September 2, 2012
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№ 6 (June 2012)

“Berkut” Rig to Start Operation for Sakhalin-1

   Exxon Neftegaz, the operator of Sakhalin-1 project, went public about completion of the gravity base for Berkut rig. After installation of the oversea substructure the rig, by then the largest in Russia, will begin producing oil at the Arkutun-Dagi field.

By Galina Starinskaya

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   ExxonMobil and Rosneft, members of the project, are to build dozens more of such platforms.

Top Grade in Its Class

   In late May, gravity-base substructure (GBS) for Arkutun-Dagi field (Sakhalin-1 project) has been completed in dry dock of the Vostochny port in Primorsky Krai territory. Norwegian company Kvaerner worked on the base’s design and construction for two years. This mighty construct is a 160,000 ton rectangle with four silos, vaguely reminiscent of the “upside-down elephant”.

   “The width of the platform is 100 meters, the length – 133 meters, the height – 55 meters, weight – 150,000 tons; there is 27,000 tons of reinforcements and 52,000 tons of concrete”, said Bjorn Gundersen, executive vice president of Kvaerner, at the ceremony for completion of the base.

   By the end of June, VOSCF (a joint venture between Van Oord and Somkomflot) will tow the base to Arkutun-Dagi field. The route runs along the northern part of the Sea of ​​Japan, through La Perouse Strait and further to the Sea of ​​Okhotsk along the east coast of Sakhalin. The total length of the route is 1,870 km (about 1,000 miles).

   In 2013 the contractors will use the float-over method to set up the oversea substructure on top of the base towering more than 20 meters above sea level. The upper structure will house various technological equipment (including for drilling), as well as residential areas. Currently it is being manufactured in South Korea by Daewoo. The platform, to be named Berkut (‘golden eagle’) will be the largest offshore oil&gas platform in Russia. It is designed for year-round operation in seismically active zones and capable of withstanding low temperatures (down to -44°C), high waves (up to 18 meters) and ice thickness of up to 2 meters.

   This is one of the largest platforms built with no accidents or critical failures, mentioned Glenn Waller, head of Exxon Mobil Russia, during the press conference. The construction project was completed on time and within budget, too.

   “Completion of the gravity-based structure is another significant milestone for Sakhalin-1 and brings us one step closer to production start-up from the project’s third field”, said Jim Flood, Exxon Neftegas Limited Chairman. – “The successful development of the Arkutun-Dagi field will strengthen Russia’s position as one of the leading countries developing oil and gas deposits offshore and onshore in challenging arctic and sub-arctic conditions”.

Sakhalin-1 to Boost Production Levels

   The new platform will enable the project members to start operating the Arkutun-Dagi field already in two years’ time. Production from field will be routed through the existing Chayvo onshore processing facility on Sakhalin Island and delivered through pipelines to the De-Kastri oil export terminal located in Khabarovsk Krai, Russia

   Arkutun-Dagi’s 4.5 million tpa peak production is planned for 2017 and expected to last 4-5 years. Arkutun-Dagi is one of the three fields (along with Chayvo, and Odoptu) being developed under the Sakhalin-1 project; the other two are already in production stage, using “Yastreb” (hawk) onshore rig and “Orlan” platform. Potential reserves are estimated at 307 million tons (2.3 billion bbl.) of oil and 485 bcm (17.1 Tscf) of natural gas.

   Together, the three fields should provide a stable production of hydrocarbons up to 2055. For the 5.5 years, Exxon Neftegas exported 47 million tons of oil. “We are very proud of “Sakhalin-1”, this is our best project in the world, including the safety parameters”, said Waller.

   Participating companies expect Arkutun-Dagi oil to boost the Sakhalin-1 production levels, which have been sliding for the past three years (see the table). However, Glenn Waller told reporters that Odoptu field “was better than expected”, explaining that it isn’t a re-evaluation of stocks but rather an increase in daily production. According to the Exxon Neftegas head, production growth at Chayvo might not be huge, but it will fully compensate the fall and “reach the plateau”.

   The company will announce concrete figures in six months’ time. Company’s earlier 2011 plans for Odoptu specified production at the level of 35,000-36,000 b/d, or 1.5 million tons per annum. For Chayvo, the figures were 120,000-125,000 b/d (in 2010 – 140,000 b/d) and 5.9 million tons, respectively.
The launch of Arkutun-Dagi field will slow down the fall of Sakhalin-1 production levels, even stabilizing it for a time, but the period of sustainable production will depend on the volume of the reserves, says IFD “Capital” analyst Vitaly Kryukov.

Mass Production of the Platforms

   Rosneft and ExxonMobil will need at least 15 more offshore platforms for their joint projects in the Kara Sea. “I think the Berkut is only the first platform, we will have dozens of other platforms. We will learn from this experience and try to replicate it in other projects”, said Glenn Waller.

   Project participants declined to reveal the cost of the platform. The rig cost ranges from 5 to 30 billion rubles (from about $154 mln to $924 mln), says Dmitry Alexandrov, head of the analytical studies at Univer managing company. For example, the price of sunken Kolskaya rig was about 3 billion rubles ($92.5 mln), while its replacement, a new rig, would cost about 7.5 billion rubles ($231.1 mln). The expert estimates cost of Berkut as closer to the upper limit.
The Russian companies still do not have enough experience in rig construction, so some of the orders (mainly from private companies) will be done by foreign contractors, says Dmitry Alexandrov. Russia is keen to fast-track the rig construction program, learning from the “Prirazlomnaya” platform experience. That rig was in construction for over ten years; eventually its cost exceeded $3 billion. “The slowdown in Prirazlomnaya construction happened because at that time no additional oil was required”, says Dmitry Alexandrov. “Also, there were questions on infrastructure, people in government and in Gazprom were being shuffled. Were the question of starting production at the Prirazlomnoye field urgent, the platform would have been, hopefully, finished on time”.
The present reality poses other challenges to the oil industry. Existing fields are depleting and the oilmen are looking for new sources to ram up oil production. In this list, offshore projects are the first.

   Sakhalin-1 Consortium includes Rosneft subsidiaries (RN-Astra (8.5%) and Sakhalinmorneftegaz-Shelf (11.5%)), Japan’s Sodeco (30%), India’s ONGC (20%). The US company Exxon Neftegas Limited owns 30% of the project.

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