Industry Deals With Hard-to-Recover Reserves

By Lada Ponomareva, April 5, 2013

Development of hard-to-recover reserves is one of the most pressing issues in the oil and gas sector today. Large conventional fields are gradually depleting and maturing, Russia's oil reserve growth rate is slowing, and at the same time energy demand is rapidly increasing. Furthermore, the quality of remaining reserves at conventional fields is decreasing, making refining efforts more difficult. These developments are forcing oil companies to start developing so-called “complex” fields that require new technologies for hydrocarbon production and refining.
Most Russian companies are uncertain how to approach this problem. Many prefer to develop and implement enhanced oil recovery (EOR) technologies at their fields. Bashneft and Tatneft are among the evident leaders in this area. Between 2008 and 2011, owing to a number of measures aimed at oil recovery enhancement, Bashneft managed to increase oil production by 29 percent (for more details, see “It's End Times for Easy Hydrocarbons”, OGE #7-8, 2012, pp. 19-20). Tatneft's average value of incremental oil production resulting from oil recovery enhancement between 2010–2012 amounted to 5.595 million tons (for more details, see “Russian Drilling Program Poised to Best 2012 Highs”, OGE #2, 2013, p. 23) and the total three-year production amount of 26.015 million tons (average over three years).

Some scientists classify remaining reserves of brownfields (with a depletion rate of 65-75 percent) as hard-to-recover reserves, as further operations at these fields require significant capital and operational expenses. In some cases these expenses are comparable to the cost of developing a new field.

However, despite the apparent production successes of some Russian companies, the industry is still confronted with the problem of developing a new frontier of difficult-to-access sites and complicated fields.

Russian experts believe that the potential volume of hard-to-recover reserves is wideranging. According to official data, this volume varies from 25 to 50 billion tons. But some experts believe that reserve estimates could reach 120 billion tons.

In an interview with Kommersant's Business Guide, Sergei Donskoi, the RF minister of natural resources and ecology, gave more detailed information on challenging reserves: “According to the State Reserve Register's data, as of the beginning of 2012, the reserves in the Bazhenov formation amounted to 501 million tons (284 million tons of A, B and C1 categories and 217 million tons of C2 category). The major part of the reserves belongs to the non-licensed stock of prospects – 368 million tons, and 133 million tons are on the books of the producing companies. These reserves are mainly located in the Khanty-Mansiisk Autonomous District (489 million tons). In 2011, only 512 thousand tons of oil was produced from these deposits, i.e. only production from pilot projects has been realized so far. More than half of the total amount – 361 thousand tons – was produced by Surgutneftegaz at the Ai-Pimskoye field.”

On May 3, 2012, at a meeting on how to stimulate production of hard-to-recover reserves, President Vladimir Putin said by 2020, production from “complex” fields in Russia could produce an additional 40-100 million tons of oil