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Gazprom Neft and the Khanty-Mansiysk Autonomous Okrug sign agreement on establishing the “Bazhen Technology Centre”

Gazprom Neft and the Government of the Khanty-Mansiysk Autonomous Okrug-Yugra have signed an agreement on establishing the “Bazhen Technology Centre” in that region. Both parties intend to develop cooperation within the framework of the national project on “Developing Domestic Technologies and High-technology Equipment to Develop Reserves at the Bazhenov Formation”. The document was signed by Natalya Komarova, Governor of Khanty-Mansiysk Autonomous Okrug-Yugra, and Gazprom Neft CEO and the Chairman of the Management Board, Alexander Dyukov.

The Bazhen Technology Centre will focus on those advanced skills and technologies available to Gazprom Neft that will form the basis for developing cost-effective methods for developing the Bazhenov Formation. The testing of new technologies and equipment will be located in the Palyanovskaya area of the Krasnoleninskoye field, where the company has been engaged in geological exploration and oil production from non-traditional reserves since 2013. Gazprom Neft’s initiative to establish a technology centre to study of hard-to-recover hydrocarbon reserves received the support of Natalya Komarova, Governor of Khanty-Mansiysk Autonomous District, in 2016. With the support of the Ministry of Energy and the Ministry of Natural Resources of the Russian Federation, Gazprom Neft’s initiative in studying the Bazhenov Formation was given the status of a national project in May 2017.

The Bazhen Technology Centre will become an open industry platform uniting the efforts of oil and gas and oilfield service companies, the scientific community, investors, and the state. All participants, including oil companies, equipment manufacturers and innovative developers, will be able to create and test technologies at the Palyanovskaya site.

Financing of the first stage of the project will be met through Gazprom Neft’s own funds, with additional external investment expected to be forthcoming in the future. In the event that those technologies developed can be implemented successfully, Gazprom Neft’s production from Bazhenov Formation reserves could reach approximately 2.5 million tonnes per year. The Government of the Khanty-Mansiysk Autonomous Okrug intends to attract as many oil and gas companies and scientific institutes as possible to work at the Bazhenov Technology Centre, through the establishment of special conditions for subsoil use, and by granting tax concessions. The economic impact for the regional budget could be as much as RUB27 million by 2025, with the potential to grow to RUB400 billion.

Gazprom Neft CEO Alexander Dyukov commented: “The full-scale development of the Bazhenov Formation will breathe new life into the ‘mature’ fields of Western Siberia. But the effective commercial development of Bazhenov’s reserves today requires technologies and solutions that do not yet exist. Such a challenge can only be overcome through collective efforts, and that is a task for the entire industry. The Bazhenov Technology Centre will make possible the accumulation of cutting-edge ideas, and the implementation of best practices, in developing hard-to-recover oil reserves. The successful implementation of this national project will ensure the country’s technological independence in the exploration and development of unconventional hydrocarbon reserves, in the future.”

Natalya Komarova, Governor of the Khanty-Mansiysk Autonomous Okrug, added: “We are keen to turn over a new leaf in developing Russian technologies, in conjunction with Gazprom Neft, having signed this agreement with the company to implement the national project on ‘Developing Domestic Technologies and High-technology Equipment to Develop Reserves at the Bazhenov Formation’, and in opening the Bazhenov Technology Centre, in Yugra. It is important that this new entity becomes a place for combining the potential of both research and production. In which context, it is essential that the results and outcomes of research are available to everyone involved in the national project, including leading federal institutions, as well as service companies and upstream organisations. Working on the basis of mutual self-interest will give further stimulus to fundamental scientific works in the effective development of hard-to-recover reserves, and will avoid duplicate investigations, excessive spending, and long lead-times in the practical adoption of innovations.”

Notes for editors

* The “Bazhenov formation” refers to a specific geological stratum identified in the centre of Western Siberia, running to depths of 2,000–3,000 metres. Estimates suggest that oil reserves at the Bazhenov reservoir could amount to as much as 100–170 billion tonnes in Western Siberia alone. The stratum covers an area of approximately one million square kilometres and is 10–100 metres thick. The Bazhenov Formation is classified as unconventional type of reserves, comprising what is known as “shale oil”, development of which currently awaits the selection of technological solutions for its full-scale development.

Gazprom Neft has already been investigating the Bazhenov Formation for several years, and has made significant progress in developing technologies for prospecting for and producing oil here. The most important results achieved in 2016 were obtained at the Palyanovsky license block in the Krasnoleninskoye field, Khanty-Mansi Autonomous Okrug, and at the Vyngayakhinskoye field, Yamalo-Nenets Autonomous Okrug. Project operations at these assets are continuing in 2017, with a well also being tested at the Salymskoye field to assess the geometric configuration of hydraulic fractures and to allow the construction of a geological model, allowing the optimum design of a multi-stage fracking well to be determined.

Gazprom Neft began its first investigations into the Bazhenov formation at Vyngayakhinskoye field in the Yamalo-Nenets Autonomous Okrug in late 2015. Fracking operations have been undertaken in the Bazhenov deposits at a new prospecting well and two directionally-drilled wells, with all wells obtaining oil inflows. Appraisal wells were drilled for sampling and well-core analysis, and an extensive range of geophysical information recorded for detailed examination of the drill core and development of a geological model.

2016 saw the completion of the full development cycle at the Krasnoleninskoye field, Khanty-Mansi Autonomous Okrug, with two high-technology horizontal wells drilled for multi-stage fracking, achieving a commercial-inflow of 45 tonnes of oil per day. Total cumulative production at these wells has now reached 10,000 tonnes per month, proving the operational efficiency and technological effectiveness of the essential technology, as adapted for the Bazhenov Formation.

Exploration and production photo gallery: