Romancing The Stone | |||
Located in the middle of Russia’s oil-producing heartland and boasting enormous reserves, Kamennoye* field has previously defeated multiple attempts at commercial development. Today, armed with modern technology and rigorous operational discipline, a young TNK-BP team is making steady progress towards unlocking its resources.
*From “kamen” – “stone” in Russian
Kamennoye is located in the middle of Russia’s oil-producing heartland, West Siberia’s Khanty-Mansiysk Autonomous District. Discovered by Soviet geologists in the early 1970s, it holds more than one billion tons of oil in-place, with recoverable reserves estimated at 280 million tons. Kamennoye is a part of the so-called Kransoleninsky group of fields – together with two other fields, Talinskoe and Em-Yoga, which was initially considered to be “the second Samotlor.”
Key facts about Kamennoye
- 280 mln tons recoverable reserves
- 1.2 mln tons production in 2008
- 4 mln tons planned production in 2012
- 35 years — average age of the Kamennoye team
But the field proved a tough nut to crack, for decades defeating generations of geologists and engineers who attempted to access its subsoil. In the 1970s and ‘80s, Soviet geologists made the initial attempt to start development at Kamennoye, drilling more than 100 exploration wells. But Kamennoye did not behave like Samotlor. Most of the wells did not deliver flow rates sufficient to justify large-scale development. The first West Siberian oil boom was just starting. Focused on delivering large volumes of production, the leadership of the Soviet oil industry stopped the Kamennoye program and diverted resources to other, easier West Siberian fields. The field stood abandoned.
Almost 20 years passed before another attempt to develop Kamennoye took place. In 1992, state-owned production association Krasnoleninskneftegaz launched a major development effort on a larger scale. Dozens of drilling crews marched onto the field, drilling more than 200 wells. But the field’s complex geology once again showed its teeth. 30% of the holes drilled came up dry; those that did not produced on average a mere three to five tons per day. Once again, development stopped, and the crews retreated, abandoning many wells.
The billion-ton prize of Kamennoye, sitting right next to existing infrastructure in the heart of West Siberia, continued to elude the oilmen for more than 30 years.
“Kamennoye has a very complex reservoir structure, which is typical of the other fields of the Krasnoleninsk group,” says Francis Sommer, TNK-BP’s Vice President for Production Technology. “The formation is full of incised valleys.” Yuri Masalkin, Chief Geologist of the Kamennoye Performance Unit (PU), adds: “It is characterized by low formation permeability. … A significant part of the field’s reserves are concentrated in the transition zone above the oil-water contact, but below pure water level, which complicates hydraulic fracturing and drilling of horizontal wells. Many dissertations were written about this field, but we are still far from having a full understanding of Kammenoye. … One thing is clear: A firm grasp of this field’s geology is key to success here.”
New beginnings
TNK-BP arrived at Kamennoye in 2003, when TNK-Nyagan became part of the new company. In 2004 and 2005, a team from the Nyagan Business Unit, led by Viktor Blagoveshensky, launched a set of pilot development projects (P61, Y1). For the first time, the field saw application of new technologies such as hydraulic fracturing, 3D seismic and horizontal drilling. And while the team had mixed success, these pilot projects allowed production to be built up, preparing the foundation for a successful future development of this difficult asset.
“The work done here by Viktor Blagoveshensky’s team made TNK-BP believe in the future of this field,” says Marat Atnachev, Kamennoye Performance Unit leader. In 2006, TNK-BP formed a dedicated Performance Unit, tasked with tapping the field’s ever-elusive reserves.
The Performance Unit brought together a diverse young team, with experts and managers coming from Nyagan, Izhevsk, Niznevartovsk, Orenburg, Moscow, the UK the US. Members of the team have worked across many global oil provinces, bringing experience from West Siberia, Volga-Ural, Alaska, the Gulf of Mexico and the Caspian.
The first thing that strikes a visitor to Kamennoye is not just the young age of management – the average age is 35 – but also the atmosphere of enthusiasm that permeates the team from the top down.
Cooperation and creativity are encouraged, say the people who work on Kamennoye.
“I have worked on a number of upstream projects in the company, but this project is truly unique,” says Vadim Gusev, the young Deputy Head of the Central Engineering Service. “The management is always accessible and willing to hear your ideas. And they are also available to give you a steer on any problem you may encounter. This creates an atmosphere where experience is shared, and performance thrives.”
“We are a young team, and our strength is in the diversity of backgrounds and experience,” Atnachev says. “We all have a stake in getting this project right this time.”
While it is still early days for the project, the first signs of success are visible. Production is growing steadily. In 2006 and 2007, the field produced roughly 0.8 million tons per year; today the project is on track to deliver 1.2 million tons in 2008. According to the comprehensive five-year plan, production will continue to grow to reach a plateau of four million tons a year by 2012.
| Production at Kamennoye (mln tons) |
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Different thinking
“Kamennoye is important, because it provides a crucial bridge in TNK-BP’s ’Greenfield transition’ – until other projects, such as Verkhnechonskye and Uvat, come on stream,” says Atnachev, whose team proudly sports the logo, “Growth Point.” “Unlike most other Greenfield projects, Kamennoye requires relatively little new infrastructure. Therefore, our task is to deliver new barrels quickly and economically. But to do that, we need to get HSE, subsurface and infrastructure right.”
Given the history of defeats suffered by generations of oilmen in this area, the project team opted for a new, systemic approach to Kamennoye, betting on 3D seismic, technology and a rigorous cost discipline. Before commencing development, 3D seismic was applied to all key areas of the license. “We covered the entire field with 3D seismic very quickly, in less than two years,” Masalkin says. “This lowered the geological uncertainty by a factor of 10.” “Into the battle – only with full intelligence,” Atnachev jokes.
Technology solution
Another aspect of the new approach was a rigorous focus on selecting the right tailor-fit technological solutions and a rigorous discipline in applying them. “The new development concept is to drill higher-rate wells that target the channel sands; to put in place a waterflood management system from the very start, with very careful selection of production and injection wells, instead of applying a standard grid; and to carefully manage the design and execution of hydraulic fracturing,” says Francis Sommer, who took an active part in preparing the new development plan for Kamennoye.
Criteria of success:
- low water cut;
- clean fracture;
- high oil flow rate.
A new approach to hydraulic fracturing is particularly important. While not available during the 1990s, hyrdofracing was extensively applied by TNK-BP earlier this decade. However, it had mixed results. Because of the complex nature of the reservoir, fraccing operations in the field’s southern sector failed to deliver commercial well yields. Water would break through, resulting in 90% watercut in new wells, typical of mature fields.
TNK-BP put together an interdisciplinary team, which involved experts from Upstream and Technology, and contractors Halliburton. Relying on support from TNK-BP’s Tyumen Center (TNNC), the team worked to come up with a solution. The result of this effort was a new design of the hydrofracs, tailor-made for the field’s specific reservoir properties. The new design involved smaller amounts of more fluid proppant, calculated to match the complex reservoir properties.
As a result, following the 150 or so hydrofracs conducted in the past 12 months, the water cut has declined dramatically. Still, more work remains to be done. “We are yet to come up with a design that allows us to control the vertical height of the fracture. Mastering this will be key to commercial development of the lower horizons of Kamennoye. That will be the next stage of our project,” Yuri Masalkin explains.
Driving efficiency
Given the field’s history, the project team is focused on delivering new barrels economically. A continued focus on efficiency resulted in considerable gains in the electric submersible pump (ESP) mean time between failures and reduction of drill cycle time – two crucial indicators of cost efficiency. From the start of 2006 to July 2007, ESP run life increased from 277 to 525 days (compared to the company average of 385 days at the end of the first quarter), while the length of drilling cycle has declined from 11.4 days to 9.32 days.
The team also succeeded in reducing the number of idle wells, which is down from 45% of total well stock in 2006 to 12% in 2008.
| Kamennoye CAPEX ($ mln) |
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The team also bet on comprehensive automation – implementing a ‘Field of the Future’ concept. “Although this approach is not typical in the Russian industry, we made a conscious choice toward full automation,” says Denis Sugaipov, Chief Engineer of the project. All the production and injection wells, all processing and metering units are linked into a single automated system, which feeds real-time data on critical operating parameters to a central control room. The wells can be controlled, adjusted and turned on and off automatically. “This minimizes the need for human intervention and reduces our reaction time in the event of an accident,” Sugaipov says. Next year, all well pads, facilities and construction sites will be covered with video surveillance and wi-fi.
Environmental aspects
One aspect that makes Kamennoye distinctive is the fact that the Northern part of the license – the so called Poima – lies in an environmentally sensitive floodplain. The Poima is part of Wetlands of International Importance called Upper Dvuobye, the area protected by the international Ramsar convention because of its unique ecosystem and the diversity of birds, animals and plant life.
Nevertheless, the area contains significant reserves and will be an important source of new production at Kamennoye. Operating here required a completely different approach. “As we were making development plans, we decided to structure this part of the development in such a way as to ensure a minimal impact on the ecosystem,” Atnachev says. “This meant voluntarily undertaking additional environmental obligations above and beyond those required by law.”
In preparing field design, the team studied the experience of TNK-BP’s Ust-Vakh development near Samotlor, which is also located in an environmentally sensitive floodplain, and consulted authoritative Russian and international environmental NGOs.
The resulting design of the Poima development looks very different from a typical production operation. “It will have fewer pads, almost no roads and minimal surface infrastructure,” says Azat Yakupov, deputy director of planning at Kamennoye. “The crude preparation unit will be on the other side of the river. The pads themselves will be large, elevated above the floodplain and hydro-isolated, able to accommodate a greater number of directional wells. They will have an automatic reservoir pressure maintenance system which minimizes water intake and re-circulates the water. Only vehicles equipped with Global Positioning System will be allowed to enter the Poima. … All of this will limit our impact on the fragile ecosystem and will minimize the need for human interference in this sensitive area.”
Early on, TNK-BP made a choice to fully engage NGOs in discussions about the development plan in the area. The Kamennoye team, with the support of TNK-BP corporate center functions, shared plans with environmentalists through a series of round tables and informal consultations. Their representatives had full access to the development plans and made a field visit in late spring 2008.
As a result, environmental NGOs expressed their support for TNK-BP’s cooperative approach and the company’s willingness to select development options that minimize the environmental footprint. “Among the examples of positive behaviors of Russian oil companies is TNK-BP. The management of the company understands the need to consider all environmental risks associated with the development of the Poima. … We are pleased that TNK-BP once again showed its willingness to engage environmental NGOs at the earliest stage of project design,” says Alexei Knizhnikov, Coordinator of Oil and Gas Projects of the World Wildlife Fund (WWF).
Nikolai Olkov, Deputy Director for Environmental Protection of the Khanty-Mansiysk Autonomous District, adds: “The oilmen are working with consideration for the public interest. … And we hope for the continuation of this fruitful cooperation.”
The NGOs will no doubt keep their watchful eye on the Poima to see whether the company lives up to its environmental commitments, and how the plans are put into practice. But Atnachev is confident that his team will deliver on its promises: “We would not want to operate in this area if we were not able to maintain an optimal set of environmental standards. By doing so, we also aim to set a new, positive example for the entire Russian oil and gas industry.”
During the winter of 2007 to 2008, six exploration wells have been tested in the Poima area. Full-scale development of the area is set to begin in earnest in winter 2008.
Monetizing gas
To further embed environmental care as a core operating principle, the project team is putting in place a comprehensive associated gas solution. In 2010, Kamennoye will see a new gas power plant, which will generate 26 MWT of electricity to cover the project’s own needs. An option for further expansion of this facility to 57 MWT is being considered. Since 2006, flaring has decreased by a factor of seven. “We are on track to achieve the statutory 95% utilization rate compliance in 2011,” says Chief Engineer Sugaipov. “The APG solution will not only reduce harmful atmospheric emissions, but will also allow us to partially manage the cost of electricity, which is one of the major issues for upstream companies across the industry.”
Looking to lower horizons
Going forward, the project team plans to drill about 100 wells per year, adding about one million tons of incremental production each year, until the project reaches a plateau of four million tons pa in 2012. After that, the project will reach a new juncture, which will bring a different set of challenges.
“The first phase of the project is clear,” Atnachev says. “The big question is what happens after 2012. We know that a lot of oil remains in lower horizons. We know it is not profitable to produce it right now. The challenge of the next phase of this development will be to find the right technological and commercial solution to this puzzle.”
“In the next five years, we plan to put into production 40 million tons of oil here at Kamennoye,” says Denis Sugaipov, Chief Engineer of the project. “But that makes up only 15% of the field’s reserves. Accessing the remaining 85% economically will be our next big challenge. And that will require answering some very difficult questions. … But we feel the team that assembled here will be up to the job.”
Romancing The Stone (608 KB)