Interview with Vadim Shashel, Executive Director of Gazprom Neft Science and Technology Center
Yekaterina Maikova, OGJRussia
Replenishment of the resource base is one of the key areas of development for any vertically integrated company. That is why development of hard-to-recover and unconventional reserves has become a necessity of our time. New geological exploration technologies and methods help increase the resource base. Vadim Shashel, Executive Director of Gazprom Neft Science and Technology Center, has told OGJRussia how Gazprom Neft is expanding its mineral resources base and what technologies are being used.
Dr. Vadim Shashel has held the position of the Executive Director for engineering and functional support of geological exploration and resource base development of Gazprom Neft Science and Technology Center since 2018. Until then, from 2016, he had worked as the Head of the Geological Exploration Department of Gazprom Neft. He graduated from Samara State Technical University majoring in Oil and Gas Fields Development and Operation in 1994. He took part in the continuing education programs, including the joint program of the MIT (Massachusetts Institute of Technology) and the Moscow Skolkovo School of Management taking a course in Major Oil and Gas Projects Planning. He started working in the oil and gas industry in Samaraneftegaz, also worked in Tomskneft VNK and Yuganskneftegaz. He has worked his way up from the oil and gas production operator to a chief geologist and chief engineer. Since 2011, he has held executive offices and headed various departments.
Vadim Alexandrovich, how is the reserve replacement process structured in Gazprom Neft?
— Gazprom Neft views geological exploration as a business and is increasingly considering new search areas and license blocks, first of all, from the point of view of efficiency. We set targets in work performance timing, in growth of the resource base. According to our last year’s results, replacement of the production level with new reserves at Gazprom Neft was 163%. The company’s proven hydrocarbon reserves-to-production ratio according to PRMS standards is sufficient for 17 years of work, Gazprom Neft is one of the top 10 global public companies in terms of reserves. One of our last year’s victories is the participation of the company’s Science and Technology Center in the discovery of a largest oilfield, Triton, on Okhotsk Shelf, in the development of Arctic projects. In total, Gazprom Neft discovered 4 new oilfields and 27 hydrocarbon reservoirs, the Science and Technology Center supported drilling of 50 prospecting and exploratory wells, which has become a record for the company.
How can efficiency of geological exploration be improved in your opinion?
— Efficiency of exploration means reducing the time of work, lower price of services and, most importantly, obtaining the largest possible amount of geological exploration data at early stages of the project. Based on that, this is how it works: we decide which new technologies to implement, look for partners who have their own solutions. And, of course, this means actively applying digital technologies, such as cognitive geologist, virtual laboratory, digital twin of seismic exploration, etc.
If we talk about the structure of reserves, how large is the share of unconventional and tight reserves?
— Everybody knows that conventional reserves are depleting year on year. Both the number of new fields and their reserves decline, and the scope of discoveries which could be observed back in the 70-80s is impossible now. However, the hard-to-recover and unconventional reserves which the company has in its portfolio today may potentially take from 30% to 50% of Gazprom Neft’s production volume after 2030. I am sure that our company today is the industry leader in terms of development and implementation of technologies related to extracting tight and unconventional reserves. The company estimates that the share of the latter ones is 300 million tons of recoverable resources. Speaking about this category, we first of all mean Bazhenov Formation which has a huge resource potential: according to a conservative estimate, the volume of recoverable resources of Bazhenov Formation in Russia is 760 million tons. By as early as 2025, Gazprom Neft is planning to produce, on its Bazhenov assets, about 2.5 million tons of oil per year.
The Bazhenov project being implemented by Gazprom Neft already has a national status. In Khanty-Mansiysk Autonomous District, the company created Bazhen Technology Center, its purpose is to unite the resources of the scientific, industry, business communities and the state in order to create profitable production technologies for Bazhen. Any companies may participate in this project — both petroleum companies and service companies. We believe that through developing technologies, we will find the key to a commercially beneficial development of unconventional reserves and this will be an industry-wide breakthrough — the company has already managed to cut per-unit costs of production of tight oil from RUB 30 thousand per ton to RUB 18 thousand per ton. Moreover, last year the company acquired several blocks in Orenburgskaya region where the targets are Domanic reservoirs. Presence of hydrocarbons in those reservoirs causes no doubt, the question is in finding profitable technologies for their recovery. And we already have a program for working with this category of reserves: conducting a gravity and magnetic survey of 13,000 km, 3D seismic exploration of 900 km2, drilling a prospecting well with core sampling (250 m) and three horizontal wells.
Application of new technologies, for example, at Achimov deposits that also have a complex structure and low permeability will enable us to recover larger volumes of reserves and achieve a profitability level comparable to conventional production. This happens thanks to choosing the most appropriate hydraulic fracturing system which takes into consideration the geomechanical properties of the formation, to drilling multilateral wells and to selecting agents for pumping, such as hydrocarbon gas.
Another project in developing unconventional hydrocarbon reserves is working on pre-Jurassic deposits in Tomsk region. We are conducting a thorough analysis of three concepts associated with understanding the oil generation process. By comparing all the results we achieve, we will be able to identify the most promising areas in order to continue geological exploration there. The work related to the evaluation of such areas is not being performed in Tomsk region alone, but throughout Western Siberia, specifically, in Megionsk district.
I would like to go back to Bazhen as the most well-developed area of business. What was your biggest surprise when you started working on Bazhenov Formation?
— We have already proved that Bazhenov Formation contains considerable amounts of hydrocarbons. Now we are facing quite an ambitious task: to decide how to recover that oil profitably. Unique wells have been drilled on Bazhen and we understand what algorithms should be applied later in order to develop those reserves. These algorithms are incredibly complex: for instance, if previous approaches to developing unconventional reserves may be compared to advanced mathematics, then approaches to developing Bazhen are advanced math combined with other disciplines of an advanced level — physics, chemistry, geomechanics etc. But no matter how complicated approaches appear, today we have the required technologies, for example, we can model complex operations in the reservoir by studying the rock properties. Thanks to implementing new software, we can manage the formation of cracks during hydraulic fracturing in an on-line mode. What used to seem science fiction before, now is turning into reality right before our eyes.
For instance, in 2018 we had a unique experience of multistage hydraulic fracturing — instead of 48 hours, we spent half the time per stage. This result may be considered yet another step towards our strategic goal — creating a profitable technology for developing Bazhen.
Vadim Alexandrovich, is Achimov a separate area of work?
— In 2016, the company decided to classify Achimov sequence as a separate exploration prospect. Bolshaya Achimovka project office was created to integrate and interpolate the knowledge and data received in relation to Achimov sequence from various regions, such as the northern and central parts of Yamal-Nenets Autonomous Region and Khanty-Mansiysk Autonomous Region. Last year, the first in the industry digital model of Achimov sequence was made. It helped us identify 10 promising areas with the potential of over 34 billion tons of hydrocarbons. Speaking about Bolshaya Achimovka, which spans several geographical areas, it is necessary to take into consideration that its development is complicated due to low reservoir porosity and permeability and high reservoir compartmentalization, areas with abnormally high reservoir pressure and high gas content. Now we are working on several technically comparable projects on Achimov sequence: wells are being tested and oil recovery rates for different technologies confirmed. Although all the projects are quite similar, the final parameters are sometimes very different from each other. So, our task is to select hydraulic fracturing algorithms in such a way as to make all of them profitable.
Today, many technologies are still being tested. And sometimes, it is necessary to combine them — try horizontal wells, multistage hydraulic fracturing, other types of hydraulic fracturing. That is why a technology office was created for developing Achimov sequence in order to test innovations as fast as possible and implement them. The office will be connected with Bazhen project in order to exchange knowledge, experience, work together with partners.
So, a technological test site is a necessity of today?
— Yes, we believe that we need more such test sites. We understand that creation of new technologies and solutions is only possible with joint effort of different companies.
Gazprom Neft has become the first company in Russia that succeeded in implementing such a project for testing technologies for Bazhen. This was preceded by working intensely with regulating authorities, participation in adaptation of laws and regulations. The reason is that, until fairly recently, the main document for developing an oilfield was the plan of development which first of all, was focused on delivering a certain level of production. Our laws did not even envisage a format like development of technologies, where the production is not a priority. Of course, during the initial stage, when work is performed on a few wells, the costs will be quite high. But as the technologies are used on hundreds, if not thousands, of such wells, the costs will reduce.
Let us talk about digitalization in geological exploration. Please tell us about the key stages of development of digital technologies in geological exploration.
— Let me emphasize two areas related to digitalization. The first one is receiving a large amount of data from the research methods that we are using. For example, wide-azimuth method. With the development of digital technologies, the probe receives large volumes of information, from it we can select additional data and study the reservoir better. For instance, we can forecast fracturing and fracture penetration.
The second area is data processing. Any geologist, first of all, relies on his/her vision, experience, skills and approaches, which is good. People do not become experts in their respective areas for nothing. However, sometimes a person is focused on his/her discipline and searches for a solution in a habitual fashion. Processing information using a computer makes it possible to receive data with the same level of objectivity. The program sees correlation of the knowledge saved in it with the data it processes and shows that there is an area where it is more probable to find a certain structure with specific parameters. Then geologists will use this information, but the machine makes it possible to quickly receive high-quality data. The built-in mechanisms help us process 100% of information, which prevents loss of data that may happen during the analysis performed with conventional methods. This is the point of working with a large body of data. Moreover, we store that information in a digital format and can, some time later, return to it when new technologies appear.
Now we are also speeding up creation of geological models. As a result, we want to receive digital twins of oilfields, their exact copies — it is possible now. This will help us test all technologies, and not in the field, but on the models. And choose the best solutions without large costs.
Let us talk about non-seismic methods.
— As everybody knowns, history develops as a spiral, and those methods were actively studied in the 60s. Some of them were used, others were frozen and put aside, but the theory is clear and well known to everyone. Components under the ground may be detected at the molecular level, gravity and magnetic fields can be used — all of this has been described in theory. However, in practice, the technologies of that time did not make it possible, by obtaining small amounts of data, to successfully implement such methods. These days, using non-seismic methods, we have proved that gathering a larger volume of information using probes, its subsequent association with scientific approaches and scaling makes it possible to make the so-called geologically definite models. Our next step will be to confirm those models using conventional research methods, but with the focus on specific areas. With this approach, the cost of geological exploration at the initial stage may be cut and the project may be fast-tracked. Having identified priority areas, the geological exploration strategy may be further developed.
We are now implementing several projects associated with non-seismic methods. They include aerial magnetic survey with drones, geochemical methods etc. We tried out geochemistry when we were studying Otdalennaya group of oilfields in Yamal-Nenets Autonomous Region in the adjacent area. The data collected using this method match our seismic results, so this approach proved reliable. We are conducting aerial magnetic survey at another site, including some areas of it where no seismic exploration has been done yet. Now we are waiting for the results to be confirmed in order to better understand whether it is possible to form an impression of a resource base with an acceptable uncertainty range on the basis of non-seismic methods.
You have already touched upon the profitability. How has the planning approach changed today?
— Reserves are tight, investments large, and the number of project stages which we used to apply is still used today. However, these days we must have some idea of the subsequent stages of the project early on, all the way through, until the field is abandoned. This also includes economic calculations because the price of a mistake is very high. That is why project management is so important. While in the past one highly profitable project out of ten covered possible errors in other ones, today the rules of the game have changed. Now we are talking about small reservoirs with complex structures and shelf projects and Arctic projects where considerable investment is required. Today, the situation is that even one unprofitable project out of ten can ruin all the other ones — we must not let that happen. After the very first step, while still conducting geological exploration, it is necessary, based on all the data available, to build the whole chain of the project implementation. To apply the probability approach to the confirmation of the resource base, prepare the development plan by forecasting whether tertiary recovery methods will be applied, what system will be necessary to use for maintaining the reservoir pressure, what to do with gas, whether it should be pumped into the reservoir to maintain the pressure or evacuated. With this approach, we are considering our options for maximum monetization of project resources. Geologists, even at a very early stage, start working in cross-functional teams understanding the ultimate goal — getting profitable production.
The second important factor is the accuracy of geological, hydrodynamic, geochemical models. The model is dynamic and updated as soon as new information is received. We get more knowledge about the field, narrow down the options and find the most suitable one. So by the time the development plan is approved, we already have all the solutions, including the infrastructure. It is very important. That is why we started with saying that geological exploration is a business. We do not want to live in one stage alone, it is impossible in our current reality.
To sum up, where is geological exploration heading, what can we expect in, say, 10 years from now?
— Geological exploration will become an even safer process. Drones, robots, green seismic methods which help radically reduce the number of trees which have to be cut down to carry out the work will be used more widely.
Secondly, of course, it is higher speed and improved methods of information transmission. By improving software and working with large bodies of data, information will be transferred faster and more efficiently. Development of information technologies, digital transformation of the company will help us bring together experts from various fields of knowledge and find effective solutions virtually online. We will not have our habitual yearly cycles. There will be something like a virtual laboratory. We will all be working in a single information field and we’ll be able to, right here, in digital twins, make calculations for business plans for implementing projects. Also, we anticipate changes in the scope of work. For example, in the past, reservoirs less than 10 m thick were considered unprofitable, our modern technologies today help us develop even 2-3-meter reservoirs and in the future, we are talking about one-meter and half-meter stringers — such technologies already exist. At early stages, an integrated approach to development will be applied. While we used to say “from an idea on paper to real project”, now we are going to say “from information in our cloud to a real project”.
Changes will also concern personnel. Not so long ago, skills of a university graduate were sufficient for building a career