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Home / Issue Archive / 2006 / July #7 / LUKOIL Chairman Boosts SPE's RO&G '06

№ 7 (July 2006)

LUKOIL Chairman Boosts SPE's RO&G '06

Valery Graifer, Chairman of the Board of LUKOIL and General Director of RITEK, is the right man for the job when it comes to chairing the Executive Committee of the Society of Petroleum Engineer's 2006 Russian Oil&Gas Technical

By Mark Thomas

To be held at Crocus Expo in Moscow, October 3-6, RO&G has attracted the attention of the largest oil producers and world class engineering, equipment and service companies operating in the Russian oil industry.

As "Official Publication" and Publisher of the show catalogue and show daily newspaper, Oil&Gas Eurasia spoke recently with Professor Graifer about the significance of this SPE event in the context of Russian oil and the role that Russia plays in global energy security. A scientist who is at home with the technologies that are transforming the industry, he had this to say.

Oil&Gas Eurasia: Would you tell us in brief about the main goals and the theme of Russian Oil and Gas Technical Conference and Exhibition?

Valery Isaakovich Graifer: The 2006 SPE Russian Oil and Gas Technical Conference and Exhibition becomes a major international event for the upstream oil and gas community. It has been organized by the Society of Petroleum Engineers and Spearhead Exhibitions Ltd., partners in the organization of the Offshore Europe Exhibition and Conference (OE) in Aberdeen, UK.

The exhibition held jointly with conference is dedicated to innovative and existing technologies and to their best use for the purposes of further development of Russian oil and gas industry worldwide.

Speaking of supply of the global energy resources, Russia will play a vitally important role in this area for a long time. Conference and exhibition addresses the need for an event that focuses on technology and knowledge exchange, and on communication of oil and gas industry professionals who search for and produce energy resources.
This event provides a unique opportunity for all its participants: managers, technical specialists, scientists and students, to share their experience and achievements in exploration and production of oil and gas.

The conference theme is "Technology for World Class Resources". The theme speaks for itself and reflects the industry's wide historical perspective as well as Russia's rich intellectual potential and unique natural resources.

Production of oil and gas from West Siberian and the Volga-Urals basins is expected to grow. Development of new oil and gas basins in the Arctic offshore, East Siberia and Far East will replenish Russia's mineral resources.

High-quality mineral resources are quite scarce in mining industry; there are much more resources of relatively lower quality and their production requires more efficient technologies. It is the so called "Resources Pyramid Concept". Both in Russia and worldwide, the more resources are produced, the worse their structure gets. In the past, in West Siberia and in the Volga river basin we actively developed Cretaceous and Devonian deposits while the reserves of under-gas-cup zones, of thin oil-pay fringes and of low-permeability reservoirs were not much involved in the process. Today, we have to develop the reserves of low-permeability reservoirs in West Siberia's Jurassic and Achim deposits as well as the viscous oil reserves of carbonaceous deposits and the natural bitumen reserves of Permian deposits in Tatarstan. For Tatarstan and Bashkiria, it is very important to develop bitumen reserves but the open-cut mining used in Canada cannot be applied as the strata are deposited deeper and much plough land would have been ruined. And the present generation of engineers and scientists have to find solutions for these difficult practical tasks.

Consequently, this conference is focused on resolving practical matters; it is not just academic sessions. Integration of worldwide technological achievements in the E&P industry with Russia's unique resources is a matter of paramount importance with regard to security of our planet's energy future given the growing prices for energy products.

OGE: In your opinion, what this unique engineering and technological event may achieve? How the participants will benefit from it?

Graifer: I hope, it'll be a great event showcasing a wide range of Russian and western technologies and achievements, both current and historical. Over 200 plenary, workshop and poster reports will be presented covering the whole spectrum of engineering and technological issues.

In the plenary sessions, managers of major companies will exchange opinions on Russia's role in the world energy production; the most prominent scientists and best specialists will address such issues as the history of development of the unique and giant oil and gas fields. For young petroleum experts to understand and to feel the continuity of time and generations' succession, a special session "Legends of the Russian Oil Industry" will be arranged on the last day of the conference.

At workshop sessions, experts will discuss the part that technolgy plays in development and construction of fields as well as the enhancement of oil recovery and improvement of economic indicators prompted by application of new technologies. The industry's evolution will be another topic to discuss.

Various issues will be considered ranging from fields' development in the Arctic conditions to production stimulation, and from drilling practices to project management. The fact that we extended the conference sessions to four days instead of the original three-day program confirms the importance of this event for the international oil and gas industry. I believe it will be truly outstanding.

OGE: How important is the exchange of technologies and best practices with other countries and companies? What benefits do you foresee?

Graifer: It is important for the conference participants to see that Russia is becoming a part of the world technology forum. A lot of technologies currently in use throughout the world have been originally designed by Russian scientists. Hydraulic fracturing, for example, was first done in Russia in the early 1950s. The first submersible pump was invented by Engineer Arutyunov. The first multilateral wells were drilled in Bashkiria. These are but a few instances I would cite by way of example.

Later, many of those ideas returned to Russia, refined and improved by western companies. So, some of the best Russian ideas are already used worldwide. But probably there are other ideas and technologies we have in use here in Russia that the world is still unaware of. As for the exchange of technologies, it's already going on but much more have to be done here. And in some areas technologies have to be improved significantly.

Many people realize now that Russia is one of the biggest hydrocarbon reserve holders in the world. To a considerable extent, world prices and the world energy balance depend on how efficiently and fully we will develop these reserves. Words are insignificant to emphasize the importance of this fact. It is essential in terms of global energy security. We are custodians of a great trust and have to use our resources wisely. That is why special attention is paid at improving the recovery efficiency of older fields, at the search of new prospective structures and at satellite fields. This is extremely important for both Russia and the entire world.

OGE: Russia's Arctic offshore has been highlighted as a key area of technical interest. Could you tell us about some of the major challenges and potential solutions for exploration and future development of these territories with frequently harsh climate? Is there any particular technology that in your opinion is vital for successful exploitation of the region?

Graifer: Arctic region is such an interesting topic that I would talk in details about it. It's vitally important to be environmentally friendly in this area. To have a very good safety record and to design systems that are safe overall is crucial for companies operating in the Arctic.

There is a lot of technical challenges and I could mention a few here: how to find prospective structures or how to efficiently carry out seismic surveys at water areas covered with never melting ice. Drilling issues are also of considerable importance: how to drill from moving ice is one of the examples to start with. Special attention shall be paid to issues related to transportation of hydrocarbons.

Much work has been done in Norway with cold flow, multiphase flow for example, that enabled the industry to optimize the product transportation scheme, and to put new fields into operation. Yet, the industry must really focus on designing environmentally safe systems for this area. If I had to pick the most important technology for the region, my choice would be a subsea completion technology as its impact on the environment is minimal.

OGE: West Siberia is another key area of equal significance. What innovative technologies are required to enhance production and to increase recoverable reserves in this "brownfield" area?

Graifer: What we intend to use in West Siberia, and what will help us a great deal in the future, are the advanced simulation technologies. 3D seismic and advanced reservoir modeling help understanding better the large fields' properties, enabling us to exploit the fields more effectively and to improve recovery efficiency in the areas already producing.

I don't expect any more giant fields being found in this area. But we will be able to find smaller fields whose reserves may approximate between 50 and 100 mln bbl. Also, we will be able to keep production growing by improving recovery efficiency. At present, in certain best strata and fields oil recovery efficiency is already 50 percent or higher. I think - and this is just my estimate - if we keep doing what we are doing, and the industry keeps developing in the right direction, working over wells, finding missed areas than the recovery factor for West Siberia will average 45-50 percent.

OGE: In your opinion, what are the most topical issues that have to be solved, and what new engineering solutions may be provided by the world oil industry? Are there any new or potential technologies or processes that in your opinion could enable the industry to make a "step change" in its performance?

Graifer: I think, one significant technology gap we have in West Siberia is that exploration did not continue beyond Jurassic formation. It happened due to different reasons but exploration focused on the Cretaceous and Jurassic strata. Now we do not see much deeper but I believe, once this problem is solved, we will be able to find new reserves. In the nearest future, oil companies will focus their attention on this problem, and western service and geophysical companies may play a certain role in the process. We have to work on this issue together and come up with solutions.

OGE: Russia has world-class giant oil and gas fields, and others exist of course around the world - in Saudi Arabia, Norway and Alaska, for example. What parallels can you see amongst these major development projects? How can operating companies learn from each other's success and mistakes, and how can they implement and pass on experience gathered by the industry?

Graifer: Large part of the world's production come from giant fields. The purpose of one of the plenary sessions at the conference,"Case Studies Of Unique Fields", is to look at these giant fields and examine the history of their development. Some of them were developed 70 years ago, others 50 or 40 years ago. We will consider the Prudhoe Bay's experience some 30 years ago, and Norway in the last 15-20 years. Also, we will look at giant gas fields. We will consider how advanced technologies changed the concept of development of such fields, and study what has been done differently on these mature fields due to advance of new technologies.

On most of these fields, reserves are being added since their discovery and the industry is able to continue increasing the reserves due to advanced technologies. There are examples of reserves that were discovered with insignificant initial production, for example Ryabchik reservoir of the giant Samotlor field. Only massive use of hydraulic fracturing technology made the development of those reserves much more active.

Speaking of offshore operations, technology advancement is much more important. I believe, our next giant field is going to be offshore. Technologies are still required to make deepwater production more economical.

OGE: Attracting "new blood" to the industry and search for the best ways to train the future generations of engineers remain the continuous source of discussion worldwide. Facing the problem of maturing workforce, what should Russian oil and gas industry do to attract and retain the right individuals? In your opinion, what technological skills will be crucial for them to acquire to help developing next generation of fields, both within Russia and worldwide?

Graifer: Much of the new technologies, the competence and knowledge of the last decades reside mainly in the West. However, the inflow of young experts to the oil and gas industry there is ebbing. At the same time, there is an ample supply of talents, but they come from the East - from Russia, China, India, etc. Today, the specifics of "fresh blood inflow" in the industry are such that knowledge and experience have to pass not only from generation to generation but cross-culturally and across the continents.

It is essential that international majors should take some steps in this direction. And I believe that it is already taking place. I was very surprised to hear, for example, that among Schlumberger's employees the second biggest national group are Russians.

I have to stress also that we need to work together in order to redouble our efforts to communicate to the public that it is good to join the oil and gas industry. Working there is hard but it is also rewarding and interesting. In Russia, the oil and gas industry is respected - I can say this for sure. It has played and continues to play such a significant part in the country's political and economic life.

We should say some words about the role of science and education in personnel training. For the last 10-15 years, research and engineering personnel of companies has been significantly reinforced due to staff drain from research and educational institutes. These experts have found their place in companies and helped to overcome the trend of production decrease in the mid-1990s. In Russia, the applied oil science and technology to a considerable extent developed at the institutes and research centers within petroleum companies. At higher education establishments, professors and teachers are getting older; and what is even more important, there is a gap between what the students study and the up-to-date practice of oil industry. Oil education is popular, and many young people come to petroleum institutes. It is very important for future graduates to be ready to apply the most modern technologies, to solve the most difficult practical and theoretical tasks. It is a difficult and multi-aspect problem, and its solution requires participation of the government and assistance of companies. The role of the state in this case is more important as the state may allocate considerable funds to solve fundamental, long-term tasks; companies prefer to finance applied and medium-term tasks. There is a very important positive trend - Russian president's grants. Seventeen higher education establishments, including our profile institutes (St. Petersburg Mining Institute) have received the grants to develop fundamental studies.

OGE: What would you say to those who may be considering attending this event but remain undecided? Why should they attend?

Graifer: We have received over 500 abstracts from all over the world. These have come from many of the world's largest oil companies, the major service companies, and from companies both based in Russia and in other parts of the world. We have selected about 200 most interesting reports to include in the program of technical and poster sessions. The quality of the program is going to be something that differentiates it from every other event. The content of this conference is going to be very good technically, created by an outstanding conference committee made up of highly-respected individuals from the leading industry companies. Out of those 200 papers, there is importantly a very good balance. Half of them are Russian, following Russian issues, while the other half represents the world's experience. All are relevant to what we do in Russia.
The exhibition will also be excellent, I believe, with very well known participators names - producers of technologies and authors of innovative solutions. On top of this, the conference and exhibition is being held in an excellent new modern exhibition facility in Moscow. This is going to be extremely interesting for young people to attend, as well as for those who have long been involved in the oil and gas industry. I commend it to you all!

OGE: What is The Society of Petroleum Engineers? What does this society do in Russia and why do you support this society and why did you decide to take the main part in preparation of the conference and the exhibition in Russia?

Graifer: Society of Petroleum Engineers is a non-profit institution operating worldwide. Its main objective is to collect and distribute technical information to the benefit of the oil industry. There are about 70,000 active members of the society in 110 countries of the world. There are about 1,000 members of the society in Russia in five sections as well as in student sections. In Russia we organize monthly technical reports by sections, three-day workshops on particular topical problems of up-to-date petroleum business. For example, recently we have held a workshop on horizontal drilling with over 100 participants where very interesting reports were presented and discussed. Such workshops are held two to three times a year, and they cover the most burning subjects. In Russia, the Society of Petroleum Engineers organizes the conference and exhibition of such a scale for the first time.

Why did I undertake to do this job? I think it is a very important event that the whole oil and gas industry of Russia would benefit from, and I want it to be done well. Society of Petroleum Engineers is a non-profit institution, mostly volunteers work for it. For example, about 70 volunteers participate in preparation of this conference in various functions, they are members of its Executive and Program Committee. There are major executives, academicians and leading technical experts representing leading oil and gas service companies and research institutions among them. Approximately half of them are Russian citizens, half of them are our expatriate colleagues. Jointly this international group of experts forms the subjects of the conference and its plenary sessions. It is a rather large scope of works that people mostly do in addition to their primary jobs.
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