In April 2018 “Gazprom neft” company completed shipment of oil from the offshore platform “ Prirazlomnaya”, located on the Russian Arctic shelf. The anniversary oil transportation was completed by the tanker “Kirill Lavrov”. The company press office informed that during 4 years of field development more than 6,6 million tons of oil was produced.
“Prirazlomnaya” is the only offshore platform extracting oil located on the Russian Arctic shelf. It was constructed in the Pechora Sea, 60 km away from the shore, above the deposit containing over 70 million tons of extractable resources. There are hardly any other fields like “Prirazlomnaya” in the world due to two reasons.
Firstly, building of such facilities requires considerable investments. Secondly, oil production costs in the Arctic region may be over $80 per barrel, hence, it might be unprofitable for businesses to develop. Thirdly, Russian technologies for exploration and developing of oil reserves are imperfect. The import share for certain types of equipment reaches 90%, which under constantly tightening sanctions is a serious challenge. As for “Prirazlomnaya”, it was constructed when market price for oil was at the top levels and overseas companies were not yet prohibited from cooperating with their Russian partners.
In 2016 the extent of offshore oil production on the Norwegian Arctic shelf amounted to 1,6 million barrels per day, which is 76 million tons per year. This is significantly more compared to the most promising forecasts of “Gazprom neft” which claims that in 2019 the company will reach 4,5 million tons of oil production.
The expert in the offshore oil fields development and the professor of University of Stavanger, Ove Tobias Gudmestad, who came to St-Petersburg to lecture the students of the Mining university, explained why the difference in numbers in oil production is major.
“Reach the Norwegian level will be very difficult for Russia. You see, the area of the Barents Sea where Norwegian shelf is located does not freeze, despite rather harsh climatic conditions. However, if we consider the Russian water body, it is covered by ice. This means you need to implement more innovative, expensive technologies,” the expert said.
“Prirazlomnaya” required far greater capital investment than the Norwegian offshore platforms. For example, its structure is built to resists a 10 meter wave, which according to statistics occurs once in a hundred years. Three–meter long concrete walls in the lower part of the structure are covered with a thick steel layer which provides additional safety. It is said the platform foundation could even withstand a direct torpedo hit. Understandably, this and other safety factors obligatory for deposits’ development on the Russian shelf increase the cost of production.
One more aspect which affects profitability is low oil recovery from domestic wells. As the chairman of the State Duma Energy Committee, Pavel Zavalniy said: “Today in Russia the projected factor is 36%, whereas the current value is 26%. At the same time the best practices in Norway allow reaching 50-60%. One of the most impressive global projects of oil recovery is “Statfjord” platform (Norway). Theie oil recovery factor is 66%”.
“Climatic differences also play a great role. We have rather favorable conditions, which allow us to get the maximal results. However, Russia possesses strong capacity for increasing oil recovery up to 50%. In order to achieve this, Russia will have to introduce new state-of-the-art technologies, that will match your climate conditions and overcome this challenge”, remarks Ove Tobias Gudmestad.
But where can one get these technologies? During the “oil boom” years the extraction companies became dependent on import. It was more profitable for them to buy an off-shelf technology than to invest into local research setting themselves up for risks related to the effectiveness of domestic innovations. However, nowadays when the western partners have refused to cooperate due to sanctions, this has become a serious issue.
“Personally, I see the situation as follows. Russia and Norway share the Barents Sea water area. But there are no borders both for pollutants and for the fish inhabiting it. That is why we are simply required to collaborate in a number of directions, particularly in the field of environment protection. Those Russian and Norwegian students to whom I currently lecture will in 20 years become the CEOs of core businesses. It will be their task to push the industry forward and to think how to provide us with power resources while preserving environmental well-being. No doubt, it would be better if we deal with these issues jointly,” said Ove Tobias Gudmestad .
However, the Norwegian government takes a somewhat different view. For example, it fully supports the idea of academic cooperation between Russian and Norwegian universities while hampering collaboration between oil companies of the two countries at the same time.
Due to unfavorable state of things, the forecasts for the development of the Russian arctic shelf are rather dim. At least, until the prices for oil rise back to $100. Or else, until the Russian oil producers obtain new technologies fit for improving profitability.
Since 2012 “Rosneft” company, despite all external challenges, has been carrying out geological prospecting works in the Kara, Pechora and Okhotsk Seas. In 2017 it started drilling “Central-Olginskaya-1” well on the shelf of the Laptev Sea. Although, according to experts’ opinion, oil production there is far from being started. For this reason, at least for a short term “Prirazlomnaya” will continue holding status of the only drilling platform on the Russian Arctic shelf.
