Russian Oil Firms Turn Associated Gas into Valuable Resource

By Elena Zhuk, April 28, 2014

The Russian government’s drive to make oil firms use associated petroleum gas (APG) more efficiently and reduce environmental impact caused by flaring is bearing fruit already – official stats confirm that oil producers have been continually flaring less APG over the last couple of years. In 2012, a total of 17.1 billion cubic meters was flared and last year the volume dropped to 15.8 billion cubic meters. This year, it could be further reduced to 11.2 billion cubic meters, Anastasia Artamonova, head of the Gas Industry Monitoring Group at the Russian Energy Ministry’s Central Dispatch Directorate, said at the Fifth International Conference “Associated Petroleum Gas 2014”. The ministry’s statistics could be tentative and not reflecting the real picture since not every flare unit at an oilfield is fitted with sensors that register the volume of APG flaring.

“In 2008, only 48.3 percent of flare units in Russia were equipped with measurement tools,” Rostekhekspertiza Association general director Alexei Aksyonov told the conference. Six years ago, in September 2008, Rostekhnadzor watchdog decided to introduce a register of APG flare units. However, as Aksyonov told OGE, the work to create the register “isn’t being conducted today, unfortunately and the issue of the installation of measurement tools has improved only insignificantly.” At a number of fields these devices had aged and were subsequently dismantled. “And still, around 70 percent of the total number of flare units are equipped with measurement devices. The major impact was made by Rosneft, which has fitted nearly 100 percent of its flare units with sensors compared to 6.8 percent in 2008,” Aksyonov said.

According to him, the only positive effect of sensor installation is the detection of incremental APG production. “During the geological exploration stage samples are taken from the depth where the gas factor due to pressure could be a lot lower than at the surface. Earlier, TNK-BP faced the same problem and today Rosneft and Gazprom Neft are facing it. Oil output has increased insignificantly, while APG production has doubled,” adds Aksyonov. 

In his opinion, the case of Surgutneftegaz, which produces 20 percent of oil and 50 percent of gas in the Khanty-Mansiysk Autonomous District (KhMAO), is exemplary when dealing with the issue of APG. “They’re short of gas. At the same time, they report actual amounts of produced gas: sensors work in realtime mode and record data from the stage of production to its use,” says the expert.

According to Aksyonov, discovered volumes of gas could be sufficient to fill the oil producers’ hypothetical gas processing plants. The issue of building the plants for processing associated gas has been the focus of the recently created gas processing cluster and oil majors in KhMAO, which today – faced with the lack of their own processing facilities – send APG to third-party processing, chiefly to SIBUR. Meanwhile, oil producers sustain losses as the cost of production by far exceeds the actual price of supply to gas processing plants, Akhmed Gurbanov, senior manager at LUKOIL’s Directorate for Coordination of