Going Deeper and Wider. Interview with Vitaly Markelov
May 15, 2014
Published in corporate Gazprom Magazine Issue 4, interview was taken by Sergey Pravosudov
Vitaly Markelov, Deputy Chairman of the Gazprom Management Committee answers the questions posed by the Gazprom Magazine
Year results
- Mr. Markelov, how much gas and liquid hydrocarbons did Gazprom produce in 2014?
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In 2014 the volume of gas production totaled 443.9 billion cubic meters, which is 43.5 billion cubic meters less than in 2013. The bulk of gas production was secured by the Nadym-Pur-Taz region – 362.5 billion cubic meters; the Bovanenkovskoye oil, gas and condensate field yielded 42.8 billion cubic meters. The maximum level of gas production was achieved last year on February 1 – 1,648 million cubic meters a day. Associated petroleum gas (APG) production from Gazprom’s fields totaled 1,529.45 million cubic meters in 2014. Last year’s total APG utilization among Gazprom’s fields reached 93.6 per cent.
Speaking of liquid hydrocarbons production, 14.5 million tons of gas condensate was produced in 2014. Following last year’s results, Gazprom Group’s oil recovery hit the record high of 35.3 million tons, which exceeded the 2013 result by 1.4 million tons. If we add the output of associated companies, we’ll get 53.5 million tons of oil. Bringing into production the oil rim of the Botuobinsky deposit of the Chayandinskoye oil, gas and condensate field last May, made it possible to recover the first 350 tons of oil from reactivated well No. 321–14.
The 2015 production plan envisages 485.36 billion cubic meters of gas, 15 million tons of gas condensate (including 2.9 million tons from the Achimov deposits, which is 0.7 million tons more than in 2014) as well as 35.1 million tons of oil
- What are the plans for 2015?
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The 2015 production plan envisages 485.36 billion cubic meters of gas, 15 million tons of gas condensate (including 2.9 million tons from the Achimov deposits, which is 0.7 million tons more than in 2014) as well as 35.1 million tons of oil.
- Could you please tell us about the current progress and production plans for the Yamal Peninsula fields?
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At present Gazprom gradually builds up its production capacities in the Bovanenkovskoye field and develops the Cenomanian-Aptian deposits. The annual design capacity of the new gas facility (GP-1) equals 30 billion cubic meters a year. As a comparison, it is more than the Company will be producing from the Chayandinskoye field, the largest one in Yakutia. Earlier in 2012, the first gas facility (GP-2, 60 billion cubic meters) was launched at the Bovanenkovskoye field. A total of three gas facilities with 115 billion cubic meters in annual capacity will operate in the Cenomanian-Aptian deposits.
Innovation technologies and engineering solutions were applied in the new gas facility. In particular, the single technical infrastructure is used for extracting gas from pay zones lying at different depths – Cenomanian (520 to 700 meters) and Aptian-Albian ones (1,200 to 2,000 meters). It saves construction expenditures and increases the field’s productivity.
The technical operations are highly automated, and unmanned technologies are used at the facility. Gas treatment is carried out through the most progressive and environmentally clean method of low-temperature separation with the use of domestic turbo expanders. In the process of construction special attention was paid to preserving the unique nature of Yamal. Process facilities occupy the least possible area, while vapor-liquid heat stabilizers and insulated pipes for wells reduce the impact on the permafrost. In-plant recycling systems eliminate water and soil pollution.
Gas from the new gas facility is fed into the Unified Gas Supply System of Russia via the Bovanenkovo – Ukhta gas trunkline system (GTS) under the pressure of 11.8 MPa (120 Ata). It was possible to reach the record pressure for onshore gas pipelines mainly due to unique domestic 1,420 millimeter pipes made of K65 (X80) steel and with a smooth interior coating, developed on Gazprom’s order. Currently, the construction of GTS’ second string is underway.
With its explored and provisionally estimated gas reserves at 4.9 trillion cubic meters, Bovanenkovskoye is the largest field in the Yamal Peninsula. As I’ve already mentioned, the full design capacity of the Cenomanian-Aptian deposits of the Bovanenkovskoye field is estimated at 115 billion cubic meters of gas a year. The field will be developed using more than 200 production, infrastructure and auxiliary facilities. The staff number will exceed 1.8 thousand people (some 3 thousand with the account of service companies).
In the long run the annual gas production from the Bovanenkovskoye field, with the account of Neocomian-Jurassic deposits, will reach 140 billion cubic meters of gas.
The actual gas production in the field is gradually rising with regard to the market demand. In 2012 (the year of commissioning) 4.9 billion cubic meters of gas were produced, in 2013 – 22.8 billion cubic meters, in 2014 – over 40 billion cubic meters. In 2015 the field is expected to yield in excess of 48 billion cubic meters of gas. In the long run the annual gas production from the Bovanenkovskoye field will reach 140 billion cubic meters of gas with the account of Neocomian-Jurassic deposits.
The Yamal Peninsula has a strategic importance for the evolution of the Russian gas industry, and this requires building greenfield production facilities in the harsh Yamal climate as well as constructing motor roads, power plants, a rail connection and an airport. Explored and provisionally estimated gas reserves there exceed 16.7 trillion cubic meters. In the long view Yamal will be among three biggest gas production centers of Russia with the potential annual output reaching 310 to 360 billion cubic meters of gas by 2030 – over one-third of forecasted gas production in Russia for that period
- What is the progress with constructing a gas pipeline system for delivering gas from the Yamal Peninsula? What are the plans for a few years to come?
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As you know, the Bovanenkovo – Ukhta gas trunkline system serves for delivering natural gas from the Yamal Peninsula. The Bovanenkovskoye and Kharasaveyskoye fields are the resource base. The gas pipeline routes cross the Yamal-Nenets Autonomous Area and the Komi Republic. The project envisages the construction of a two-string gas trunkline system with the total length of 2,532.64 kilometers, which includes nine two-shop compressor stations (CS) with the aggregate capacity of 1,938 MW.
In 2012 and 2013 the first string of the Bovanenkovo – Ukhta GTS with the total length of 1,265.66 kilometers and seven compressor station workshops with the aggregate capacity of 852 MW were commissioned. In 2014 two compressor station workshops with the aggregate capacity of 256 MW (CS-7 Syninskaya and CS-9 Maloperanskaya) were put into operation. As for the second string, it is planned to construct 31 linear sections with the total length of 1,266.94 kilometers and nine compressor station workshops with the aggregate capacity of 830 MW. Sixteen linear sections covering a total of 696.48 kilometers were commissioned in 2014. Presently construction & installation activities are underway at 15 linear sections with the total length of 570.46 kilometers (to be launched in 2015 and 2016) as well as at nine compressor station workshops with the aggregate capacity of 830 MW (to be launched between 2016 and 2018).
- What are the prospects for gas and liquid hydrocarbon production from the Achimov deposits?
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It is a known fact that condensate-bearing gas deposits account for a considerable share of Gazprom’s promising fields. According to the expert appraisals, these formations hold about 16 per cent of Russia’s explored non-associated gas reserves. The Achimov blocks of the Urengoyskoye oil, gas and condensate field are the most promising condensate-bearing gas deposits. The Achimov deposit reserves within the Gazprom Dobycha Urengoy area of activities alone exceed one trillion cubic meters of gas and over 400 million tons of C1 gas condensate.
In 2014 the Achimov deposit yielded 4.8 billion cubic meters of gas and 2.2 million tons of gas condensate. In 2015 it is planned to produce 6.3 billion cubic meters of gas and 2.9 million tons of gas condensate. Within ten years to come, according to the existing project document for deposit development between 2022 and 2024, it is planned to reach the highest production levels in the Achimov blocks of the Urengoyskoye oil, gas and condensate field – up to 36 billion cubic meters of gas a year and 10.8 million tons of unstable gas condensate. Before 2039 the cumulative production from the Achimov blocks of the Urengoyskoye oil, gas and condensate field will exceed 750 billion cubic meters of gas and 200 million tons of unstable gas condensate.
Before 2039 the cumulative production from the Achimov blocks of the Urengoyskoye oil, gas and condensate field will exceed 750 billion cubic meters of gas and 200 million tons of unstable gas condensate
Eastern Siberia
- Once the Chayandinskoye field is launched, how much gas and liquid hydrocarbons will it yield? When is it planned to launch other fields in Yakutia?
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The start of gas production in the Chayandinskoye field is scheduled for late 2018. By that time the section of the Power of Siberia gas transmission system from the Chayandinskoye field to Blagoveshchensk will be commissioned as well as top-priority gas processing capacities. It will make it possible to start direct gas supplies to China in 2019. The Chayandinskoye field is to reach its full design capacity in 2022. The maximum level of annual gas production will total 25 billion cubic meters of gas with the producing well stock of 335 wells. The period of stable production will last for 30 years. The cumulative gas production will reach 1.262 trillion cubic meters (with gas recovery ratio of 87 per cent). Maximum annual oil recovery will equal 1.9 million tons with the producing oil well stock of 310 wells; cumulative oil production will amount to 67.5 million tons (with oil recovery ratio of 25.9 per cent).
In December 2011 Gazprom obtained licenses for the fields in the Republic of Sakha (Yakutia): Verkhnevilyuchanskoye, Tas-Yuryakhskoye, Sobolokh-Nedzhelinskoye and Srednetyungskoye. During the Chayandinskoye oil, gas and condensate field FEED stage, the Gazprom VNIIGAZ specialists carried out an expert assessment of the production capacity of this group of fields – up to 18 billion cubic meters a year.
- When are you planning to put the Kovyktinskoye field onstream?
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In 2022. The Kovyktinskoye gas and condensate field is to reach its full design capacity in five years from the start of development. The maximum level of annual non-associated gas production will reach 35 billion cubic meters, the period of stable production being 30 years. The projected level of stable gas condensate production will equal 1,882 thousand tons a year.
- Within what time limits will the Power of Siberia gas pipeline be constructed?
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The project for constructing the Power of Siberia gas transmission system provides for delivering blue fuel from the Yakutia and Irkutsk gas production centers to Russia’s Far East as well as its export to China. The gas pipeline length will be about 4,000 kilometers, its operation will be maintained by 8 compressor stations with the aggregate capacity of 1,331 MW. The gas trunkline will be constructed under the contract for Russian pipeline gas supply to China, concluded in May 2014 between Gazprom and China National Petroleum Corporation. According to the document, 38 billion cubic meters of Russian gas will be annually exported to China for 30 years.
The first blue fuel supplies via the Power of Siberia gas pipeline system will start already in 2018. By this time Gazprom is going to put into operation a 2,240-kilometer linear section of the gas trunkline and the Zeyskaya compressor station, due to which the system’s throughput capacity will reach 5 billion cubic meters of gas a year. The commissioning of the Nimnyrskaya CS in 2020 will bring the volume of supplies via Power of Siberia to 10 billion cubic meters of gas a year. In 2021 the Olekminskaya and Skovorodinskaya CS are to be commissioned, increasing the gas trunkline annual throughput capacity to 15 billion cubic meters. In 2022 four compressor stations are to be put into operation at once (Saldykelskaya, Amginskaya, Nagornaya and Sivakinskaya), which will result in boosting the volume of transported gas to 22 billion cubic meters a year. In 2023 the capacities of the four operating compressor stations (Saldykelskaya, Olekminskaya, Nimnyrskaya and Skovorodinskaya) are to be expanded, 844.5 kilometers of loop lines are to be commissioned, the Kovyktinskoye gas and condensate field is to be linked to the system together with the 792.8-kilometer connection gas pipeline to the Chayandinskoye field. As a result, the Power of Siberia capacity will rocket to 30 billion cubic meters a year. At the closing stage of the project implementation (between 2024 and 2031) it is planned to put onstream the CS between the Kovyktinskoye and Chayandinskoye fields, boost the capacities of three CS (Amginskaya, Nagornaya and Sivakinskaya) and build a 719.3-kilometer loop line. After that the Power of Siberia GTS will reach its full design capacity of 38 billion cubic meters of blue fuel a year.
- How much time would it take Gazprom to construct the Altai gas pipeline?
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Provided that a contract is signed in 2015, first gas may be supplied via the Altai gas pipeline after 2020 and the full design capacity of 30 billion cubic meters will be reached within six years.
- What are the plans for gas and liquid hydrocarbon production offshore Sakhalin?
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As you know, the Sakhalin II project is being successfully implemented offshore Sakhalin. In 2007 Gazprom acquired 50 per cent plus one share in Sakhalin Energy Investment Company Ltd. Presently production is carried out with the help of three offshore ice-resistant stationary platforms with the annual output of 16.1 billion cubic meters of gas in 2015, out of which 8.1 billion cubic meters account for Gazprom Group. At the same time, we produce hydrocarbon feedstock in the Kirinskoye gas and condensate field. Here it is planned to produce 1.2 billion cubic meters of gas and 204.5 thousand tons of gas condensate this year.
Coalbed methane
- Could you please say some words about the progress with the project for coalbed methane production? What are the outlooks in this area?
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Since 2009 geological exploration activities have been carried out within the Gazprom Dobycha Kuznetsk license area in the top-priority prospects of Kuzbass. 33 prospecting wells were drilled and put into test operation in the Taldinskoye and Naryksko-Ostashkinskoye coalbed methane fields. 38.477 million cubic meters of gas has been produced since the start of test operation.
Practically all the extracted gas is used as a vehicle fuel or for the purposes of power generation by reciprocating-engine power plants. Round-the-clock fuelling of the Gazprom Dobycha Kuznetsk vehicle fleet is arranged as well as the vehicle fleets of nearby mining companies. A total of 1.54 million cubic meters of compressed natural gas has been sold through CNG filling stations, 114 vehicles have been converted to natural gas. Between 2010 and 2014 six reciprocating-engine power plants with the aggregate capacity of 4.79 MW were commissioned with a view to supply electricity to the Taldinskoye and Naryksko-Ostashinskoye field facilities as well as deliver power to the regional power grid (for consumers from nearby mining companies and localities).
In order to increase the investment attractiveness of the project, the activities aimed at reducing the tax burden were carried out with the federal and regional executive authorities. In particular, coalbed methane was included into the list of mineral resources exempt from severance tax.
Between 2015 and 2016 it is planned to start the construction of operational wells and pre-development of the Taldinskoye field facilities. By 2017 and 2018 it is expected to fully develop the production process and move on to large-scale operational drilling in the amount of up to 96 wells a year as well as to assess the potential of coalbed methane production in the Tutuyasskaya area. The project for coalbed methane production in Kuzbass is of high social importance as it provides for resolving major economic and social tasks, such as the diversification of regional economy, maintenance of miners’ labor safety and creation of new jobs.
Despite high risks resulting from the uncertainties related to the production capacity of prospects and lack of experience in exploring and producing this type of hydrocarbon feedstock, the substitution of gas supplies from northern territories to the Kemerovo Region with coalbed methane may yield an additional effect of redistributing gas flows throughout the entire Unified Gas Supply System by means of directing the released gas volumes to higher-priority areas.
- What are Gazprom’s plans concerning Kyrgyzstan?
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On February 15, 2014 an agreement came into effect between the Russian and Kyrgyz Governments, concerning cooperation in natural gas transmission, distribution and sales in Kyrgyzstan. On July 7, 2014 the deal was completed for sale and purchase of a 100 per cent stake of KyrgyzgazProm under the said agreement. Thus, in July 2014 KyrgyzgazProm was renamed Gazprom Kyrgyzstan and registered with the Kyrgyz Ministry of Justice. Currently an Action Plan is being implemented for integrating Gazprom Kyrgyzstan into Gazprom Group. In order to carry out the top-priority activities aimed at preparing the Gazprom Kyrgyzstan facilities for the autumn – winter period of 2014 and 2015, Gazprom transferred RUB 262.1 million to Gazprom Kyrgyzstan (as part of the property deposit) on October 2 of the last year.
The agreement between the Governments of the Russian Federation and the Republic of Kyrgyzstan provides for taking top-priority measures aimed at maintaining reliable and safe operation of the gas transmission and gas distribution systems with the total price of some RUB 35 billion in three years to come. In particular, in 2015 it is planned to start the construction of Phase II of the Bukhara Gas-Bearing Province – Tashkent – Bishkek – Almaty gas trunkline.
On January 30, 2015 Gazprom’s delegation took part in the extraordinary meeting of the Kyrgyz Government, which considered and adopted the General Scheme of Gas Supply to and Gasification of the Kyrgyz Republic until 2030. Preparations are underway for geological exploration activities in the Kugart and Eastern Mailu-Suu IV oil and gas prospects in the Kyrgyz Republic. Following the results of geophysical surveys, a decision will be made on moving on to the next stage of the Geological Exploration Program envisaging the construction of five prospecting wells. In addition, starting from October 1, 2014 Gazprom Group began supplying gas to the north of the Republic, and from December 30 – to the south.