BOWELS WHICH CAME TO LIFE. “RussNeft” switch on reserves of growth where the others give up

Sergei MIKHALEV,
Chief Geologist of the OOO “Belyie Nochi”

Attraction of foreign investors and setting up of a number of joint ventures in the USSR in early 90ths
were undertaken with a good intention to enrich domestic oil production branch with the latest technologies and methods. Soviet-American joint venture “Belyie Nochi” was one of the first projects of the kind in the FSU. The tandem of Russian and foreign specialists was much written of in numerous central issues. The shortsightedness of the ministries became evident many years later. Instead of the expected positive changes due to production upgrading and efficient management cooperation of “Belyie Nochi” first with the Americans and later with Croatians resulted in the fact that the company found itself in a critical situation. Now the stuff of “Belyie Nochi” recollects those times as a nightmare. The proprietors who worked with the motto “ After us the deluge” have gone for ever, the periods of  unwise management, hands changing, collapse  of the team, production decrease, many-month stoppages of the oilfields after the pipe had been closed by “Transneft”, arbitration procedures on the subject of the leased equipment  are way back. Integration of the Limited Liability Company “Balyie Nochi” into the structure of the Oil and gas Company “RussNeft” can really be regarded as its second birth. 

The history of the oilfields Tagrinskoye and Zapadno-Varioganskoye is directly connected with discovery of the one of world largest oilfield, Samotlor, in Siberia in 1965. In 1975 Tagrinskoye oil condensate field (TOCF) was discovered and its initial effective pay amounted to 38 451 million tons of oil. Zapadno-Varioganskoye oilfield (ZVO) was discovered in 1978 and its initial effective pay amounted to 65 663 million tons.  The development of Tagrinskoye oilfield started three years after the discovery and Zapadno-Varioganskoye - 10 years after the first oil gusher had been obtained.

The first million tons at Tagrinka was produced in 1980, in 1984-1987 the production was at its peak: more than 2 million tons. Those years were followed by a dramatic decrease,  and in 1989 oil production reduced more than twice. In 1991 onl7 475 thousand tons was produced.

In the early 90ths Zapadno-Varioganskoye oilfield,  which came into operation 10 years later than Tagrinskoye, was at the initial stage of development. Production level up to 1991 had been unstable, the oilfield was operated in conformity with the project documents.
The Soviet American oil producing joint venture LLC “Beliye Nochi” was set up in 1991 at the basis of the oilfields Tagrinskoye and Zapadno-Varioganskoye. Due to the faulty operation of TOCF, during the 13 years of exploitation there had accumulated a significant stock of idle wells and the product was low-yield, water-bearing. Wide usage of jet pumps proved to be inefficient in our conditions and resulted in further reduction of producing stock at Tagrinka. Production at the oilfield fell to the minimum and the foreigners concentrated on Zapadny Variogan. In order to achieve maximum production at all the Jurassic deposits, hydrofracturings of formations were undertaken almost at all the wells of the stock. It resulted in dramatic oil production rise which in 1002-1993 exceeded the planned level almost twice. The reduction of production which followed a few years later became typical. In 1996 oil production at Zapadno-Varioganskoye amounted only to 488 thousand tons.

All the geological and technological measures were undertaken only at ZVO, and oil production at Tagrinskoye oilfield continued to reduce rapidly: in 1996 only 207 thousand tons was produced.

Within the period from 1991 to 1996 total production of OOO “Belyie Nochi” reduced almost twice, and it was mainly due to the fact that the company tried to receive maximum profits while doing minimal investments. Minor investments into geological and technical measures at Tagrinka, unbelievably small-scaled works on rehabilitation of mineral resources base reduced the oilfield to a miserable state. The production went on falling and in 1998 amounted to 122 thousand tons. The producing well-stock reduced from 143 (in 1991) to 51/ The situation at the Zapadno-Varioganskoye oilfield was hardly better:  oil production - 314 thousand tons and producing well stock – 85 wells (104 in 1991). In 1999 the American specialists gave place to Croatian ones and OOO “Belyie Nochi” became a Russian-Croatian joint venture. Nobody was surprised by sagacity of the Croatians who concentrated on Zapadny Variogan. The repeated scrupulously the strategy of t heir foregoers and laid stress on hydrofracturings, but in their case they practiced hydrofracturings at the upper, most productive deposit of  the reservoir B-10 and Achimov   bench. They returned the exploitation stock from the Jurassic deposits which considerably complicated the process of development of formation Ю1. The production output at ZVO more than doubled   in 2001-2002 due to return to the higher objects and practicing hydrofracturing of formations. But Tagrinskoye oilfield was abandoned.
In 2002 Oil and Gas Company OOO “Belyie Nochi” was acquired by the Russian “Mezhprombank” and in the first half of 2004 it sold the company to “RussNeft”. And it is from this point that the new era in the activity of “BN” began.

It was a troublesome purchase for “RussNeft”, for during a number of years a lot of problems had accumulated, such as obsolete project documentation, production level which was not in conformity with it (considerably lower); a huge idle stock, formed as the result of activity of the foregoers; outstanding license agreements under which the company had to drill six more exploration wells.

In 2004-2005 new project documentation was worked out for Tagrinskoye and Zapadno-Varioganskoye oilfields, and in 2005 the oil production level at the company achieved 1 million 13 thousand times – for the first time in 12 years.

During the three years of work within the structure of “RussNeft” some grand projects were imolemented and considerable growth of oil production was achieved. In 2003 only 131.9 thousand tons was produced at Tagrinskoye oilfield, were the stock of producing wells counted 35 ones, but at present the average daily production at this oilfield has almost tripled. The plans for the future are still more optimistic: to achieve in the next 5-7 years the oil production level of 2 million tons a year.

Considerable investments are being made in exploitation drilling – within the period from 2004 to 2006 32 wells were drilled. In 2007-2101 it is planned to drill more than 60 wells.

“Russneft” company pays considerable attention to rehabilitation of mineral resources base, compensating the reserves of produced oil by new explored reserves which is achieved through seismic works and drilling exploration wells. The approved five-year program of geological and exploration works  stipulates substantial investments in this field.  The proportion of the total amount pf investments and the costs of geological and exploration works is 70%. In 2004-2005 the allocations for GEW amounted to 175 million 206 thousand rubles, and in 2007 it is planned to spend for geological and exploration works 667 million 650 thousand rubles – 10 times more as compared with 2004. The major part of this money is to be used for drilling of six exploration wells and seismic works.
For the period from 2004 through to 2006 the total reserves increment at the company amounted to 25 milliion 125 thousand tons of oil. Three new deposits were discovered and in 2007 the geologists have already received as the result of drilling and testing well No 407 a waterless oil gusher with the flow rate of 92 cubic meters per day. It resulted in considerable growth of the reserves of formation БВ5. Besides, a new oil deposit was discovered in formation БВ2. The results of GEW give the chance to build up the reserves in amount of 17 million 894 thousand tons. Positive dynamics can be seen in all the aspects of the company’s activity. The terms of license agreements are being fulfilled completely, geological and exploration works which provide considerable increment of reserves are under way, a wide program of geological and technical measures is being implemented. The main accent is made on such measures as returning suspended wells into operation by way of remedial cementing.

Social infrastructure is also taken care about: a large0scale program of constructing new hostels, canteens, recreation blocks is being implemented. The issues of ecology and environment protection are given special accent. During the last few years almost all the “legacy” of the foregoers was eliminated – by the moment “RussNeft” purchased the company, the area of fuel oil polluted territory was more than 75 hectares. The three-year program of recultivation of the land is being successfully implemented. The program stipulates complete restoration of the land by way of using up-to date technologies. The annual volume of financing environment protection works amounts top more than 30 rubles. “Belyie Nochi” is a city-forming company and acts as a sponsor of many events arranged by the city Within the frames of the agreement signed between the company and the city administration “BN” renders financial assistance to the institutions and organizations of Raduzhny.

Khanty-Mansy
Autonomous Area

Facts

OOO “Beliye Nochi”, a subsidiary of OAO Oil and Gas Company “RussNeft”, is planning in 2007 to invest in geological and exploration works  668 million rubles which ten times exceeds the values of the last two years. The major part of the money will be allocated to drilling of six exploration wells and seismic works.

Within the framework of implementation of a five-year program of the company development “RussNeft” pays special attention to rehabilitation of mineral resources base of the plant, compensation of oil production by increment of new explored reserves. Thus, in 2007 it is planned to allocate 70% of the whole volume of capital expenses of Belyie Nochi” to GEW: seismic works and exploration wells drilling. In this year the volume of incremented reserves of the OOO will amount to 17 million 894 thousand tons of oil , and the total increment of reserves during the three years of the company’s business activity within the structure of “Russneft” (2004-2006) equals 25 million 125 thousand tons.

From our files

OAO Oil and Gas Company RussNeft  is a vertically integrated oil holding numbered among top ten oil and gas enterprises of the country.

RussNeft’s structure encompasses 30 producing plants, 3 refineries, a transport plant as well as a modern distribution network of gas filling stations counting  311 filling complexes. The company’s plants are located in 23 regions of Russia and the CIS.

Business geography of RussNeft covers Western Siberia, Tomsk, Novosibirsk, Ulyanovsk, Penza, Volgograd, Briansk, Kirov, Vologda, Smolensk, Saratov, Orenburg, Tver, Pskov, Novgorod, Yaroslavl, Tula and Kaluga regions, Krasnodar Territory, Republics of Udmurtia, Komi and Belarus. The head office of the company is in Moscow.

Net effective pay of RussNeft exceed 630 million tons. The volume of annual production reached the level of 17 million tons.

The Company’s personnel numbers more than 17 thousand people.

In all the regions of its business activity the Company is implementing large-scale social and charitable programs based on agreements with the administrative bodies of the subjects of the Federation.