Vsevolod Cherepanov: Enormous potential

March 13, 2012, the interview was taken by Segey Pravosudov
Published in corporate Gazprom Magazine Issue 1–2

Vsevolod Cherepanov, Member of the Management Committee, Head of the Gas, Gas Condensate and Oil Production Department of Gazprom answers questions by corporate Gazprom Magazine.

Mr. Cherepanov, how much gas and liquid hydrocarbons did Gazprom produce in 2011?

In 2011 gas production amounted to 513.2 billion cubic meters, thus surpassing the planned amount by 7.5 billion cubic meters. Oil and gas condensate production was at 32.3 and 12.1 million tons accordingly.

Reserves increment

What are the results of geological exploration in 2011?

As a result of exploration operations performed by Gazprom last year, C1 hydrocarbon reserves incremented to a record high level of 728.4 million tons of fuel equivalent, with gas reaching 686.4 billion cubic meters, condensate – 38.6 million tons and oil – 3.4 million tons. Geological operations were successful on the Sakhalin shelf last year: another gas and condensate field (Mynginskoye) containing 19.9 billion cubic meters of gas and 2.5 million tons of condensate of C1+C2 categories was discovered. Testing of the second exploratory well at the Yuzhno-Kirinskoye field resulted in the reserves increment as well – 304 billion cubic meters of gas and 41.8 million tons of condensate. The field’s reserves currently total 564 billion cubic meters and 71.7 million tons (C1+C2) accordingly. The third exploratory well was drilled at the Kirinskoye field and C1 reserves addition made up 53 billion cubic meters of gas and 6.3 million tons of condensate. The field’s current reserves are evaluated at C1 category – 137.1 billion cubic meters of gas and 15.9 million tons of condensate. In 2011 the increment in commercial categories (C1+C2) reached a total of 381.2 billion cubic meters of gas and 48.9 million tons of condensate in the offshore area. Gazprom created a strong resource base in the Arctic seas shelves and in Sakhalin. It makes up nowadays 6.8 trillion tons of fuel equivalent, with gas standing at 6.3 trillion cubic meters.

Geological exploration successfully goes on at the Chayandinskoye field – around 180 billion cubic meters of gas was added here, while at the Yuzhno-Russkoye field the increment exceeded 140 billion cubic meters in C1 category. Besides Mynginskoye, two more fields were discovered – the gas-containing Novotatishchevskoye in the Orenburg Region with 0.5 million tons of fuel equivalent and the oil-containing Severo-Trassovoye in the Tomsk Region with 0.5 million tons of oil (both fields have C1+C2 reserves). Three new deposits were discovered – two gas and condensate deposits at the Yuzhno-Padinskoye field and one oil deposits in the Zapadno-Pestsovoye field with total reserves of 47.2 million tons of fuel equivalent (C1+C2 category).

It is planned to produce 528.6 billion cubic meters of gas, 12.8 million tons of gas condensate and 33.2 million tons of oil in 2012.

What are the production plans for 2012?

In 2012 we are going to produce 528.6 billion cubic meters of gas, 12.8 million tons of gas condensate and 33.2 tons of oil.

Chunsky license block in Boguchany District
Chunsky license block in Boguchany District

Chunsky license block in Boguchany District


What are your plans for the Yamal Peninsula development?

Yamal is our main target when it comes to hydrocarbons production in Western Siberia. In 2010 Gazprom design institutes developed a program for comprehensive development of hydrocarbon fields in the Yamal-Nenets Autonomous Area and north of the Krasnoyarsk Territory including the Yamal Peninsula fields and adjacent offshore areas. The program will require significant investments and will allow reaching the peak production level of 310 billion cubic meters of gas and 11 million tons of liquid hydrocarbons – this is the basic development scenario regarding offshore fields as well as production by other subsurface users. The maximum active well stock will exceed 2 thousand units.

Gas production at the Bovanenkovskoye field will eclipse 115 billion cubic meters in 2017.

The Cenomanian-Aptian deposits of the Bovanenkovskoye field are of prime importance for Gazprom in Yamal. The deposits will be brought into development in June 2012. Gazprom’s investment program stipulates launching the first 143 wells of CGTU-2 in 2012. In early 2012 there were 117 constructed wells. Production drilling is underway at the field using 10 drilling rigs. Gas production will eclipse 115 billion cubic meters in 2017. Continuous gas extraction will last 10 years that will require bringing onstream 775 wells. It’s planned to commission Phase 1 facilities of booster compressor stations on the fourth operating year, Phase 2 facilities – on the 19th year.

Bovanenkovskoye field
Bovanenkovskoye field

Bovanenkovskoye field

This year, upon granting the license to Gazprom Neft, Gazprom plans to start a triennial pilot commercial production from the Novoportovskoye oil field. For this purpose eight new wells will be drilled and five existing ones will be reactivated. It is planned to produce and carry by vessels more than 0.5 million tons of oil over three years. The peak production volume of 7.9 million tons of oil is expected in 2018. From 2015 to 2041 the accumulated oil production will be around 80 million tons, 303 wells will be drilled.

It is planned to bring The Cenomanian-Aptian deposits of the Kharasaveyskoye field into development in 2018. The peak gas extraction in the amount of 32 billion cubic meters is projected for the third operating year. The continuous extraction period will last 15 years. According to license commitments, at the next stage of Yamal development Gazprom will bring onstream the Neocomian-Jurassic deposits of the Bovanenkovskoye field in 2020. The peak extraction of formation gas in the amount of 25 billion cubic meters and deethanized condensate in the amount of 2.28 million tons is planned for the fifth operating year. The continuous extraction period will last four years.

The Low Cretaceous deposits of the Kharasaveyskoye field will be brought into production in 2025. The peak annual extraction rates will reach 12.2 billion cubic meters of gas and 1.2 million tons of condensate. The developed program stipulates that the Kruzenshternskoye field development will also begin in 2025. Under favorable conditions the deadline may be set earlier to the year 2022. The field will maximally produce 32 billion cubic meters per year. The Tambey group of fields may not be brought into production earlier 2027.

Achimov deposits

What are the prospects for gas and condensate production from the Achimov deposits?

The Achimov deposits are also promising for boosting hydrocarbons production in Western Siberia especially in regions with well-developed infrastructure and declined production from overlaying deposits. The Achimov suite relates to earliest Lower Cretaceous accumulations. It overlies the Jurassic oil- and gas-bearing complex and features complex geological structure, anomalously high formation pressure and large contents of condensate. At present, prospecting and exploration activities are underway in the Achimov deposits of some fields (Yamburgskoye, for example) to evaluate the commercial significance of reserves and find out opportunities for their subsequent commercial development.

The Achimov mine is especially well studied near the Urengoyskoye oil, gas and condensate field divided into license blocks among eight subsurface users, with Gazprom Dobycha Urengoy, NOVATEK and Rospan International being the major ones.

Commercial development first started between 1996 and 1997 at the Novo- and Vostochno-Urengoyskoye license blocks owned by Rospan International. In 2003 three wells of the Samburgsky license block owned by Arcticgaz were put into commercial production.

Between 2008 and 2009 development operations started at the first and the second license blocks of Gazprom Dobycha Urengoy. As of January 1, 2012 six wells were operational at the CGTU-31 of the first block (operated by Achimgaz). The cumulative gas production there exceeded 3.7 billion cubic meters of gas and 1.6 million tons of condensate. At the second block, 17 wells are operational at CGTU-22, with cumulative production at 1.7 billion cubic meters of gas and more than 0.8 million tons of condensate. There were no development activities in oil deposits of the Achimov accumulations, they are only 10 per cent studied and follow-up exploration is needed.

Last year TyumenNIIgiprogaz delivered a megaproject for all subsurface users by creating a Unified Development Plan for hydrocarbon deposits of the Achimov accumulations in the Urengoyskoye field. The document defines a strategy stipulating optimized rates of production and wells commissioning to minimize possible formation crossflow between layers as well as ensuring efficient hydrocarbons extraction. Potential annual extraction of separation gas and condensate by all subsurface users may reach 60 billion cubic meters and 18 million tons accordingly between 2020 and 2022. The scheme envisages taking oil deposits into operation from 2014 to 2015. The production may peak at more than 11 million tons of oil per year. It is planned to launch the development of the fourth, fifth and third production blocks of Gazprom Dobycha Urengoy in 2015, 2016 and 2017. The annual production level of 36.8 billion cubic meters of gas will be attained in 2024, the peak production of unstable condensate will be 10.8 million tons in 2022.

Gas production from Achimov deposits of Urengoyskoye field
Gas production from Achimov deposits of Urengoyskoye field

Gas production from Achimov deposits of Urengoyskoye field


When will you start developing the Ob and Taz Bays? What peak production should be attained there?

The Ob and Taz Bays are poorly explored at the moment. With no approved project documents on development expert assistance is needed to estimate peak production at most facilities. For instance, our Department estimates the potential production from these fields at no less than 100 billion cubic meters of gas per year by 2030. This estimation was performed only for some of Gazprom’s licensed production assets. According to the license commitments, the Severo-Kamennomysskoye gas field is the first to be taken into commercial development in 2018. It is planned to reach the peak extraction of 15.3 billion cubic meters of gas by 2020.

By 2030 gas production from the Ob and Taz Bays and adjacent onshore areas may exceed 50 billion cubic meters.

In 2020 production from the Kamennomysskoye-Sea gas field will start. The planned extraction level of 15.1 billion cubic meters per annum will be attained on the third operating year. The continuous production period is 13 years. In 2022 the Cenomanian gas deposit of the Semakovskoye field will be brought into development. The total extraction level of 11.8 billion cubic meters onshore and offshore is scheduled for the third operating year. Across the entire mine of the Semakovskoye field (containing Lower Cretaceous and Jurassic accumulations) the total annual production may be up to 17 billion cubic meters.

By 2030 the annual gas production from the Ob and Taz Bays and adjacent onshore areas may exceed 50 billion cubic meters.

What is the outlook for the Shtokman project?

The project parameters remained the same, gas deliveries will start in 2016 via pipelines and in 2017 in liquefied form.

What are your work plans offshore Sakhalin?

It’s planned to drill five exploratory wells and conduct 3D seismic survey of 1.4 thousand square kilometers offshore Sakhalin before 2015. At the moment, preparations are being made to take the Kirinskoye gas and condensate field into operation. According to the project, the peak production is expected to amount to 4.2 billion cubic metes per year. The project is being currently updated as drilling of exploratory well No. 3 in the season of 2010 resulted in a substantial increment of hydrocarbon reserves. Finally, the annual gas production level may exceed 6 billion cubic meters at the Kirinskoye field.


When will production start at the Chayandinskoye field? How much gas and liquid hydrocarbons will be produced there annually? When will you bring other Yakutian fields into development?

The Chayandinskoye field has a basic significance for the Yakutia gas production center. The field should secure the bulk of gas into the export-oriented gas transmission system. In 2010 the Development Plan for the Chayandinskoye oil and gas condensate field was approved. It envisages a seven-year stage of pilot commercial production between 2012 and 2018. According to the project, the oil rim of the Botuobinsky horizon will be put in production in 2014 to examine the ways of utilizing a barrier technology proposed for attaining the prescribed oil extraction ratios. To this end multifunctional four-lateral wells will be used. Gas and condensate deposits of the Botuobinsky, Khamakinsky and Talakhsky horizons will be developed starting from 2016. In general, the following production parameters have been outlined for 2018 at the pilot commercial development stage: production of formation gas (exclusive of associated gas) – 16.1 billion cubic meters, oil – 146 thousand tons, condensate – 254 thousand tons.

Based on the pilot commercial development results a decision will be made on the expediency of further utilizing the barrier technology. For the plateau production period the parameters are as follows: formation gas (exclusive of associated gas) production – 25 billion cubic meters and attaining the planned level in 2021, with the constant production maintained until 2034;maximum production of unstable condensate – 391 thousand tons on the same year; maximum oil production – 1.542 million tons in 2027.

Gazprom has elaborated the Concept for comprehensive development of license blocks in the Republic of Sakha (Yakutia) that acknowledges the expediency of obtaining the license for the Tas-Yuryakhskoye, Verkhnevilyuchanskoye, Sobolokh-Nedzhelinskoye and Srednetyungskoye fields. In December 2011 the licenses for these fields were registered in the name of Gazprom. According to license commitments, these assets have to be developed starting from 2020.

The peak annual recovery from the Tas-Yuryakhskoye oil, gas and condensate field is evaluated on the seventh operating year in the following amounts: 5 billion cubic meters of gas, 90 thousand tons of condensate, 137 thousand tons of oil. At the Verkhnevilyuchanskoye field the peak annual extraction is expected on the eighth operating year and makes up 5 billion cubic meters of gas, 95 thousand tons of condensate, 242 thousand tons of oil. The peak production at the Sobolokh-Nedzhelinskoye gas and condensate field is planned for the eighth operating year with the following amounts: 2.1 billion cubic meters of gas and 100 thousand tons of condensate. At the Srednetyungskoye gas and condensate field peak production is expected on the ninth operating year in the following amounts: 7.2 billion cubic meters of gas and 526 thousand tons of condensate.

Therefore, assuming all the project solutions are implemented between 2026 and 2028, the total production in the Yakutia center may reach 44 billion cubic meters of gas, 1.2 million tons of condensate and more than 1.9 million tons of oil.

Coalbed methane

How the project for coalbed methane is progressing? What are the prospects in this area?

Gazprom jointly with the Kemerovo Region Administration is implementing an innovative project for methane production from coal beds in Kuzbass in line with the Russian President’s assignment. The project represents a promising trend in the strategy of the Kemerovo Region socioeconomic development. As part of the Project, a new sub-industry is emerging within the Russian fuel and energy complex. It helps enhance the labor security of miners, improve the environmental situation in the region and create new workplaces.

The project’s strategic objective is to replace annual gas supplies of up to 4 billion cubic meters to the Kemerovo region from northern Russia by domestically produced gas. Starting from 2008 comprehensive exploration and pilot commercial activities have been going on at Kuzbass top-priority areas. This will make it possible to obtain by late 2012 the results of pilot production from 30 exploratory wells at the Naryksko-Ostashkinskaya area and of pilot commercial operation of 20 production wells at the Taldinskoye field.

According to the Framework Agreement of Cooperation signed by Gazprom and Shell Exploration Company (Russia) B.V. the possibility is being currently considered for setting up a joint venture or another kind of cooperation to jointly develop coalbed methane fields in Kuzbass.

Between 2008 and 2009 seven exploratory wells were built at the Taldinskoye field. In February 2010 the first Russian facility for coalbed methane production was put into pilot operation with the participation of Russian President Dmitry Medvedev. Between 2010 and 2011 pilot production from these wells was conducted. Total daily gas production from these wells hovers around 14–16 thousand cubic meters (2–2.3 thousand cubic meters per one well). Such output correlates with average output of coalbed methane wells in such countries as the USA, Canada, Australia and China. Total methane extraction amounted to 5.18 million cubic meters in 2011 and 10.16 million cubic meters in 2010 from the launch of pilot production.

Coalbed methane production
Coalbed methane production

Coalbed methane production

In 2010 recoverable gas was marketed as natural gas vehicle (NGV) fuel via CNG filling stations including filling of two mobile gas filling trucks. Gas consumption at CNG filling stations averaged 1,500–1,800 cubic meters per day. By now, 104 vehicles have been converted to gas at the Taldinsky coal mine. Gazprom Dobycha Kuznetsk also fills its own seven motor vehicles with NGV fuel.

In order to produce power energy for own facilities and convey its surplus to the power grid the pre-commissioning activities ended and pilot commercial operation started in late November 2010 at a gas-fired reciprocating power station with the capacity of 1.35 MW. In January 2011 the second 1.063 MW gas-fired reciprocating power station was installed and launched within the Kuzbass technology park at the expense of the Kemerovo Region Administration. It is intended for power generation and supply to the Taldinsky surface mine sub-station and the Zhernovskaya 1 and Zhernovskaya 3 mines under construction. At present, the power stations daily consume a total of 11.3–11.9 thousand cubic meters. In this way, the whole of the extracted gas is utilized.

From the end of 2010 to June 2011, 10 exploratory wells were built at the Naryksko-Ostashkinskaya area and 55 hydrofracturing operations were carried out to stimulate gas inflow. The infrastructure installation and pilot operation stage has started. At the moment, the preparation of the ground for building two horizontal and 18 vertical exploratory wells (roads, sites, power line supports construction) is nearing completion. Four vertical wells have been drilled and another two wells are being drilled at the ready drilling sites.

Fundamental differences in extraction of conventional gas and coalbed methane predetermine the use of totally new and more sophisticated and expensive technologies. As a result, the innovative project for coalbed methane production requires specific measures of state support especially at the first stage. These, first of all, include the tax abatements.

The main state support measure for coalbed methane production in Russia can be a zero severance tax and tax benefits at the regional level. Under the existing legislation the Kemerovo Region Administration, on its part, took a number of measures to ensure preferential taxation of the project on the regional level. They are as follows: the property tax rate has been reduced from 2.2 to zero per cent for Gazprom Dobycha Kuznetsk implementing the project in the Kemerovo Region; the corporate profit tax rate intended for the regional budget has been abated from 18 to 13.5 per cent, the lease payment for land plots allocated for methane production facilities is now five times less than before.

Gazprom and the Kemerovo Region Administration have recurrently appealed to the Russian Federation Government concerning introduction of a zero severance tax for coalbed methane. In December 2011 amendments were introduced in the Russian Classified Index of Natural Resources and Underground Waters. Categorizing coalbed methane as an individual kind of natural resources makes it possible to start actions aimed at setting the zero severance tax for it. In this context, Gazprom sent another request to the Russian Ministry of Finance in January 2012 about setting the zero severance tax in coalbed methane production.

In 2012 it is planned to build in the Naryksko-Ostashkinskaya area 18 exploratory wells including two wells with horizontal end and passage through the coal seam engaging the advanced international practices according to Maxial 2 method developed by Australian Mitchell Group. Besides, 10 production wells will be built at the Taldinskaya area. Between 2015 and 2017 this technology will be totally refined to initiate production drilling of up to 96 wells a year. By 2025 all the local consumers will be switched to indigenous gas (provided that production amounts to 4 billion cubic meters).

In the aim of subsequently lowering the gas hazard in Kuzbass mines, the joint actions are being taken with regional coal producers (Evraz, Yuzhkuzbassugol Coal Company, Novolipetsk Metallurgical Plant – Zhernovskaya mine) and design institutes (Gazprom Promgaz, Kuzbassgiproshakht, Giprougol) and joint projects are going to be implemented on coordinating mining works and gas production.


What are the plans for gas production in the Irkutsk Region?

The unique Kovyktinskoye gas and condensate field serves as the basis for building the Irkutsk gas production center. In March 2011 Gazprom acquired the property and assets of RUSIA Petroleum which had owned hydrocarbons exploration and production license for the Kovyktinskoye gas and condensate field. On October 3, 2011 the Federal Subsurface Use Agency re-registered a license in the name of Gazprom with a view to produce hydrocarbon feedstock and explore the subsurface resources of the Kovyktinskoye gas and condensate field.

In October 2011 Gazprom brought the Kovyktinskoye gas and condensate field into pilot commercial development. At this stage the Company plans a great scope of studies on follow-up exploration, evaluating wells productivity and meeting some other challenges that will help avoid investment risks at the next stage of full-scale development. The Company is not yet planning to achieve high levels of production and gasification of the Irkutsk Region facilities (due to absence of gas transmission scheme). Pursuant to the General Scheme for the Gas Industry Development until 2030, commercial development of the Kovyktinskoye gas and condensate field will start between 2017 and 2022. In the first half of 2012 it is planned to elaborate a draft investment rationale for comprehensive gas supply to southern region of the Irkutsk Region stipulating, inter alia, construction of gas processing and chemical capacities.

Subsequently the term of taking the Kovyktinskoye field into commercial operation will be defined and, taking into account updates on gas market, the General Scheme for gas supply and gasification of the Irkutsk Region will be adjusted.


When will Gazprom start producing gas on Vietnam’s shelf?

Starting from 2002, Gazprom has conducted, according to the contract signed with the PetroVietnam Vietnamese oil and gas corporation, exploration activities in licensed block 112 located offshore the Socialist Republic of Vietnam. As part of the Exploration Activities Program, six exploratory and appraisal wells were drilled in structures outlined after seismic survey activities.

In 2007 a gas inflow rated at some 400 thousand cubic meters per day was reported during the first exploratory well drilling and testing in the Bao Vang structure. In 2009 a gas inflow rated at 300 thousand cubic meters per day was reported in the Bao Den structure. In this way, two fields were discovered. It is planned to perform hydrocarbon reserves calculation and feasibility study for the Bao Vang field in 2012. Later on, project documents for field development will be elaborated and its commissioning is planned for 2017–2018.

In 2008 Gazprom and PetroVietnam signed the Strategic Partnership Agreement. As part of the document, the Vietnamese party proposed to consider Gazprom’s participation through 49 per cent shareholding in joint development of the Hai Thach and Moc Tinh fields offshore Vietnam. They contain 55.8 billion cubic meters of gas and 25.1 million tons of condensate. At present, pre-development of the fields is ending and the first exploratory well started to be constructed. The Nam Con Son offshore gas trunkline running near the fields will be included in the development infrastructure.

The feasibility for Gazprom to take part in developing the Hai Thach and Moc Tinh fields was addressed on November 11, 2011 at the meeting of Gazprom’s Central Commission for Subsurface Resources Use and Licensing Management, which recommended the Company’s leadership to review its participation in the project. In case a positive decision is taken on Gazprom EP International entry (Gazprom’s dedicated company focused on foreign projects), the first output will be produced this December.

Geological exploration offshore Vietnam
Geological exploration offshore Vietnam

Geological exploration offshore Vietnam