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Vol. 13, No. 25 Week of June 22, 2008
Providing coverage of Alaska and northern Canada's oil and gas industry

Varandey Arctic oil terminal starts up

Lukoil sends tanker to Newfoundland, ConocoPhillips head praises new technology and points to benefits of Alaska experience

Sarah Hurst

For Petroleum News

Lukoil has loaded the first ice-class tanker at its new Varandey oil export terminal on the Pechora Sea coast, the company said June 9. The 70,000-ton Vasily Dinkov was headed for the Canadian port Come By Chance in Newfoundland. Varandey has the capacity to export up to 240,000 barrels of oil per day, much of which will come from the Yuzhno-Khylchuyuskoye field.

Varandey “represents a significant advance in technology,” Jim Mulva, chairman and CEO of ConocoPhillips, said at the St. Petersburg International Economic Forum June 7. ConocoPhillips is a partner with Lukoil in developing the Yuzhno-Khylchuyuskoye field. “Our joint venture has also worked with Sovcomflot to develop three new Russian-flagged ice-breaking tankers to transport the oil,” Mulva added.

Yuzhno-Khylchuyuskoye “has been a predominantly Lukoil-style development,” Mulva said. “But it has been supplemented in key areas by the experience that ConocoPhillips gained on Alaska’s North Slope. These insights have, for example, helped reduce the number of drilling pads needed from the originally planned 10 to only three. They also enabled us to double peak production capacity, reduce the environmental impact and improve the development economics. Overall, this blending of expertise has resulted in more than $500 million in savings.”

Fixed ice-resistant terminal with mooring 14 miles offshore

The Varandey facility consists of an onshore tank farm with a total rated capacity of 325,000 cubic meters (11.5 million cubic feet); a fixed ice-resistant oil terminal 14 miles offshore, with a height of over 160 feet and a weight of over 11,000 metric tons, including living quarters and a mooring cargo handling system with a jib and a helicopter platform; two underwater pipelines, 32 inches in diameter, connecting the onshore tank battery and the offshore oil terminal; and an oil metering station, auxiliary tanks, pumping station and power supply facilities.

An auxiliary icebreaker and an icebreaking tug will be on duty in the vicinity of the terminal, according to Lukoil. The environmental safety system at Varandey has three levels of security and is fully automated. The terminal has been designed to operate with zero discharge, which means that all industrial and domestic waste is collected in special containers and transported onshore.

“Our company has created a unique sea export system which makes it possible to transport large quantities of oil to polar regions; it is unrivaled in the world,” said Vagit Alekperov, Lukoil’s president and CEO. “This new Russian transportation corridor exports oil at a minimum cost, while preserving its quality, via the shortest sea route to the European and North American markets. In addition, the infrastructure we have been able to establish helps develop new fields in the Timan Pechora oil and gas province,” he added.



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