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Alexander Shpilman: if production from the Bazhen reaches 10 mln tns of oil a year, we値l achieve our first objective

July 04/ 15:42

Khanty-Mansiisk. The economic development today is impossible without petroleum industry. However, scientists keep saying that conventional reserves of oil are getting depleted and we’ll run out of them in just 50 years’ time.

A lot of researchers claim that the solution to the problem is developing hard-to-recover reserves, including those of the Bazhen formation. Hard-to-recover reserves are one of the key priorities for the V.I.Shpilman Center for Sustainable Mining. Its specialists have evaluated the reserves contained in the challenging Bazhen.  

Alexander Shiplman, the director of the Center talked to the Oil and Gas Information Agency about the ways to reach the hard-to-recover oil and increase its production.

- Large fields will soon be depleted. At the same time there is a lot of controversy concerning the Bazhen’ reserves. Experts’ opinions vary within 5 to 30 bln tons, while the academic Ivan Nesterov estimated them at 20 bln tons. What is the truth then? Will we be able to reveal the secret of the Bazhen?

 - The controversy is due to the misuse of the term. Geologists use different notions. Firstly, the original oil in place is the oil contained in the formation. A lot of researchers agree that it is about 100 bln tons. Secondly, recoverable reserves are the reserves that can be recovered using the current technology. The current technology allows to extract about 5-6% from shale formation, that is about 5-6 bln tons. Of cause there are optimists who believe that using alternative technologies we will be able to extract up to 20 bln t. The others, on the contrary, speak about just 3 bln tons.  Geologists have similar knowledge of the nature, but they estimate technologies, especially future ones, differently.

We have come up with some estimates we try to stick to. We are more concerned with some other indicators, in particular how much oil cane be extracted from a square kilometer. Why so? Because when we define well spacing we plan the drainage area per well, thus calculating economic efficiency to see if the profit will exceed the cost of drilling.    

Some experts believe that the initial production rate of a horizontal well should amount to at least 60-70 tons, this way a well with a kilometer-long horizontal wellbore will not just pay back, but will bring some profit.  Such a well can be called economic. So, such estimates are more important for us that trying to guess how much oil there is in the Bazhen.

- Alexander, how much oil do you think can be extracted from the Bazhen in the nearest future? And what needs to be done to do so? 

- Based on 2017 data over 600 thousand tons of oil are really recovered in Khanty-Mansisk. This is not a big figure for Russia or the region, but if it were in another place it would be considered a good result.

We are talking about a different thing now. How to reach 20-30 mln tons per year production, how to increase the production 40-60 times. That’s what worries us the most.

We understand that to increase the recovery  from the Bazhen we need to test and implement new technologies for exploration and production. Lots of them require state-of-the-art equipment because we deal with very special rocks here.

When we started studying shale reservoirs we realized that we needed an electronic microscope  to be able to see the rock structure. Similarly we need equipment with a higher resolution to study the Bazhen rocks. This is the challenge for the geologists and petroleum specialists.  

The same is true about the production technologies. Some of them are based on previous developments, but shales require a different approach. Almost all the companies, Gazpromneft, LUKoil, Surgutneftegaz, are testing new technologies. Pilot operations are in process, there is no need to hurry. I think that in 2-3 years’ time the companies will start implementing their methods. 

In my opinion, soon we’ll be drilling not just one or two pilot wells, but hundreds. Luckily the price for oil permits us to do so.

- Full development of the Bazhen suit is still the matter of distant future. Do Russian companies, Gazpromneft for one, which initiated the Bazhen National Project, have a chance to draw it closer?     

- The participants and the authors of the national project face serious challenges. Its head, Kirill Strezhnev, an experienced leader, will be able to overcome them all. He has managed to gather a good team, so I am sure they will be able to accomplish their objectives.

I am also a participant of the project. I think this is the right way to develop hard-to-recover reserves. The territory of the pilot has already been allocated, the Palyanovsk license area. It is planned not just to produce oil there but also to test dozens of new technologies. By the way, they will be Russian technologies as well. As you know the very strange decision of the US to impose sanctions against shale oil production promotes the development of Russian technologies. 

I like that fact that Gazpromneft is open for cooperation. The company has developed a number of activities to arrange a consortium, where petroleum specialist can join their efforts in creating and implementing new technologies. It is true that not all the majors will be interested in such an offer, but there are minor companies which would be happy to participate.     

 V.I.Shpilman Center for Sustainable Mining and the other authors of the national project decided to create a new core laboratory based at our core store. We have good equipment and experienced staff, and still we need to employ a lot of new equipment and specialists to work with it.  

One of our first incentives was the decision to use our existing laboratories at the core store. I think we’ll purchase some equipment and start using it as early as 2018.

Gazproneft and ourselves think of the center as a joint venture, which would be used to study the core provided by any company. What we are doing is creating a consortium for studying the core of the Bazhen suit.

- In May the well Bazhen 1 started to be drilled at the pilot area. Can you tell more about it? What hopes are you placing on it? Are there any results yet?

- the well Bazhen 1 is being drilled at the most promising part of the Frolov megadip. Drilling is done by Rosgeoogia hired by the Mineral Reserves Department for the Ural Federal District.

By May the footage was 900 meters and this is the most recent figure that I am aware of. It must be bigger now. The well is in the primary stage of construction, it hasn’t reached the Bazhen suit yet. A lot of tests need to be done, including logging, VSP, etc.

Let me say it again that we are just beginning the tests, which will take at least two years, 2018-2019. No quick results should be expected.

If we try to predict the future, the production of 20-30 mln tons per year will be possible no sooner than 2030.

- In an interview a few years ago you spoke about the Yugra State University and its chemical department. You said you were going to cooperate with the chemists. Did you do it? What exactly have you managed to achieve over the years?    

- Our center cooperates with numerous universities, including those of Tyumen, St Petersburg, Moscow, Yugra, Surgut. Such cooperation means a lot. Our employees teach at the universities, students write their works, which we assess as part of exam committees. This is an ongoing fruitful process, which we strengthen from year to year. 

The cooperation with the Yugra University and its chemical department in particular is really important for us. We encourage chemists to work with us, especially at the core lab. A few people are already working there, both freshmen and PhDs. We have a good base for implementing new technologies in core studies. I think that the universities will join the project initiated by Gazpromneft.   

- Alexander, you have been teaching at university for quite a few years, can you tell us about the situation with young specialists? Are they encouraged to devote their lives to petroleum geology?

- There is a huge demand for good specialists. A young geologist will find work easily, provided he studied well. Around a hundred people a year graduate from Tyumen University. Everyone who studies reasonably and wants to work with the industry will be able to find a job either in Tyumen or in the North of the region.

Sometime a lack of human resources can be felt. Too many economists and lawyers have graduated over the years. There is a misbalance that the government talked about: universities teach too many specialists not needed in the country, while having a huge lack of necessary staff.   

The education system in Russia has its faults too. According to the current legislation the Bachelor degree is not considered higher education. I‘ve had a few cases when I had to train BSs who came to work in my company. It turned out that they can’t be engineers. I had to send them back to continue their education. I favor specialists’ degree. I think it makes no sense to let Bachelors graduate without finishing proper training.   

Now cross-disciplinary programs are becoming more popular, since they enable people with different qualification learn something useful for their work. I have experimented with such programs in my center. The Industrial University and ourselves developed week-long trainings called Geology for Non-geologists. Such trainings helped accountants and cost-estimate specialists to better understand what was written in the contracts. The experiment proved to be useful. A lot of people thanked us for the fact that they had understood the basics of geology in a week’s time, had realized what the Bazhen formation was. 

- What other big projects are the center’s specialists working on? What are the plans for this year?

- We have a lot of plans. One of our big projects is the core study center I have already mentioned. If we speak about international activity, we’ve been cooperating with Belarusneft for two years in terms of core study.

Besides, the center has completed several federal projects including the study of Ygansko-Koltorskaya exploration area. The work on the Karabashskaya area is also complete.

We devote a lot of time to studying the Bazhen formation, a lot of staff work on it.

The key event in 2018 is the center’s 25th anniversary. We are planning to issue brochures, publish our works.

- Alexander, what should we expect in the petroleum industry in 2018-2019?

- For a geologist there is nothing like discovering  new fields. So, I always look forward to new discoveries and feel happy about them. They may be surprising, we may not expect to discover a large field but then we do. Like it happened with Ourienskoe field located at the border of Sverdlovsk region. We didn’t use to think the area to be perspective, but it turned out to be a large field with 200 mln tons of reserves. 

I’d also like the Bazhen’s production to increase. The work that is being done should have good results. As soon as the annual production from the Bazhen exceeds a million barrels I will say that we have done a lot. As soon as it exceeds 10 million, I’ll say we have achieved our first objective.

I hope that bidding for licenses will go well. The price for licenses has become huge, which indicates investors’ interest to Yugra’s  reserves. Living in the reaches region we should be interested in exploration and production as well as reserves increment. 

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