7 May 2009

Arctic project faces never-before-seen obstacles

The challenges of exploration and development of arctic hydrocarbons is the newest frontier that energy companies are entering. 

A representative for Herve Madeo, a vice president at Total, spoke Wednesday at the Offshore Technology Conference (OTC) in Houston. Total (25%), StatoilHydro (24%), and Gazprom (51%) are jointly developing the Shtokman. Madeo was in Russia attending to other issues.

The Shtokman field is one of the world's largest natural gas fields, and it lies in the central part of the Russian sector of the Barents Sea, 600 kilometers (370 mi) north of Kola Peninsula. Its reserves are about 3.8 trillion cubic meters of natural gas and more than 37 million tons of gas condensate. That would be $2-4 trillion worth at present prices.

“Gazprom asked us to design the infrastructure to last for 50 years, which is probably not possible in those severe conditions,” the representative related, “but we can be sure of 25 years and we can repair and replace to make 50 years happen.”

Russia discovered the gas reserves in 1988, but the field sat for a long time undeveloped, owing to extreme Arctic conditions and the depth of the sea. The sea depth in the area varies from 320 to 340 meters (1,050 to 1,120 ft).

Gazprom expects the gas production to be running by 2013-2015. Russian scientists have warned that the Shtokman's development will face greater problems as global warming unleashes vast icebergs into the Arctic.

The Shtokman developers plan to address this challenge by using floating removable platforms, which can move around in case of emergencies.

The initial project will produce 22.5 billion cubic meters (bcm) of natural gas and 205,000 tons of gas condensate a year. Later the production will go up to 70 bcm of natural gas and 0.6 million tons of gas condensate.

All extraction facilities will be located under water. The development costs will be between $15 billion and $20 billion.

 – Nicholas Sheble