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An Unpriced Product

   The Russian oil and gas industry generates over 3 million tons of cuttings a year. Cuttings accumulate at the bottom of water reservoirs after oil spills and are generated as a by-product of oil treatment processes or form in sediment in storage and transportation tanks and are spilled on the ground as a result of accidents or during technological processes. About one third of the sludge that accumulates comes from oil producing companies. However, Russian legislation does not have clear provisions regarding the ownership of products produced from sludge. Sludge products cannot be sold on the market as full-fledged products.

   “No-one in the last 20 years has taken responsibility to amend legislation or to make sludge products tradable,” Vyacheslav Manyrin, the president of ROSING (the Russian Society of Oil and Gas Engineers) and chairman of the Sub-committee on Energy Strategy and Oil and Gas Industry Development Issues of the Chamber of Commerce and Industry (CCI), said at the sub-committee meeting on cutting disposals in Russia held October 12, 2010 in Moscow.

   Production companies are trying to get rid of wasted ballast: no Mineral extraction tax and export duties breaks on oil and oil products are received when cuttings are disposed. Environmental protection requirements are also getting more strict.

LUKOIL and TNK-BP Intend to Promptly Dispose of Oil Cuttings Inherited from Soviet Era

   LUKOIL is using a comprehensive approach to cutting disposal. LUKOIL disposes of waste both on its own and by hiring contractors. Marina Chikovani, a leading expert at the LUKOIL Environmental Department said that in 2003 LUKOIL launched a cuttings disposal program at the LUKOIL Neftochim Burgas Refinery (Bulgaria) where it invested $3 million. A LUKOIL technological program at the facility envisions using German-made equipment by BAUGRUND and building a depot for technological waste.

   Two lines of disposal facilities are planned at the LUKOIL Permnefteorgsintez Refinery as well. “The construction of the first line facility was started last year,” Chikovani said, “the train is currently in construction. A stripping unit is to be installed and sludge briquetting is planned. In the next several years, this program will allow waste disposal including waste accumulated in previous years, and most importantly, it will prevent the accumulation of waste in the future”, Chikovani told OGE.

   Like other major Russian oil and gas producing companies, LUKOIL faces the issue of disposing of waste accumulated prior to 1991. Chikovani said she believes that there is no established compensation mechanism covering previous environmental damage and no provisions for any allowances to recover the expenses incurred by companies to pay for environmental damage that dates from periods preceding privatisation. No incentives exist for companies to dispose of such waste, Chikovani said. She added that not only do companies not receive any allowances, they must also pay for disposing of the waste.
While LUKOIL disposes of liquid waste on its own, TNK-BP uses contractors to dispose of both liquid and solid waste. TNK-BP plans to bury its oil waste by 2017, Elena Lebedeva, the director of TNK-BP Management’s Environmental Department, said. At the Russian CCI sub-committee meeting, Lebedeva talked about the reinjection of cuttings, an advanced disposal technology. She said that the use of that technology is hindered by the lack of appropriate regulations and a long payout period. For example, the payout period for the Samotlor field is estimated to be seven years, Lebedeva said. She said she does not expect any technological breakthrough in the cuttings disposal industry in the near future.

Companies are Trying, but not to the Best of Their Abilities

   TNK-BP was the first company to start a waste disposal program, launching one at its Saratov refinery which was built in 1934, ROSING Central Council member Konstantin Pestsov said at the CCI sub-committee meeting. From 2003 to 2009, the pollution due to waste on the facility’s territory dropped in half; now the polluted area is less than 2 percent of the refinery’s total acerage, the TNK-BP public affairs office said. Workers at the refinery also liquidated four oil-storage pits, two sludge reservoirs and emergency sludge pit and an oil remover. These efforts paid off, reducing annual air emissions by 3,000 tons. By 2014, the Saratov refinery plans to invest over $20 million in environmental protection projects.

   Experts from the AT Consulting Company, which studies B2B markets in Russia and the CIS, believe that the funding allocated to environmental protection programs is not sufficient for sludge disposal. The waste disposal industry, including services and equipment depends highly on funds allocated by vertically integrated oil companies to environmental programs.

   The monetary value of the waste disposal market is now growing at a rate of 14 to 15 percent a year. Over the last five years oil sludge has accumulated at an average rate 20 percent higher than the waste disposal rate, AT Consulting General Director Amin Seidov said. Seidov said he believes that waste disposal could be stimulated by stricter environmental regulations, rises in oil prices, the removal of administrative barriers and by using cheaper methods to dispose of waste. He noted that in additional to major pipeline accidents, processing sludge to produce oil products boosts the waste disposal market.

Special Receipts

   The Institute of Оil Chemistry (Tomsk city) proposed a comprehensive physical-chemical and microbiologic sludge treatment method. The institute developed a detergent composition based on biodegradable surfactants that can stimulate the growth and activity of hydrocarbon-oxidizing microorganisms in the biodegradation of sludge and also developed biological preparation for treatment of oil polluted waters and soil. At the CCI sub-committee meeting, Institute of Oil Chemistry Director Lyubov Altunina spoke about pilot testing of a proposed comprehensive sludge treatment method at the Malorechenkiy field in Tomsk Region: after initial treatment, the concentration of polluting oil decreased by 63 percent after which it was followed by further treatment using microorganisms-destructors.

   Gubkin Oil and Gas Institute Industrial EcologyDepartment head Stanislav Mescherikov said that the main problem with using sludge treatment methods developed by major international companies is that these methods are developed to work only under certain conditions and only for a sludge of a certain composition.

   Gennady Shmal, the chairman of the Oil and Gas Producers Association, said that each company needs an individual approach to waste disposal. He illustrated this point of view with the example of Slavneft’s Mendeleyev Refinery in Yaroslavl Region where millions of tons of acidic tars have accumulated. He pointed out that not a single company agreed to dispose this waste because of the highly specific technologies required.

   Shmal noted that there are examples of successful responses to oil spills. He said some of the most efficient technologies are those being used by Biomedkhim and methods developed by Ivan Neseterov, a member of the Russian Academy of Sciences. Shmal said that oil spills occurred more often twenty years ago than they do today and pointed out that they used to be cleaned mechanically; for example, a centrifuge was used at the Samotlor field, he said.

   Speaking on ROSING’s efforts to solve sludge disposal issues with the support of private companies and the government, Shmal said that if ROSING’s efforts bring at even just 500,000 or 1 million tons of oil, it would be a good contribution.

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