprom’s CEO Alexey Miller said in his year-end column.

Prirazlomnoye and Prirazlomnaya

Discovered in 1989, the Prirazlomnoye field is on the shallow Pechora Sea shelf, in 19-20m water depth. It’s 60km off Russia’s north coast and south of the Novaya Zemlya archipelago. Gazprom calls the development “an essential element of Gazprom Group’s oil business development strategy.”

Costs for the project are estimated to be US$4-5 billion.

The company says the field contains around 72MM tons of oil, setting it up to achieve a peak annual production rate of 6.6MM tons after 2020.

While the absence of a platform is a distinguishing feature of the Kirinskoye field, Prirazlomnoye’s platform is a noteworthy addition to the already-landmark development. Gazprom Neft says the Prirazlomnaya platform is the first stationary platform to produce hydrocarbons in the region, and that it was engineered for drilling, oil production, storage and offloading. The company says it is resistant to strong ice loads and can operate year-round.

“We became the pioneers of Russia’s Arctic development,” Miller said when first oil was struck.

The Prirazlomnoye field contains around 72MM tons of oil. Gazprom is the first Russian company to produce in the Russian Arctic.

Designed for Gazprom, the platform was under construction for 15 years at Severodvinsk. The project was mothballed for six years, and changed course when Gazprom bought the topsides of Conoco’s Hutton TLP, built in 1984 and retired from the North Sea. Sevmash Production Association incorporated the Hutton topsides and the resulting platform is nearly 144m-long and weighs about 506,000 tons. On 18 Nov 2010, eight tugboats and two vessels towed the Prirazlomnaya more than 800km from Severodvinsk to Murmansk, the first time in Russian history a towing operation of such scale occurred. The 140m-wide platform, which weighs around 120M tons (net of concrete ballast), arrived on 27 Nov 2010.

Gazprom said it will drill 40 wells with slanted wellheads, which will be located inside the platform so that its foundation would barricade it from surrounding the fragile environment and marine life in the event of a spill. The controversial project has been delayed for nearly a decade due to internal issues; safety and environmental issues have been the most pervasive challenges.

Prirazlomnaya’s design has been under works since the 1990s. The first set of delays arose from shareholder changes: as the projects’ investors rotated, so the design plans changed.

When it came to light that the structures were recycled from a decades-old project, activist and environmental groups charged that the metal on the Hutton topside was too aged to function safely. Greenpeace then delayed the start date with fervent protests held against Gazprom’s involvement in the project; against the platform’s stability, and against drilling in the Arctic. In August 2012, 30 members of Greenpeace, including its executive director, boarded the platform to protest Gazprom’s expired spill plan. The Russian Ministry of Emergency wrote to Greenpeace to inform them that a new spill plan has been neither submitted nor approved. The “Arctic 30” were arrested by Russian authorities and jailed for two months on piracy charges before being granted amnesty by the Russian parliament.

However, production is in full swing, as Gazprom Neft’s Deputy CEO Vadim Yakovlev announced 5 Feb 2014 that beginning 1Q 2014, one tanker per quarter would carry 331,000 tons of oil from Prirazlomnoye to Rotterdam.

Sovcomflot’s Mikhail Ulyanov and Kirill Lavrov ice-class tankers will shuttle produced oil year-round to the FPSO Belokamenka, located 1100km west, in Kola Bay, in the Barents Sea.

“Gazprom is Russia’s outpost in the Arctic … There is no doubt that Gazprom will continue advancing in the Arctic,” Miller said.

Kirinskoye, Sakhalin III, and the Far East

Situated 28km off the coast of the Sakhalin Island in the Sea of Okhotsk, Gazprom says the Kirinskoye gas and condensate field contains reserves of up to 162.5 billion cu m of gas and 19.1 tons of gas condensate. Six wells are planned to be drilled with a projected gas production rate of 5.5 Bcf/yr.


An operator launches an oil skimmer during a training exercise newar the Prirazlomnaya platform.

Water depths in the field reach 90m, which the company says is only 4m deeper than Moscow’s deepest subway. Production began 23 Oct 2013, when Gazprom also celebrated the successful testing of Russia’s first subsea processing facility. Russian Federation President Vladimir Putin issued the order to commence Kirinskoye’s production.

“The subsea production technologies allowed avoiding significant risks in adverse natural and climatic conditions, for instance, typhoons in [southeast] Asia and icebergs offshore Canada. Freezing seas of Russia with navigation period [of] only 3 to 4 months long simply have no other option but these subsea systems,” Gazprom Head of the Directorate for Offshore Fields Development Technology Vladimir Vovk said of the decision to pursue subsea processing in an interview Gazprom released in 2010.

Kirinskoye is located in the Kirinsky Block, one of four blocks that comprise the Sakhalin III project. Along with Kirinsky, two other Sakhalin blocks - Ayashsky and Vostochno-Odoptinsky – were discovered by and licensed to Gazprom. Russian-held Rosneft holds the license to the remaining Veninsky block. Gas from Kirinskoye traverses a 28kmlong pipeline to reach land, where it is treated and pumped through a 139kmlong pipeline to the main compressor station of the 1800km-long Sakhalin- Khabarovsk-Vladivostok gas transmission system (GTS).

This GTS is part of the larger-scope Eastern Gas Program of East Siberia and the Russian Far East, currently under development. Approved by the government in 2007, the plan enables and ensures gas production and supply to the far eastern regions of the country, with an ultimate goal of gas export to China. The Russian Federation government appointed Gazprom as the program execution coordinator.

Gazprom’s recent activity shows that it will go to great lengths to secure its position as countries eye and circle the Arctic as one of oil and gas’ remaining frontiers.

images courtesy of Gazprom