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Our Arctic Neighbors: Liquefied natural gas plant for Nenets Oblast? Taking cue from Putin, independent considers LNG plant for commercializing Arctic fields instead of gas-chemical complex Sarah Hurst For Petroleum News
A little-known Russian independent, Moscow-based CH-Oil & Gaz, has announced plans to build a liquefied natural gas plant in the Nenets Autonomous Oblast. The LNG Pechora Project, as it is called, was introduced by the company’s CEO, Viacheslav Pershukov, at the 10th World LNG Summit in Barcelona Dec. 3.
The plant would be built as an alternative to the gas-chemical complex that CH-Oil & Gaz had planned to assist with commercialization of the gas reserves of the Kumzhinskoe and Korovinskoe fields, the company said in a release Dec. 3. According to a feasibility study that has been prepared by engineering firm Technip Italy, construction of the LNG plant and the associated infrastructure could begin in 2011 and would require more than $4 billion in investments.
The plant would make it possible to commercialize 138 billion cubic feet of dry gas per year in the first stage, and it may be possible to increase production to 275 bcf in the future, according to CH-Oil & Gaz. The plant could be launched in 2015, at the same time as the start of production at the fields. The LNG would be exported mainly to the Asia-Pacific region.
Lack of infrastructure “The project will allow us to commercialize the reserves of natural gas in Nenets Autonomous Oblast that have not been developed due to a lack of the necessary infrastructure, so if we complete our project we can create a new gas province in Russia,” Pershukov said at the summit.
“Initially we considered only one way of commercializing the reserves by constructing a gas-chemical complex near Indiga village,” Pershukov said. “But recently new opportunities have opened up for independent Russian operators in the LNG sector. At the conference in Salekhard in September 2009, Prime Minister Vladimir Putin stated that it is now important to take the leading positions in the LNG market.
“It is no secret that construction of the LNG plant in Nenets Autonomous Oblast requires more approvals and is subject to various regulations; nevertheless we decided to consider this option. Simultaneously with the development of pre-project documentation for the LNG plant, gas transmission infrastructure and marine facilities, we are negotiating on strategic cooperation with foreign companies. We hope that our project will make a valid contribution to the realization of our country’s plans,” Pershukov said.
Development of the Kumzhinskoe field is controversial. Located in the delta of the Pechora River, 37 miles from the town of Naryan-Mar, a massive blowout occurred at one of the field’s wells in November 1980. The Soviet government detonated a nuclear device underground at the field in 1981 after other attempts to halt the flow of gas and condensate from one of its wells had failed.
Environmental groups such as Norway’s Bellona say that gas is still leaking from the deposits. Bellona wants to renovate and reinforce a protective dam, and opposes any gas production at the field. The administration of the Nenets Autonomous Oblast proposed restarting development of the field in 2007 “to reduce the intrastratal pressure so that the risk of gas discharge shall be minimized,” CH-Oil & Gaz says on its Web site. The administration has placed serious environmental obligations on any company that develops the Kumzhinskoe field, the Web site notes.
The plant in Nenets is the third proposed LNG plant in the Russian Arctic, along with the plant envisaged in the village of Teriberka on the coast of the Kola Peninsula to handle gas from the Shtokman field in the Barents Sea, and a proposed plant on the Yamal Peninsula. The only operating LNG plant in the Arctic is Statoil’s Melkoya plant in northern Norway, which has been plagued by technical difficulties.
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