Gazprom Neft almost halves production costs of Bazhenov oil

The Bazhenov Technology Centre (a Gazprom Neft subsidiary) has cut the costs of producing oil at the Bazhenov Formation, from RUB30,000 to RUB16,000 per tonne. A viable production cost, of RUB8,500 per tonne, is expected to be reached as soon as 2021.

Gazprom Neft’s 2019 year-end results show a 2.5-fold year-on-year increase in oil production at non-traditional reserves. Improvements in the technologies used in developing the Bazhenov Formation have allowed the company to almost halve the costs of producing Bazhenov oil, * from RUB30,000 per tonne at the start of the project in 2017, to RUB16,000 per tonne in 2019 — this figure itself reflecting a 20-percent reduction on 2018 levels.

Efficiency improvements in developing “hard-to-recover” oil have been achieved thanks to the development of innovative tools and the deployment of new approaches to developing the Bazhenov Formation. The Bazhenov Technology Centre has continued fine-tuning fracking technologies at unconventional reserves throughout 2019,** with the total number of stages achieved in high-tech fracking at the productive layer or “interval” at the Bazhenov Formation reaching 18 — the first such instance in the history of Russia’s oil industry. Added to which, the rate of fluid injection has also seen a three-fold increase, to 14 cubic metres per minute, with injection volumes increasing six-fold, to 2,000 cubic metres. The first domestic geophysical well-logging complex also successfully cleared pilot testing last year, as well as several new drilling fluids and supporting technologies for fracking. The company has also successfully tested a new type of xanthan-gum-based fracking fluid, the use of which has resulted in a 1.5-fold increase in well-flow.

The Bazhenov Technology Centre was responsible for drilling a 1,500-metre-plus horizontal well shaft at the Bazhenov interval without the use of rotary-controlled systems in 2019 — the first such instance in the history of Russian oil production, with a compound drilling tool being used specifically for that purpose, together with an oil-based drilling mud to reduce friction. Initiatives in fine-tuning drilling technologies have allowed the company to cut high-tech well construction lead-times by 13%, from 63 to 54 days.

“Creating cost-effective technologies for developing ‘hard-to-recover’ hydrocarbon reserves is a challenge on a national scale. Accessing the significant resources of the Bazhenov Formation is directly dependent on addressing this, as is strengthening a whole range of oil-sector auxiliary and related industries. The outcomes achieved in 2019 demonstrate how the national ‘Bazhenov’ project is giving major impetus to the development of Russian drilling technologies, high-tech fracking and other innovative products. These developments will be rolled out to other geologically complex fields throughout the country, as well as improving the Russian oil and gas industry’s competitiveness on the global market.”
Alexei Vashkevich
Alexei Vashkevich Director for Technological Development, Gazprom Neft
Notes for editors

* The testing of new methodologies for working with low-permeability reservoirs is being undertaken through the national “Developing Domestic Technologies and High-technology Equipment to Develop Reserves at the Bazhenov Formation” project, on which the Gazprom Neft Bazhenov Technology Centre is operator. The project includes both a technological element, and facilities for state support. 2019 saw the adoption of amendments to subsoil legislation, envisaging a new kind of subsoil use regime in Russia, designed specifically to facilitate the development and testing of new technologies. Once these changes come into force Gazprom Neft will be able to make access to Russia’s first pilot testing facility at the Bazhenov Formation fully available to third-party companies.

** Hydraulic fracturing (fracking) is one of the most effective means of increasing oil production at a field, and increasing oil recovery. It involves the high-pressure injection of a mixture of fluids and a proppant into oil-bearing strata, at depths of several kilometres. This operation creates fissures in the rock, allowing oil to flow into the well. The longer these fissure are, the larger the reservoir area they cover, meaning more hydrocarbons can be produced.

The Bazhenov Technology Centre — a subsidiary of Gazprom Neft — is operator on a national project, “Developing Domestic Technologies and High-technology Equipment to Develop Reserves at the Bazhenov Formation”. The project is directed at bringing together the resources of the scientific, industry and business communities, together with government, in developing profitable technologies for developing the non-traditional hydrocarbon reserves of the Bazhenov Formation. The Bazhenov Technology Centre’s production programme to develop non-traditional hydrocarbon reserves is being implemented in the Khanty-Mansi Autonomous Okrug.

The Bazhenov Formation comprises a group of oil-bearing rocks covering an area of approximately one million square kilometres in Western Siberia. The formation lies at a depth of two to three kilometres. Provisional forecasts indicate geological reserves at the Bazhenov Formation to be in the order of 18 to 60 billion tonnes. There are not, currently, any effective technologies for working with the Bazhenov Formation.