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   “Prirazlomnaya” is the first ever offshore ice-resistant fixed platform (a.k.a. MLSP in Russian). It has been designed for offshore exploration of Prirazlomnoye field, located in the Pechora sea (in the south-western part of the Barents Sea). Construction of the platform had been going on for years, and in August it was finally towed to the oil field. The platform will secure a year-round drilling – both vertical and horizontal — crude oil production and preparation for transportation by tanker.

   The platform is unique as it is able to operate in extreme climatic conditions with the temperature as low as minus 50 degrees Celsius. In this sector of Arctic the ice sheet stays seven months a year, from November to May. The average wave height equals to 3.9 meters, and maximum heights can reach 13 meters.
Special transport and technological system that includes tankers, supply vessels, and a floating oil storage has been developed for exploration of Prirazlomnoye oil field. At the same time, an onshore infrastructure is being created. It consists of a shift camp, airfield for helicopters near the Varandey village, permanent accommodation and offices at Usinsk, as well as supply and technical support base in Murmansk.

How It All Began: The History

   The platform designing began in 1992, right after Rosshelf was founded by a decree of the Russian president. It was founded by Gazprom, the Russian Scientific Center Kurchatov Institute, Sevmash plant, the Rubin design bureau and other regional companies closely connected with exploration of Shtokman and Prirazlomnoye fields. Rosshelf obtained licenses for those fields’ development. The list of investors changed several times and so the list of construction requirements was also modified.

   In 1995, Rosshelf, Gazprom and the Australian company ВНР Petroleum signed the agreement on Prirazlomnoye field development. Rubin was meant to be the main Russian engineering contractor. Nevertheless, soon the activity was suspended due to financial difficulties. Also, ВНР Реtroleum exited the project. The next stage took place in 2002 when Gazprom and Rosneft started collaborating on the venture. Rubin and the design bureau Coral (Sevastopol city) were chosen as the main contractors.

   In the course of construction there were a lot of major modifications introduced, such as changes in field development, location of the platform, number of wells and drilling rigs, the shape of the platform topside structure (the number of topside structure’s modules). At some point a decision was made to use up to 70 percent in initial estimate of Hutton platform equipment bought from Monitor TLP Ltd. It was built in 1984 and operated for approximately 20 years in the North Sea. However, the major part of equipment from Hutton platform was dismantled because of its poor technical condition and replaced with the new one. Line pipes, air duct and cables also had to be changed. Accomodations of Hutton platform appeared to be unsuitable because of their technical condition. So, new accomodations had to be designed by Rubin and built at Vyborg shipyard.

   In 2005 Gazprom bought shares of Rosneft in Sevmorneftegaz, thus becoming a sole investor in this project. In the future Prirazlomnoye field is to be consigned to Gazprom Neft, a Gazprom subsidiary.

Arctics as a Strategic Resource

   Currently Arctic shelf exploration is an important and principally new task for Russia. According to preliminary estimates, the potential resources of hydrocarbons of Russian continental shelf are equal to 90 billion tons of coal equivalent of which more than 60 billion tons are concentrated in the Barents and Kara Seas’ areas. Gas deposits are the major part of the shelf resources (76 trillion cubic meters.)

   According to Russian legislation, only state-owned companies that have at least five year history of working on the shelf may own shelf development licenses. Today this means Rosneft and Gazprom. Soon Zarubezhneft will be qualified for the job as well.

   Gazprom will need over 10 drilling and technological platforms of its own and rented ones to explore the continental shelf in the period up to 2030, as the company’s media department representative announced  recently. Today, the company owns Amazon jack-up rig, and Obsky-1 floating drilling facility. This year Gazprom plans to add to its fleet semisubmersible drilling rigs, Polyarnaya Zvezda (the North Star) and Severnoe Sijaniye (the Polar Light), and Arkticheskaya jack-up rig.

   Rosneft, the biggest Russian state-owned oil company, plans to build at least 10 more platforms. Each one will cost up to 15 billion dollars. This information was announced by the Vice Prime Minister Igor Sechin, who is in charge of fuel and energy sector in the government, upon signing the agreement on cooperation between Rosneft and Exxon Mobil late in August. The agreement provides a good basis for joint exploration of the Arctic shelf. Igor Sechin added that the American company agreed to place main orders for equipment at Russian yards. Also, for further shelf explorations the companies are to set up the Arctic Scientific Center in St. Petersburg that will use in-house technologies of ExxonMobil and Rosneft. The center will also be engaged in know-how development for such projects, including drilling and mining ice-resistant platforms. In preliminary estimations the parties are going to allocate $500-600 million to set up the center.

It Won’t Be an Easy Job

   The plans are really grandeur. Yet, those who intend to conquer the Arctic shelf have to resolve at least the two major problems. First, they need to match ecological requirements and restrictions and secondly, to find investment to go into the project.

   Environmental organizations and ecological pressure groups are convinced that drilling for oil and gas on the Arctic shelf demands additional feasibility assessments. In their opinion, not a single country currently has the technology and infrastructure necessary to clean oil spills exceeding hundreds of tons in Arctic conditions, and it is highly possible that Prirazlomnaya platform may suffer a potential leakage of several thousand tons. WWF claims that the nearest infrastructure and rescue services capable to act in the sea in case of emergency are located in Murmansk, the nearest port which is almost 1,000 kilometers away from the oilfield.

   However, Gazprom promises that ecological control and environmental monitoring while exploring Prirazlomnoye oil field will be secured by a number of complex measures protecting air, subsurface, groundwater and sea biological resources.

   Financial issues are particularly acute for Gazprom to reach cost effectiveness. The peak production of Prirazlomnoye has to reach 132,000 barrels per day. Troika-Dialogue analysts said they believe that exploration of the oil field is currently inefficient and economically unattractive. Even taking into consideration tax exemptions approved by the government (the first 35 tons of produced oil are tax free), the internal rate of return equals only to 8 percent (if Urals price is $80 per barrel). In addition to that the quality of oil in this area is quite low. It is heavy and has a high sulphur content. Excessively high initial costs include high costs of platform’s construction (approximately $3 billion), as well as unfavorable contract with Sevkomflot. Experts notice that even before production began, the transportation costs exceed current market rates of tankers’ freight.
Nevertheless, Gazprom looks forward to get tax exemptions (zero export duty) and the company has high chances that government will provide them . Thus, Sergei  Shmatko, Russian Minister for Energy, stated that the program on shelf exploration will include measures targeted at getting a high level of cost efficiency of these projects (no less than 20 percent). Also, Russian oil and gas companies apparently understand that without foreign investment and technologies, exploration of Arctic oil fields will not be an easy task to accomplish.

Main participants in the platform design and construction   

Project developers:  Kellogg Brown & Root Limited (KBR), UK (at the early stages);
Morneftegazproject (Moscow);
Rubin Design Bureau  (St. Petersburg);
Koral Design Bureau  (Sevastopol).
Platform stability calculation: All-Russian Vedeneev Hydraulic Engineering Research Institute (St. Petersburg).
Construction: Sevmashpredprijatie (Severodvinsk)
Construction of the accomodation block and utility module of the topside facility executed by Vyborg Shipyard (Vyborg, Leningrad region).
The platform construction has been completed in Murmansk at Shipyard #35 by Sevmash PA.

Summary of the platform’s technical specifications

“Prirazlomnaya” offshore ice-resistant platform consists of a steel gravity substructure (“caisson”), 126 x126 x 24,3 meters in size, with a net dry weight of approximately 70 tons. It contains an oil storage capacity of 130,000 cubic meters, as well as fuel storage reservoirs, liquid and solid ballast and pumping stations. The topside of the platform has a special construction for storage of drilling and other technological and additional equipment, as well as accomodations. Once the crude is processed, it goes to storage reservoirs and then it’s reloaded to tankers with the load capacity over 60,000 tons.  

   The Prirazlomnoye oil field, located approximately 60 kilometers away from shore, was discovered in 1989. The field has about 83.2 million tons of oil resources. Sea depth in the area of the oil field is 20 meters. It has been estimated that the field holds resources of up to 231.1 million tons (C1+ C2) of which 74.45 million tons are believed to be extractable. It is planned that the annual peak production may amount to about 6.6 million tons. Development is scheduled for 25 years.

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