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Where Land and Sea Meet: Developing Arctic Offshore and Transition Areas

by Alena Lipyavko | Mar 14, 2014
Oil&Gas Vertical, March 2014
                                                               

The mid- and long-term prospects of development of the domestic oil and gas complex are normally associated today with the development of the continental shelf, particularly the Arctic shelf. At the same time, the very limited level of geological exploration of the region through seismic surveying and drilling (in comparison with the Caspian region and even the regions of the Far East), the specifics of operations in the harsh natural, climatic, and geographical conditions of the Far North, as well as the considerable financial, engineering, and ecological risks associated hamper the implementation of projects, including strategic ones.

The Arctic, however, is not just a shelf. The fields and deposits located on the arctic coast and in transition and shallow (up to 30 m) areas are of great resource potential. All the technologies and equipment, as well as experience, required for ensuring an efficient, safe, and economically feasible development of these areas are currently available.

It is obvious that the development of seismic surveying for offshore and shallow areas in the Arctic could not only speed up but also help reduce costs in the development of the resources of certain offshore fields. However, the government shows a lack of interest in such work today.

 

According to the latest statements of officials, including no less than Sergei Donskoi, minister of natural resources, the resource potential of the Russian arctic shelf stands at about 85-100 billion tons of fuel equivalent, and the resources accounted for by the state amount to 10 billion tons. Thus, the oil and gas resources already inventoried represent a considerable portion of the hydrocarbon reserves of the Russian Federation. Further detailed surveying may multiply the volume of found and demonstrated resources.

According to various estimates, there are 800 to 1,000 major oilfields and deposits in the Arctic (including strategic ones), the majority of which are concentrated in the Kara sea and Barents Sea basins. Nevertheless, they are currently vastly underdeveloped, which is due to a number of factors. Such factors, among other things, include harsh environmental conditions, as well as the engineering and economic problems of the current stage of development. Thus, developing arctic territories requires enormous infrastructure expenses by mineral developers. Difficult icy conditions also contribute to the projects’ economics by increasing the risks and, hence, the price of mistakes.

Offshore fields in the Barents Sea, west of Novaya Zemlya, are being successfully developed by Norway, and engineering solutions tested may be adapted for application in the Russian sector.

Development of offshore fields east of Novaya Zemlya will be much more difficult. Adapting existing engineering solutions to more difficult ice conditions, as well as developing testing of new technologies, will require considerable time and money expenses. The lack of a developed infrastructure and changeable ice conditions increase the risks considerably. Any breakdown or failures on the production platforms may result in major remedial costs, to say nothing of a catastrophic environmental impact. The resulting changes in the Arctic environment in turn may lead to global consequences and an extensive international response.

Finally, the theory of global warming and complete opening of the Northern Sea Route and adjacent territories during summer may not prove viable in the forthcoming years. Arctic countries are actively developing their icebreaker fleets, not putting much hope in climatic changes. The need for icebreaking support of freights will inevitably result in an increase in logistics costs related to the development of offshore fields. Accordingly, the ratio of power resources extracted and the costs of their extraction will also worsen.

In order to improve the attractiveness of arctic offshore projects, various incentives are provided, including extraction taxes differentiation, introduction of privileges, nullifying of oil export duties, import custom duties and VAT for high-end equipment. Despite that, it is the fields located closer to the coast that are being developed first, where there is at least some infrastructure. In this context, fields and deposits located on the shore itself or in transitional areas, at the junction of the cost and sea, may be of particular interest.

 

Subarctic coast

With respect to operating conditions, the situation ashore considerably differs from that of offshore sites. Thus, the level of geological exploration of the northern landside (the territories of the Nenets, Yamal and Taimyr Autonomous Areas) is quite high: total reserves in these territories are currently estimated as 1.5 - 2 billion tons. Thanks largely to the implementation of the government’s licensing policy, the number of geological surveys in this region during the last three years has increased substantially. Such major oil companies as LUKOIL, Bashneft Joint-Stock Oil Company, Rosneft Oil Company, NOVATEK, and others have established subsidiaries there. Extensive efforts to encourage the development of onshore fields in the Russian far north are being undertaken, including at the level of the administrative entities of the Russian Federation. Particularly, the administration of the Nenets Autonomous Territory has recently introduced temporary tax incentives for mineral developers in order to improve the investment attractiveness of arctic oilfields. It should also be noted that, in case of an emergency, oil recovery would take considerably less time, with less risk. With offshore fields, cleanup would be impossible if oil sifted under the ice cover.

The main problem hampering the development of offshore fields is related solely to logistics. The region’s peculiarities regarding operations in arctic environments include the remoteness of the fields from the supply and engineering lines and the need for considerable stocks of fuel, spare parts and consumables, which increase the overall logistic costs associated with the delivery and removal of equipment.

In addition, the problem is compounded by the region’s limitations when moving heavy machinery through the tundra during the summer period (May through December). Hence, when planning geological surveyors in the region, one needs a thorough review of all available logistic solutions in order to perform a year’s worth of work in just five months (of which one is devoted solely to building winter trails). In comparison, in the adjacent territory of the Republic of Komi, such restrictions on summer transportation are absent. The disadvantages might also include the pace and effectiveness of work ashore.

In the case of offshore seismic surveying, for instance, it is possible to be highly effective in one’s daily operations given favorable weather conditions. The number of linear kilometers surveyed in a day, a week, or month could be considerably higher than the area that can be surveyed ashore. Thus, for example, with a sea surveying vessel with streamer cables data could be collected over several thousand square kilometers in a fortnight of continuous work. A seismic crew operating ashore will be able to survey several thousand square kilometers in several months, i.e. during the entire surveying season.

A vessel equipped with streamer cables remains in motion 24/7, with the actual surveying rate depending on the speed of the vessel. During onshore operations, equipment arrangement is fixed, and it takes much more time to deploy it, to disassemble it, and to move to another location.

 

Onshore technologies

Staying on the topic of technologies, it should also be noted that there are no fundamental differences between seismic surveying in an arctic coast and in farther laying southern regions. In both cases, geological surveys utilize conventional onshore techniques and equipment. The exception is the particular types of machinery and mobile accommodations that should be adapted to a polar environment.

Thus, there is no doubt that domestic geological surveyors are prepared technologically and engineering-wise  for the development of the oilfields of the Far North: they already have accumulated sufficient experience as regards operations on the arctic coast and are ready to offer any of the equipment modifications required. They also have the option of using the technology of high-definition seismic surveying UniQ, the exclusive rights for use of which in the territory of the Russian Federation are held by “GEOTECH Holding” CJSC. It took a lot of efforts on the part of the company to introduce this technology into the Russian market last year. The pilot project implemented in association with “Gazprom Neft” OJSC in East Siberia was a success. The project managed to prove in practice that the use of UniQ allows one to considerably improve effectiveness in geological surveys, particularly oil and gas seismic surveying.

On remote arctic fields, it is possible to use the most effective and advanced survey methods. The enhancement of seismic surveying methods and the use of high-end equipment is bound to allow one to collect more accurate information in order to estimate and model oilfields, which in future will lead to an increased rate of successful drilling and help achieve the required results faster and at a lower cost. In addition to high-definition surveying methods utilizing UniQ super-multichannel complexes, such methods may also include non-explosive sources, particularly vibratory sources.

Unfortunately, because of, apparently, the financial and economic situation, oil companies are still reluctant to use the advanced seismic survey technologies, despite the promise of positive results. They are loath to increase geological survey costs, which are conventionally regarded as investment costs. Such an approach is rather surprising. In the 1980s, there was a lot of discussion about whether it was necessary to introduce 3D surveying methods, whether they were bourgeois methods, and whether the industry had to stick to the 2D system, with merely increasing profile definition. This sounds ridiculous today. But, as practice shows, the same is happening with respect to the UniQ system.

Transition area

Transition areas, or marginal shallow areas, are another reality of the Arctic interesting in terms of development. However, operating in such areas also has its pecularities. The width of a transition area is typically in the range of 1 to 10 km, with depths of 0 to 3 meters. So, neither specialized seismic survey vessels with a considerable draft, nor onshore machinery can operate on them. Surveying of shallow areas is currently undertaken using seismic source points arranged on specialized vessels with a small draft. Such equipment, however, has certain limitations. Thus, for instance, shock blasters are ineffective at a depth of less than one and half meters. In turn, watercrafts with a small draft are limited by weight capacity and, hence, cannot accommodate large loads. As an alternative, during the low tide, light self-propelled drilling machines can be used, but only within a limited distance (up to 1 km off the water line).

in a transition area, combined recording systems with dual hydrophone + geophone detectors are used, as well as autonomous boomerang bottom networks, which allow one to record both offshore and onshore.

Without seismic surveying of the transition area, so called transitional oil and gas containing deposits, i.e. those located both onshore and offshore, cannot be accurately correlated. Only seismic surveying of transition areas allows one to determine the optimal method for further development of shallow area fields. Drilling wells from ashore is environmentally sounder and less costly than constructing and installing offshore drilling rigs. The main difficulty associated with operating in a transition area is the lack of a universal source of fluctuations for the marginal shallow area. Several years ago, during operations in the Khaipudyrskaya Gulf of the Pechora Sea, “GEOTECH Holding” engineers came up with the idea using hovercrafts as mobile bases for “Yenisei” electromagnetic impulsive excitation sources for the purposes of shallow area seismic surveying. In 2012, the possibility of funding the project at the R&D stage was discussed with “Naryanmarneftegaz” LLC, a joint venture between “LUKOIL” and “Conoco,” who had shown interest in the technology. In order to manufacture the experimental model, seismic experts even purchased a hovercraft. However, funding was discontinued, and the project was suspended.

Thus, given the fact that there is still no source that can survey arctic shallow areas, the problem arises at a national level. In these circumstances, government support of the project would be a reasonable step. The existing traffic restrictions in the areas of the Far North described above do not apply to transition areas, where operations can only be performed during the short period of arctic navigation. Use of hovercrafts will, among other things, prevent any damage to the soil when operating in the onshore coastal area.

Even despite these obvious advantages, interest from the government and mineral developers in this technology is, to put it mildly, not particularly high. Thus, the cost in operating in transition area (with the same scope of surveying) 5-10 times exceeds the costs of onshore surveys. During a single summer operation period, a seismic crew operating ashore may perform 2D-surveying of about 200-250 linear kilometers. Compared with onshore surveying, this is negligible. However, the efficiency of a technology should be measured, among other things, by the amount of demonstrated resources. And from this point of view, the development of the Arctic transition area has serious potential.

 Prospects of development of arctic areas

In conclusion, it should be mentioned that the pace of development of arctic territories in future years will first and foremost depend on how fast production falls at the existing fields of West Siberia, the Ural and Volga regions, and other areas. In order to ensure a more rational development of arctic coastal areas, surveying and development techniques must be developed on a constant basis in areas with infrastructure for the extraction and transportation of resources. It is also necessary to expand to the East (East Siberian Sea-wise) through consistent construction of transportation routes, pipelines, and ports for loading oil onto tankers. There are technologies for operating onshore and in transit areas. They currently allow one to cover the entire Russian subarctic coast and an offshore area of depths of 20-30 meters. The risks and costs related to the development of onshore and coastal fields will be substantially lower than those associated with offshore development.

VLADISLAV VOTSALEVSKY
Chief Geophysicist at “GEOTECH Holding” CJSC
IGOR GOTS
Managing Director
at Naryan-Marseismorazvedka” OJSC