Events
Strategy
The Shtokman gas and condensate field development project is of strategic significance for Gazprom. The project implementation will become a pivotal point to form a new gas producing region on the Russian Arctic shelf.
The Shtokman field will become a resource base for building up Russian pipeline gas and liquefied natural gas (LNG) supplies to the domestic and foreign markets.
Field description
Discovered in 1988, the Shtokman gas and condensate field is located in the central part of the Russian sector of the Barents Sea shelf, about 600 kilometers northeast of Murmansk, where sea depth varies between 320 and 340 meters.
C1 reserves of the field make up 3.9 trillion cubic meters of gas and 56 million tons of gas condensate, with 3.8 trillion cubic meters of gas and 53.4 million tons of gas condensate located within Gazprom’s licensed area.
Major project features
The Shtokman field development is divided into three phases. Phase 1 and Phase 2 facilities commissioning will allow for respective annual production of 23.7 and 47.4 billion cubic meters of gas. The field will reach its design capacity of 71.1 billion cubic meters of gas a year through implementing Phase 3. This volume is comparable to the annual gas output of Norway, one of the major European gas exporters.
Gas production buildup in the field is envisaged following the results of the first two phases implementation, provided that the target market environment is favorable and the gas demand is at the appropriate level.
Field operations will be performed using deepwater production systems and special FPSO/FPU platforms equipped with quick-disconnect system and able to swiftly move off the icebergs. Produced gas will be conveyed via the offshore trunklines to the coast near the Teriberka settlement where an LNG plant (first production train capacity – 7.5 million tons a year), a port transportation and technological complex and other production facilities will be located.
Shtokman gas and condensate field pre-development scheme
It is projected to construct the Murmansk – Volkhov gas pipeline to deliver natural gas to the Unified Gas Supply System of Russia. Liquefied gas will be loaded to LNG carriers and delivered to consumers by sea.
In September 2006 Gazprom successfully finished drilling of exploration well No.7 in Shtokman field
The final investment decision on Phase 1 will be divided into two stages. It is planned to take the decision on pipeline gas production in March 2011 and the decision on LNG production – by the end of 2011.
Project potential assessment
Vast gas deposits, favorable feedstock composition providing for minimum costs of gas purification and treatment in parallel with an opportunity for production expansion ensure sustained and long-term gas supply.
The project features a diversification capability – simultaneous supplies of pipeline natural gas to Europe and liquefied natural gas to Europe and North America, which may be altered according to market conditions.
The project is highly competitive as there are no transit countries crossed by the pipeline gas running from the Shtokman field to Western Europe via the offshore Nord Stream pipeline, the feedstock base is quite close to LNG markets, and low temperatures prevail in the region thus reducing energy consumption required for gas liquefaction.
License holder
Gazprom neft shelf (former Sevmorneftegaz), a wholly-owned subsidiary of Gazprom, holds the gas and gas condensate exploration and production license for the Shtokman field.
Cooperation within Phase 1 of the project
On July 13, 2007 Gazprom and Total signed the Framework Agreement on the major terms and conditions of cooperation when developing Phase 1 of the Shtokman gas and condensate field. The identical Agreement between Gazprom and StatoilHydro (present Statoil) was signed on October 25, 2007.
In order to implement the project, on February 21, 2008 Gazprom, Total and StatoilHydro signed the Shareholder Agreement to set up the special-purpose company Shtokman Development AG. Gazprom holds a 51 per cent stake in the company, while Total and Statoil – 25 and 24 per cent stakes, accordingly.
Gazprom retains the license for the field and all rights for product marketing.
Thus, an innovative model is being created to attract international petroleum majors for the field development. This model meets the national interests and can be used for developing other offshore projects.
Gazprom, Total and StatoilHydro are the partners for the Shtokman field development, phase one
Project implementation
The special-purpose company, Shtokman Development AG, operates Phase 1 of the Shtokman project and will own Shtokman Phase 1 infrastructure for 25 years starting from the date on which the field is brought onstream.
Gazprom dobycha shelf (Gazprom’s fully-owned subsidiary) implements Phases 2 and 3 by the order of Gazprom. The company is the customer of the port transportation and technological complex constructed in Teriberka.
Project operations
Phase 1
So far, Shtokman Development AG has developed an integrated basic project involving the entire process chain from well drilling to final products delivery to the license owner for marketing. A comprehensive engineering survey has been performed, front-end engineering design (FEED) documents have been developed according to the international and Russian standards and a package of project specifications has been prepared. The project risks have been assessed and the ways of mitigating them have been elaborated. The state expert review for offshore facilities has been finalized.
Phases 2 and 3
At this stage Gazprom dobycha shelf has developed key engineering solutions for Phases 2 and 3 of the Shtokman gas and condensate field development with a focus on process, environmental and fire safety of the future hydrocarbon production and transmission facilities.
Survey activities
Starting from 2002 dozens of survey missions have been accomplished contributing to decision-making on facilities design in the Shtokman gas and condensate field.
Hearings
In October 2006 the project successfully passed the public hearings carried out throughout the year in the Murmansk, Leningrad Oblasts and the Republic of Karelia.
Construction
In 2008 the Vyborg Shipbuilding Plant launched the construction of two semi-submersible drilling rigs (SSDR) to drill production wells in the Shtokman field. The first SSDR will be ready in the fourth quarter of 2010, the second one – in the first quarter of 2011.
Social focus of the project
The Shtokman field development will have a considerable socioeconomic impact. Russian companies will place considerable orders for the equipment production and services rendering. The infrastructure in the areas of the port complex, drilling and construction sites will expand. The domestic industry will receive an impetus for innovative development through manufacturing of new import-substituting products for the gas industry.
The project implementation will contribute to the employment growth in the Murmansk Oblast in parallel with the tax and other revenues of the local budget as well as to the social programs implementation in the region.
Russian industry participation in the project
Comprehensive development of the Shtokman gas and condensate field in the Barents Sea is primarily a Russian project using international practice and investment. The Russian industry involvement in the project is an essential precondition for its successful implementation.
Russian participation in the project involves the activity of the domestic design institutes, industrial enterprises and contracting companies, the use of the Russian materials, equipment and components, attraction of the national human resources.
Personnel management policy
Innovative solutions are being elaborated as part of the Shtokman project implementation that will allow using partially-manned technologies in extreme climatic conditions. One of the keys to successful implementation of the large-scale project is a team of highly skilled experts. Their training should be initiated at this very moment.
Environmental safety
The Russian Arctic nature is specific with high sensitivity and exposure to man-made impacts. Therefore, the basic pre-conditions for the project implementation involve meeting Russian and international environmental standards, eco-friendliness and preventing negative impacts on the marine and terrestrial ecosystems of the Arctic zone when constructing and operating the Shtokman gas and condensate field facilities.
In October 2006 the Federal Nature Management Supervision Service (Rosprirodnadzor) granted the approval of the state environmental expertise on the investment rationale for Phase 1 of the Shtokman field development embracing liquefied natural gas production and sea-borne transportation.