Vitaly Markelov: Expanding geographic reach

April 17, 2013, The interview was taken by Sergey Pravosudov
Published in corporate Gazprom Magazine Issue 4

Vitaly Markelov, Deputy Chairman of the Gazprom Management Committee answers the questions posed by Gazprom Magazine.

Vitaly Markelov (right) at Nyuksenitskaya CS
Vitaly Markelov (right) at Nyuksenitskaya CS

Vitaly Markelov (right) at Nyuksenitskaya CS

Mr. Markelov, how much gas and liquid hydrocarbons did Gazprom produce in 2012?

In 2012 Gazprom produced 487 billion cubic meters of gas, 12.85 million tons of gas condensate and 33.33 million tons of oil.

What are the results of geological exploration in 2012?

According to the overall results of geological exploration performed by the Company in the Russian Federation in 2012, the total growth of C1 hydrocarbon reserves made up 600.5 million tons of fuel equivalent, including 572.6 billion cubic meters of gas, 21.5 million tons of gas condensate and 6.5 million tons of oil. The replenishment rate of gas reserves reached 117.6 per cent.

The largest growth of reserves was achieved at federal fields in the Yamal-Nenets Autonomous Area, namely the Severo-Tambeyskoye and Tasiyskoye fields (386 million tons of fuel equivalent) as well as the Chayandinskoye field in the Republic of Sakha (Yakutia) (73 million tons of fuel equivalent). The physical indicators of geological exploration in the Russian Federation are as follows: the scope of exploration drilling amounted to 77.1 thousand meters, with 1,840 linear kilometers of 2D exploration surveys and 5,954 square kilometers of 3D exploration surveys conducted, 46 wells constructed and RUB 25 billion spent.

The production plan for the current year includes 495.73 billion cubic meters of gas, 14.75 million tons of gas condensate, 33.34 million tons of oil

What are the plans in production and reserves growth for 2013?

The production plan for the current year includes 495.73 billion cubic meters of gas, 14.75 million tons of gas condensate, 33.34 million tons of oil. In 2013 we plan to increase C1 hydrocarbon reserves by 560.5 million tons of fuel equivalent, including 521.7 billion cubic meters of gas, 23 million tons of gas condensate and 15.8 million tons of oil through geological exploration.


Please tell us about the plans for the Yamal Peninsula development.

The Program for comprehensive development of hydrocarbon fields in the Yamal-Nenets Autonomous Area and northern Krasnoyarsk Territory, approved by the Russian Energy Ministry Order No.441 of September 10, 2010, provides for two scenarios of hydrocarbons production in the Yamal Peninsula: the basic one, on the basis of in-place gas reserves and the intensive one, taking into account the prospective resources in the adjacent offshore fields. According to the basic scenario, gas production in the Yamal Peninsula is expected to come up to 236 billion cubic meters a year, and after 2025 it is planned to develop the largest fields in the Kara Sea with the annual production of 74 billion cubic meters.

In order to develop Yamal's onshore fields three production zones – Bovanenkovo, Tambey and Southern – will be established.

The first group (Bovanenkovo) includes three basic fields: Bovanenkovskoye, Kharasaveyskoye and Kruzenshternskoye. The total production within the group is estimated at 217 billion cubic meters of gas and 4 million tons of stabilized condensate a year.

The second group (Tambey) comprises six fields: Yuzhno-Tambeyskoye, Severo-Tambeyskoye, Zapadno-Tambeyskoye, Tasiyskoye, Malyginskoye, Syadorskoye. It is projected to produce there a total of 65 billion cubic meters of gas and 2.8 million tons of gas condensate per annum.

Gas production in the Yamal Peninsula is expected to come up to 236 billion cubic meters a year, and after 2025 it is planned to develop the largest fields in the Kara Sea with the annual production of 74 billion cubic meters

The third group (Southern) comprises nine fields: Novoportovskoye, Nurminskoye, Malo-Yamalskoye, Rostovtsevskoye, Arkticheskoye, Sredne-Yamalskoye, Khambateyskoye, Neytinskoye, Kamennomysskoye. The group is regarded as the top-priority oil production site with the maximum oil production level at 7 million tons a year. The gas production potential of the Southern group is not high – some 30 billion cubic meters a year.

The Kara Sea development will start after 2025 to attain the forecasted level of gas production and load gas trunklines in the period of declined gas production from the onshore fields of Yamal.

What is the progress with the construction of a gas pipeline system from the Yamal Peninsula?

Natural and climatic conditions of Yamal require applying cutting-edge and eco-friendly technologies in field development and gas trunklines construction. The Bovanenkovo – Ukhta gas trunkline system project provides for building and bringing onstream a two-string gas pipeline stretching for 2,512.37 kilometers and nine two-shop compressor stations with the total capacity of 1,854 MW.

Gazprom started the active stage of the project implementation in August 2008 (construction of the submerged crossing via the Baidarata Bay). In late 2012 the linear section of the gas pipeline's first string was commissioned along with two compressor stations – Baidaratskaya CS-1 and Chikshinskaya CS-8. By the end of the current year, facilities of the first string will be gradually brought onstream.

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

The Achimov deposits of the Urengoy oil, gas and condensate field are being developed in line with the Unified Development Plan for hydrocarbon deposits of the Achimov accumulations in the Urengoy field elaborated by TyumenNIIgiprogaz and approved in 2011. As part of this document, the development parameters were specified not only for the license blocks of Gazprom Dobycha Urengoy, but for Rospan International and Arcticgaz as well.

Currently, the development of the first and second license blocks of Gazprom Dobycha Urengoy is in progress. In 2012 gas production from the Achimov deposits of Gazprom Dobycha Urengoy totaled 2.7 billion cubic meters of gas: 1.2 billion cubic meters from the first block and 1.5 billion cubic meters from the second one, as well as 0.5 and 0.7 million tons of gas condensate accordingly.

With all the five license blocks of Gazprom Dobycha Urengoy brought into development, the total gas production is projected to be 33 billion cubic meters by 2020 and reach its peak level of 38 billion cubic meters by 2025. Meanwhile, the gas condensate production will plateau at 10 million tons.


What are the oil production plans at the Prirazlomnoye field?

Intense preparations are currently being made to bring online the Prirazlomnoye oil field: an onshore maintenance base was leased in Murmansk and an international airport was opened; two versatile ice-breaking supply vessels were constructed and commissioned, tankers and specialized vessels were rented; the sufficient amount of equipment and means of oil spill response were reserved and deployed at the transshipment terminal in Varandey, at the Prirazlomnaya offshore ice-resistant stationary platform and salvage vessels keeping the watch near it.

In the fourth quarter of 2013 we expect to receive the first oil output at the Prirazlomnoye field.

When are you going to start developing the Ob and Taz Bays? What will be the maximum production at these fields?

The Program for hydrocarbon resources development on the Russian Federation shelf until 2030 identified the Severo-Kamennomysskoye and Kamennomysskoye-more gas fields as the development priorities in the Ob and Taz Bays. Gas production in the region is to start in 2019–2020.

The development of the Ob and Taz Bays may yield the annual gas production of more than 50 billion cubic meters. At the same time, offshore development projects are cash-consuming and may be launched in case there is secure long-term gas demand.

And what are the Shtokman project outlooks?

The Shtokman gas and condensate field development strategy envisages using gas for pipeline transmission as well as for liquefaction. At present, Gazprom Dobycha Shelf and Giprospetsgaz are making preparations for the Shtokman field development. The field pre-development process provides for deepwater placement of wellheads and production gathering systems, gas and condensate treatment at the FPSO system, gas deliveries onshore in a one-phase state and offloading of stabilized condensate to tankers.

Design and survey operations for the offshore facilities are to be completed in 2014. The project documents for the LNG plant will be ready in 2015.

Please tell us about the planned activities offshore Sakhalin.

The Kirinskoye gas and condensate field is the priority development target offshore Sakhalin. The construction and pre-development of the onshore and offshore process systems are in progress there. Gas production will start in the fourth quarter of the current year.

The next stage of the Sakhalin shelf development will involve bringing into production the Yuzhno-Kirinskoye and Mynginskoye fields. At present, Gazprom is preparing the process engineering package.

The development of the Ayashsky and Vostochno-Odoptinsky blocks of the Sakhalin III project is planned after adjusting the estimates of their reserves in the course of geological exploration activities.

Eastern Siberia

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

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 2017. 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 production 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.

The decisions on commissioning other licensed fields of Gazprom in Yakutia will be made upon completion of geological exploration, updating the resource base as well as production capacities of operational facilities and defining gas sales markets.

How will the Yakutia – Khabarovsk – Vladivostok system be constructed?

As you know, in the end of the last year the name of the Yakutia – Khabarovsk – Vladivostok gas pipeline was changed to the Power of Siberia gas trunkline. This pipeline is aimed at conveying gas not only from the Chayandinskoye field, but other fields of the Yakutia gas production center as well. Its total productivity will come up to 32.5 billion cubic meters of gas a year. The gas pipeline route is to be laid along the Eastern Siberia – Pacific Ocean oil pipeline connecting the maximum possible amount of regional consumers.

The commissioning of the Power of Siberia gas pipeline is scheduled for the fourth quarter of 2016. The gas pipeline will stretch for 2,166 kilometers to Belogorsk, where the gas processing and gas chemical complex will be located. The gas pipeline is made of 1,420 millimeter pipes, its operating pressure is 9.8 MPa. It is planned to construct eight compressor stations along this section with the total capacity of gas compressor units reaching 788 MW.

Commissioning of the gas pipeline at the Belogorsk – Khabarovsk section is scheduled for 2020. The gas pipeline's length will be 842 kilometers. This gas pipeline section will consist of 1,020 millimeter pipes and stipulate one compressor station with the total installed capacity of gas compressor units at 32 MW. 

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

An innovative project for coalbed methane production in Kuzbass is one of the promising trends 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.

In February 2010 the first Russian facility for coalbed methane production was put into pilot operation in the Taldinskoye field. During pilot production from seven exploratory wells over 12 million cubic meters of methane was produced. In 2010 recoverable gas was marketed as natural gas vehicle (NGV) fuel via Compressed natural gas filling stations including filling of two mobile gas filling trucks.

In late 2010 in order to develop the technologies of electric power generation and its supply to the power grid, the pre-commissioning activities ended and pilot commercial operation started at a gas-fired reciprocating power station with the capacity of 1.35 MW. In early 2011 the second 1.063 MW gas-fired reciprocating power station was installed and launched for power generation and supply to the Taldinsky surface mine sub-station and the Zhernovskaya 1 and Zhernovskaya 3 mines under construction.

In 2011, 10 exploratory wells were built in the Naryksko-Ostashkinskaya area. Pilot operation of these wells is scheduled for this year.

Between 2013 and 2015 we are planning to start pilot commercial operation of the Taldinskoye coalbed methane field, finish geological exploration in the Naryksko-Ostashkinskaya area and launch exploration activities in the promising Chaltoksky block and the Tutuyasskaya (Raspadskaya) area.

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

The Kovyktinskoye gas and condensate field is of primary importance for building the Irkutsk gas production center. The Investment Rationale for the Chayandinskoye oil, gas and condensate field pre-development, gas transmission and processing identified the joint development of the Chayandinskoye (with up to 25 billion cubic meters of gas production annually) and the Kovyktinskoye (with up to 35.3 billion cubic meters of gas production annually) fields as the prioritized activity. Currently, the terms of bringing the Kovyktinskoye field into commercial operation, as well as potential production volumes are in line with the outlooks of long-term gas demand of potential consumers.


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

In 2012 Gazprom obtained stakes in blocks 05.2 and 05.3 offshore Vietnam in the South China Sea. Two gas and condensate fields – Moc Tinh (block 05.3) and Hai Thach (blocks 05.2 and 05.3) were discovered within the blocks. These fields contain 55.6 billion cubic meters of gas and 25.1 million tons of gas condensate.

The fields are located 320 kilometers away from the Vung Tau onshore base. The Nam Con Son offshore gas pipeline runs 43 kilometers away from the Hai Thach field. The fields lie in water depth of 100 to 135 meters.

In order to develop the fields 16 exploratory wells will be constructed. At present, the project is at the pre-development stage. Construction of the fourth production well from the WHP-MT1 production platform (Moc Tinh field) is in progress. The first gas is expected in June 2013.