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‘Great Game’ on for the Arctic Petroleum News introduces ‘Our Arctic Neighbors’ to keep tabs on news and technology advances in Norway, Russia and Greenland Kay Cashman Petroleum News
A 21st-century “Great Game” is being played by the biggest countries in the northern hemisphere – a race to control, discover and produce the Arctic’s vast resources. The world’s last, great exploration frontier, the region is believed to hold huge deposits of oil and gas that will pose formidable economic, technical and environmental challenges to produce.
With the “Our Arctic Neighbors” news section, Alaska-based Petroleum News is stepping up its coverage of the far north from its core areas of Alaska and northern Canada to include two other major Arctic players, Norway and Russia, and a fledgling oil and gas province, Greenland.
Petroleum News’ home base, the state of Alaska, boasts more than 30 years’ experience producing oil in the Arctic, starting with the world’s first commercial onshore Arctic production at Prudhoe Bay, and followed by the first Arctic offshore projects, Endicott and Northstar.
Alaska, Canada, Greenland, Norway and Russia may appear distant from each other on a conventional map, but on a circumpolar map it is clear they are neighbors, with expertise they have already begun to share.
Complicating the situation is the debate over which country has the rights to which sectors of the offshore Arctic.
Petroleum News will keep its readers and advertisers updated on all major events in the Arctic oil and gas industry, with a special eye on regions or projects that could use the expertise that has evolved in Alaska.
Sarah Hurst is in charge of “Our Arctic Neighbors.” She can be reached by email at [email protected].
Primary writers will include Hurst, Petroleum News senior reporter Alan Bailey, and Petroleum News Canada writer Gary Park.
Russian president an unknown quantity At first glance Russia’s government appears hostile to the participation of foreign companies in its petroleum industry, but the reality isn’t so straightforward. Take a closer look at many of Russia’s projects and you will find that foreign companies are very much involved as partners, just not with a controlling interest.
Outgoing President Vladimir Putin has led the charge to regain state ownership over Russia’s natural resources, and he will undoubtedly continue to exert a strong influence in his new role as prime minister. President-elect Dmitry Medvedev, who takes office in May, is the chairman of Gazprom’s board of directors and something of an unknown. If he can assert his own authority and not act as a subordinate to Putin, he may opt to take a more pragmatic approach towards dealings with the international community.
—Sarah Hurst
Russia keen to establish Arctic dominion Russian state-owned oil company Rosneft hosted a meeting of the government’s Marine Board in mid-April. The top item on the agenda was to establish the outer limits of Russia’s disputed continental shelf zone, in the Arctic and elsewhere.
In August 2007 a Russian expedition planted the national flag on the seabed under the North Pole in an effort to claim that area and its mineral resources. Canada disputes the claim.
Rosneft CEO Sergei Bogdanchikov, a member of the Marine Board, estimated the resource potential of Russia’s part of the Barents Sea at 7 billion tons of oil equivalent (approximately 51.3 billion boe), and the resource potential of Russia’s part of the Bering Sea at 300 million tons of oil equivalent (about 2.2 billion boe).
Russia’s minister of natural resources, Yuri Trutnev, recently told the newspaper Kommersant that Rosneft would get monopoly rights to all oil reserves in the Arctic shelf, and state-owned Gazprom would get monopoly rights to all the region’s natural gas. Gazprom already holds the license to the Prirazlomonoye oil field in the Pechora Sea, which is scheduled to enter production next year. It is unclear whether Gazprom will have to give that license to Rosneft. Kommersant said foreign partners will almost certainly be needed for the projects.
The Marine Board endorsed a second North Pole expedition planned for this year which would attempt to bolster Russia’s claim in accordance with the U.N. Convention on the Law of the Sea. Russia needs soil samples, which can be obtained only by drilling, but the country has no drilling vessels, RIA Novosti reported.
First Deputy Prime Minister Sergei Ivanov, who chairs the Marine Board, insisted that Russia’s Arctic claim is in compliance with international law, which currently grants the United States, Canada, Norway, Russia and Denmark each a 200-mile economic zone in the Arctic Ocean. (Greenland is a self-governing province of Denmark.)
—Sarah Hurst
Gazprom, partners to invest big in Shtokman Gazprom and its partners Total and StatoilHydro plan to invest about $40 billion by 2020 in the development of the Shtokman natural gas field in the Barents Sea, Rosbaltnord.ru reported in April. Shtokman’s reserves are estimated at 3.8 trillion cubic meters of natural gas and more than 37 million tons of gas condensate. The license for Shtokman is held by Gazprom subsidiary Sevmorneftegaz.
Sevmorneftegaz officials briefed residents of the village of Teriberka in Murmansk Oblast recently about how the Shtokman project would affect them. Three platforms will be placed 560 kilometers off the coast of the Kola Peninsula, and a subsea gas extracting complex will be installed at a depth of 340 meters, from which three pipelines will be connected with Teriberka. The fishing village has a population of about 1,400 and is located on the Bering Sea coast.
Meanwhile, management of the Kola nuclear power plant in Murmansk Oblast is negotiating with Gazprom over the possible construction of reactors that would produce energy for the Shtokman project. Gazprom has also been considering the use of floating nuclear power stations for the project.
—Sarah Hurst
Field at nuclear blast site might go back on-line A Russia company wants to restart production at a gas and condensate field that suffered a massive blow-out in November 1980. The Soviet government detonated a nuclear device underground at the Kumzha field in 1981 after other attempts to halt the flow of gas and condensate from one of its wells had failed. Now SN Invest plans to spend 77.5 billion rubles ($3.3 billion) to bring Kumzha back on-line.
Located in the Nenets Autonomous Okrug, the Kumzha field is estimated to hold about 353 billion cubic feet of gas and 25 million barrels of gas condensate. A total of 23 new wells are planned, and there will also be a large-scale environmental recovery program.
—Sarah Hurst
Lukoil, Conoco bringing Nenets field on-line Russia’s largest oil company, Lukoil, and partner ConocoPhillips are progressing with plans to bring the Yuzhno-Khylchuyuskoye oil field in the Nenets Autonomous Okrug on-line later this year under their Naryanmarneftegaz joint venture. The companies have invested over $3 billion in the project since 2004, Lukoil’s president, Vagit Alekperov, recently told the Financial Times.
“Oil from this field is to be supplied to Europe and the United States via a unique marine terminal situated in Varandey settlement on the Barents Sea coast,” Alekperov said. “It is equipped with the world’s first ice resistant offloading terminal 22 kilometers (13.7 miles) away from the coastline. Despite severe ice conditions this solution will ensure offloading of oil via Varandey on a year-round basis.”
Lukoil owns 70 percent of Naryanmarneftegaz, ConocoPhillips 30 percent. Each company has a 50 percent voting interest in the venture.
Naryanmarneftegaz is expected to produce and market approximately 200 million barrels of oil equivalent per day at peak, according to ConocoPhillips.
—Sarah Hurst
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