Innovation and Efficiency. Key to Stability for West Siberian Conventional Resources

By Joe Parson, June 25, 2014

Russia continues to fight an uphill battle in its war to maintain its oil production levels, at even a plateau rate. But this battle, and the war in fact, can be won by applying enhanced oil recovery (EOR) technologies, and taking innovative measures to increase operational efficiencies.

Russia’s production per unit of effort (PPUE) has, with few exceptions, steadily declined over the last decade. This means that, despite increasing well counts, production figures are falling in absolute terms even though Russian companies have been moving away from the unsustainable Soviet model of massive sidetracking operations and have moved instead towards new EOR technologies.

Notable exceptions have been Russia’s national oil company Rosneft and state-owned regional champion Tatneft. Both have actually seen consistent increases in PPUE over the last decade – for good reasons.

Rosneft has succeeded by applying innovative technologies derived from joint research involving Russian, U.S., and European scientific research centers. The NOC has also benefited by acquiring fields with advanced technologies already in place; obvious examples include YUKOS, TNK-BP and its 50-percent position with Conoco Phillips in Polar Lights.

Tatneft has also seen an uptick in recent years through the adoption of measures to greatly enhance the efficiency of its horizontal and hydraulic fracturing operations. In his 2012 address to shareholders, Tatneft Board Chairman Rustam Minnikhanov attributed this success to the use of automated, satellite-driven Supervisory Control and Data Acquisition (SCADA) technologies to prevent waste, cut downtime and optimize well-bore awareness.  

Although LUKOIL has spent considerable time and money researching enhanced recovery methods via their subsidiary, RITEK, field information from the company’s own Analyst Databook shows that their vast swaths of Soviet-inherited fields continue to depress LUKOIL’s overall PPUE rates.

The non-sustainability of the Soviet Union’s capacity to drill wells faster than almost anyone else had led in the past to a reliance on sidetracking and relatively simple water-flooding (cleverly referred to as dual injection) to boost EOR numbers. Simple solutions were required because equipment in use in the early 1990s was seriously outdated. Western service companies even found equipment in-service that had been acquired under the World War II lend-lease program with the United States. 

Among the pioneers who started to change things was Canada’s FracMasters, Ltd. which entered the Russian market in the late 1980s and immediately saw an opportunity to vastly enhance Russia’s utilization of water stimulation via “Skin Fracking”. FracMaster folded after the 1998 financial crisis and the international services company Schlumberger acquired its equipment in Russia. Later, Russia’s now defunct major, YUKOS (empowered by hiring FracMaster management) stepped in to reboot Russia’s hydraulic fracturing and horizontal drilling sector. Russian fracking industry grew by a 100-fold factor during the YUKOS years. 

But as far as West Siberia is concerned, not much has happened since Rosneft’s takeover of YUKOS. Advances seen at Rosneft seem to relate mainly to greenfield investments in northwest and in eastern Siberia. In effect, Rosneft (and LUKOIL as well) are having to move beyond their mature West Siberian well stock