Sakhalin & the Russian Far East 2010 Project Development & OSR
Readiness“Sakhalin & the Russian Far East - 2010
Project Development & OSR
I intend to cover 3 Main Topics:
1)What was the basis and development of the OSR System on
Sakhalin and in the Russian Far East -- How was Ecoshelf Ltd
formed and what other organizations are part of the overall OSR
capability2)The current status of oil & gas development, the future and theincreased OSR capability
3) With the infrequency of oil spills, how can we determine if ourOrganization & “System” is Response Ready?

Who is William Stillings & Is It WorthYour Valuable Time To Listen To
Him Today ?
Or asked another way:
How Did this “American” become an
Oil Spill Response “Expert” on
Sakhalin Island and the Russian Far
East?

Sakhalin & the Russian Far East 2010 Project Development & OSR
Readiness
First it is important to note that I do not represent, nor am I
a spokesman for any of the oil spill responseorganizations or oil companies that I will discuss today.
[Except Ecoshelf Ltd]The Company information that I will present is available
on the various company’s web sites
The opinions are solely mine!

My Career Began In
California in the 1960’s
During my university years in California I
worked summers w/ State Fire Service –responding to Wild Land Fires
2. Shell Refinery ’66-’68 – ERT Member
1.

3.

’68 – I Went to work at the “New” San Francisco
Bay Area -Exxon” [then Humble Oil] RefineryHippyRevolution&
Viet Nam War

Career in the 70’s
In 1971, the San Francisco Oil Spill Mutual Aid
Co-Operative - Clean Bay was formed – I was
nominated by my refinery as a responder
2. I Responded to Several Bay Area Spills w/Clean
Bay
3. During the late 70’s my refinery had a number of“small” spills // I was made a1.

‘Responsible Person’

Career in the 80’s
During the late ‘70’s – there were a number ofsignificant spills in the US and overseas
2. In the early ‘80’s Exxon formed an “International
Response Team” -- I was nominated a member [wetrained annually]
3. The morning of Good Friday, March 23rd 1989 I
responded to the Exxon Valdez Oil Spill and worked
for 2 years as 1 of 3 Oil Spill Response Managers
through the end of clean up operations in 1990.
1.

Career in the 90’s
1.

2.

3.

After the Valdez Spill – the USA passed the Oil Pollution Act
of 1990 [OPA-’90] – Alaska was singled out for increased
regulation
I was requested to become General Manager of Cook Inlet
Spill Prevention & Response Inc. [CISPRI] so I resigned
from Exxon {I had fallen in love with Alaska}

Cook Inlet Alaska has the second most sever tideand currents in the world – and heavy, 1 year winterice which moves rapidly on the 5 m tide cycles

Cook Inlet Alaska

&
es
eri s
f in
Re atform
Pl
PWS

Winter Ice - Upper Cook Inlet

Sakhalin – Lun-A – Spring Ice

Winter Surfing in Cook Inlet
AlaskaIce onshoreCareer in the 90’s
1.

At CISPRI we developed broken ice, winter oil spill
response techniques – worked at CISRI – 4 yrs 1990 – early
1995

2.

In the winter of 1994/1995 there were a series ofpipeline breaks in the Komi Republic of Russia[1500 km north of Moscow] – the World Bank and
EBRD funded the clean up and I was requested tobe the Project Manager

3.

During 1995 & 1996 - we recovered 125,000 Tons ofoil – in the northwestern Russian Arctic

Career in the 90’s
In the late summer of 1996, my former associates at
Exxon decided to drill an exploratory well off the East
Coast of Sakhalin
2. They asked our company to perform Oil Spill standby
for their drilling operation
1.

3. So, I traveled to Sakhalin Island

Career in ’90s
1.

That year, 1996, I met Anatoly Yanchuk, at that time,
Director of the Russian State Marine Pollution Control,
Salvage & Rescue Administration -- Sakhalin Basin
Salvage Authority – [SakhBASU] located in Korsakov,
Sakhalin Island, Russia

2.

At the 1997 International Oil Spill Conference in Ft
Lauderdale Florida, we agreed to form the Russian
OSR Company, -- Ecoshelf Ltd. - we had

approx. 20 people

Ecoshelf Ltd – OSR Vessel Agat

Vessel is owned by the Russian Federation

Career in 2000’s
1.

Ecoshelf Ltd now provides OSR & Waste Management
Services to many of the companies on Sakhalin Island, at
the Prigorodnoye [Sakh-2] OET & LNG Terminal and at the[Sakh-1] Oil Terminal on the Mainland at DeKastri – today
we have in excess of 200 employees

2.

As we discuss the state of OSR in the Russian Far
East; it certainly is no longer only Ecoshelf. All of
the operators have their own extensive
capabilities and there are other responsecompanies… and with mutual aid agreements weare ready

So That is My Background
Learned OSR in California in the formative years of theindustry
2. Was a Project Manager on 2 of the larger oil spills in history
3. As the General Manager at CISPRI in Cook Inlet Alaska ourteam developed moving, broken ice OSR
4. I learned to work with Russians during the tough earlyyears of perestroika in the Russian arctic
5. I have been in Sakhalin since 1996 and continue toenjoy it!
1.

Career in 2000’s
Two tips for you today¾

There is no such thing as an OSR “Expert”¾

Oil Spill Response “Managers” know Safety,
Logistics and Waste Management are the keys
to effective oil spill response

The Sakhalin-1 Consortium
Exxon Neftegas Limited, an affiliate of Exxon
Mobil Corporation, is the operator of the
Sakhalin-1 Project.
Other participants in the Consortium are:Russian companies, SakhalinmorneftegasShelf and RN-Astra; the Japanese company
Sakhalin Oil and Gas Development Co., Ltd.;and India's ONGC Videsh Ltd.

The Current Sakh-1 Operation

Orlan SummerChayvo Onshore Processing Facilities –Drill Rig Yastreb in the Distance

Orlan in Winter Ice

SAKHALIN-1 PROJECTCONTINUES TO ACHIEVEMILESTONESOn October 2, 2008 -- The Sakhalin-1
Consortium, announced that more than 20
million tons (157 million barrels) of Chayvo
field crude oil have been produced andloaded into over 200 tankers at the DeKastri Export Terminal in the Khabarovsk
Krai.

DeKastri Oil Terminal

Worlds Largest Offshore Loading Arm& Tanker @ DeKastri

Phase 1 of the Sakhalin-1 Project
Phase 1 of the Sakhalin-1 Project produces crude
oil and natural gas from the Chayvo field.
Future phases of the Project will include
developing the Odoptu and Arkutun-Dagi fields,
expanding the Chayvo Onshore Processing
Facility, and further developing Chayvo gas.

Chayvo Drill Rig – Yastreb {Eagle}

ENL is Committed to Continuous
Efforts to Improve Environmental
Performance Throughout it’s
Operations.
ENL has invested over US$ 700 million
through 2007 on environmental safeguards,
equipment and studies, including various
archaeological, ornithological, bathymetric,
meteorological, seismic, top soils, fisheries,
stream crossing, waste management,
bioremediation and oil spill response studies& equipment.

Odoptu Field Oil and Gas
Development;
The next phase of the Sakhalin-1
project, will produce oil and gas fromthe Odoptu field, located off thenortheast coast of Sakhalin Island near
Piltun Bay, approximately 35 miles (55km) north of current Chayvo operations

The Yastreb has been moved from Chayvo to Odoptu

Arkutun-Dagi Development
The off-shore Arkutun-Dagi development willproduce oil and gas from a field, locatedapproximately 25 kilometers off thenortheast coast of Sakhalin Island, just eastof the Chayvo field. The project plansinclude developing the field through a newoffshore drilling and production platform,
which includes a gravity base substructure
and topsides facilities.

Sakh-1 OSR – 2010
1) Full time OSR standby at Chayvo &DeKastri – Ecoshelf Ltd. & Island
General Services2) Full time off-shore OSR Standby
3) Well trained company & contractor
personnel

Sakhalin Energy Investment Company
Sakhalin – 2 ProjectSakhalin Energy Investment
Company Ltd
Sakhalin Energy is a unique partnershipdrawing upon global oil and LNG expertiseand experience.
Under the shareholding structure of
Sakhalin Energy, Gazprom holds 50% plus 1
share, Shell 27.5% minus 1 share, Mitsui
12.5% and Mitsubishi 10%.

Piltun B - Platform

On 22 July 2009 Sakhalin
Energy exported 200th oil cargo.
The Sakhalin Island, a PRISCOowned tanker on long-term
charter to the company,
delivered 100,000 tons of oil to arefinery in South Korea.

On 22 July 2009 Sakhalin
Energy exported 200th oil cargo.
Sakhalin Energy exported
5,5 mln tons of oil from the Company’s
offshore facilities in the Sea of
Okhotsk in 2009.

Tanker Loading in
Prigorodnoye

LNG Delivery From the Sakhalin2 Project to JapanOn 18 February 2009 Russian President,
Dmitry Medvedev, opened Russia’s firstliquefied natural gas (LNG) plant built by
Sakhalin Energy

LNG Tanker Loading @ Prigorodnoye,
Sakhalin Island Russia

100th LNG Cargo to Asia PacificDuring the last days of January 2010 a
major milestone was achieved at thePrigorodnoye Asset - the 100th tanker
carried Russian liquefied natural gas
from the LNG plant to Sakhalin Energy
customers in Japan.

LNG Tanker LoadingSakhalin Energy Has an Excellent
Record of Spill Prevention
Since production operations began in 1999
the total volume of oil spilled at Sakhalin
Energy operated assets is approximately 0.56
tons, while total production wasapproximately 19.2 million tons (140 million
barrels) of oil or about one barrel for every 35

million barrels produced.

SEIC Oil Spill Response – Ecoshelf Vessel AgatOperational Personnel Have Been
Trained for Specific OSR Issues
SEIC has also developed their own
Emergency Response Teams
Overview & Certification (MorEcoTech) located in
Vladivostok), Environmental Awareness for OSR, Course
for OSR equipment operators. Emercom courses: Basic
Fire Fighting, Emergency First Responders and Emercom
ER&OSR courses have also been completed by staff.

All SEIC’s Operational Facilities Now
Have Complete OSR Equipment at a
Cost of Over $12 million USD
OSR equipment for the onshore pipeline
system has been placed in the five
Emergency Response Depots (ERD) built
along the pipeline route and another set of
OSR equipment in Prigorodnoye.
Onshore Response Companies – Ecospas &Ecoshelf provide 24 hr OSR standby

SEIC’s Pipeline & Terminal
Operations Have Full Time OSR
StandbyAdditionally, SEIC has offshore standby
contracts w/ Ecoshelf Ltd. at their platforms
and at their Oil Export & LNG Terminal @Prigorodnoye in Aniva Bay

SEIC & ENL Operations Have
Full Time OSR Standby
SEIC, as has ENL, also outfitted their full time rig andterminal vessels with state of the art “ARCTIC”
winter ice capable OSR equipment supplied by Lamor
Lamor’s daughter company – “Clean Globe
International” is a partner in Ecoshelf Ltd since 2008

Distinguished Achievement
Award
In May 2009 the Offshore Technology Conference(OTC), chose Sakhalin Energy to receive their
Distinguished Achievement Award for Companies,
Organisations and Institutions.
Sakhalin Energy was awarded the offshore
industry’s highest recognition for the Sakhalin-2
Phase 2 Project’s significant and uniqueachievements in developing offshore technology.

Oil Terminal 2009 Award
Sakhalin-2 Oil Export Terminal (OET) and LNG jetty
also won the Oil Terminal 2009 international prize
competition in 2009 in Saint Petersburg.
The first Russia LNG jetty won the Breakthrough of
the Year nomination and Oil Terminal - in theEnvironmental Safety and Breakthrough of the Year

The Sakhalin Salmon Initiative Won –“Best Program Demonstrating Corporate
Philanthropy Policy and Social Investment
Principles”
SEIC also introduced the Sakhalin Salmon
Initiative [SSI]. SSI sponsors salmon
conservation activities. Launched during aninternational conference in October 2006.
Sakhalin Energy is one of SSI’s main sponsors.
Program Budget is $8.8 million.

Students Who Participated w/
SSI

Sakhalin Salmon Initiative –Sustainability: New methods in studying salmon
Goal of Project:
Support the Sakhalin salmon fishery and help
Sakhalin companies to receive market incentives
internationally from the growing market need forsustainably harvested seafood.
Objectives of Project: Help fishing companies of Sakhalin to receive
Marine Stewardship Council (MSC) certification.
 Receive recommendations through the MSC
certification process regarding improving sustainabilityof the salmon fishery.
 Establishment of contacts between fishingcompanies undergoing the MSC certification process
and leading international seafood buyers.

Sakhalin-3 – Rosneft /Sinopec
Rosneft, together with China Petroleum andChemical Corporation (Sinopec), is involved in
the exploration of the Veninsky licensed blockof the Sakhalin-3 project.
The 5,300 sq.-km block is located on Sakhalin
shelf of the Sea of Okhotsk. Sea depth in thisarea ranges from 25 to 150 meters.
Project participation:
Rosneft — 74.9%
Sinopec — 25.1%

Sakhalin - 3– Rosneft /Sinopec
Exploration began in the 1960s, and in the
mid-1990s, seismic surveying activities were
begun. In April ‘03, Rosneft obtained a
exploration license to this block.
The existing project plan envisages onshore
drilling of 5,000-8,500 meter-deep exploration
wells using cutting-edge drilling techniques
similar to those employed at Sakhalin-1.

Sakhalin - 3– Rosneft /Sinopec
In 2006, the first exploration well was drilled,
tested and liquidated.
The second prospecting well was drilled at
the Veninsky block during 2008 andpenetrated more than 10 gas saturated strata
and inter-strata.
Reserves at the field are being analyzed

Gazprom -- Sakhalin-3
Gazprom, the world's biggest gas producer, wasslow in entering projects on Sakhalin.
The situation changed when Gazprom bought
control in the giant Sakhalin-2 oil and liquefied
natural gas project from Royal Dutch Shell.
Gazprom has signed a preliminary agreement to
supply China National Petroleum Corp (CNPC) with
about 70 billion cubic meters of gas.
(

b D

i Pi

h k

iti

b Vl dii S ld tki )Gazprom -- Sakhalin-3

LOS ANGELES, Oct. 20 –2009
Russia's state-owned OAO Gazprom plans to start
production at the Sakhalin-3 project's Kirinsky fieldin 2011 or 2012, 2-3 years ahead of schedule,
according to a senior company executive.

Gazprom -- Sakhalin-3“Accelerating the development of the
Sakhalin-3 field could provide Gazprom withvolumes needed for the KhabarovskVladivostok pipeline”

Gazprom -- Sakhalin-3
When asked about the chances of Japanese companies
taking part in the Sakhalin-3 project, Medvedev reminded
reporters that Gazprom already has contracts with RoyalDutch Shell PLC, Mitsui, and Mitsubishi, which holdstakes in the Sakhalin-2 project.
“Those contracts stipulate that Gazprom give priority to
the three firms…

EASTERN SIBERIA – PACIFICPIPELINE
Construction of a large oil port in Kozmino Bay(at Nakhodka, Russia Far East) will becompleted in 2010.
The oil terminal being at least 15 meters in
depth will be capable of handling tankers of up
to 200,000 tonnes in displacement". It will be
the end point of ESPO oil pipeline.
PortNews reports

NAKHODKA & THE SEA OFJAPAN

EASTERN SIBERIA – PACIFICPIPELINE
Transneft [100% Russian State owned]
operates one of the largest networks of oilpipelines in the world. The company moves
crude oil through more than 30,000 miles ofpipeline stretching across Russia, Eastern
Europe and Asia. Yahoo FinanceEASTERN SIBERIA – PACIFICPIPELINE
Monday, 28 December 2009
Russian Prime Minister Vladimir Putin, today
formally opened the first section of a SiberiaPacific oil pipeline network envisioned as
eventually helping deliver Russian crude to
Japan, China and Asia-Pacific markets.

EASTERN SIBERIA – PACIFICPIPELINE
At the ceremony at the new export terminal at
the port of Kozmino at Nakhodka - Primorsky Krai,bordering China and North Korea in Russia's Far
Southeast, Prime Minister Putin pressed a
computer mouse button to start crude flows to filla 100,000-ton tanker, which officials said will sailto Hong Kong. Monday, 28 December 2009

Kozmino Terminal – Nakhodka Russia

Tanker NAKHODKA Oil Spill in
the Sea of Japan - 1997
On Jan 2, 1997, in the sea of Japan, the Russian
tanker NAKHODKA, with a cargo of about 19,000
Tons of heavy fuel oil, en-route from Shanghai,
China to Petropavlovsk, Russia, broke up in thestormy weather.

TANKER NAKHODKA SPILL
MAP

Tanker NAKHODKA Oil Spill in
the Sea of JapanFor more information on the Nakhodka spill see
the paper presented by Mr. Todd Moller to the
PAJ – July 1997

EASTERN SIBERIA – PACIFICPIPELINE
Reports say Russia plans to export up to 3.1
million tons of crude through the terminal in
the first quarter of 2010
With it’s opening in 2009 it became the 3rdlargest sea terminal in Russia

On 22 July 2009 Sakhalin
Energy exported 200th oil cargo.
Sakhalin Energy exported
5,5 mln tons of oil from the Company’s
offshore facilities in the Sea of
Okhotsk in 2009.

EASTERN SIBERIA – PACIFICPIPELINE
At the initial phase oil will be delivered to theport by railway for further shipment to the Asian
Pacific Region including Japan, up to 15 million
tonnes per year.
At the second phase, to be completed by Sept
2012, the terminal will be capable of pumping
50 million tons PortNews reports.

EASTERN SIBERIA – PACIFICPIPELINE
Figures published in the World Bank's
monthly World Finance Review suggest that
(Transneft) oil pipeline bursts grew fromabout 19,000 in 2002 to more than 22,000 in
2005.

EASTERN SIBERIA – PACIFICPIPELINE
The Kozmino Terminal does have asignificant stockpile of OSR Equipment,much of it supplied by Lamor
Additionally, they have a full time Oil Spill
Response GroupNAKHODKA & THE SEA OFJAPANSo Let’s Talk About ReadinessHow can we assure that our Oil Spill
Response System is “READY”??

How to Determine If Your OSR
Team IS Ready
Fortunately Oil Spills Occur Infrequently !
So how can Management assess if theorganization is ready to respond?

Asked another way – What canManagement do to assure OSR
readiness?

How to Determine If Your OSR
Team IS Ready
A Company Does Not Have a Conscience

Only the People Who Manage andWork for the Company do!

How to Determine If Your OSR
Team IS Ready

Make OSR as high a priority
as SAFETYHow to Determine If Your OSR
Team IS Ready
Based Upon the volunteer response to the1997 Nakhodka Spill – OSR responders inJapan are respected !
Work with that respect – make OSR duty aprivilege to which workers request to be
assigned

How to Determine If Your OSR
Team IS Ready
Provide The Group The Best PersonalProtective Equipment [PPE]
Senior Managers -- attend training session
and award ceremonies

How to Determine If Your OSR
Team IS Ready
The following “Charts” are “Hypothetical”
They assume a 20 yr cycle
With a tri-annual exercise program with a“major” exercise ever 3rd year

How to Determine If Your OSR Team IS Ready

Equipment Lifecycle Maintenance
Cost

How to Determine If Your OSR Team IS Ready

Annual or Tri-Annual Drill & Exercise
Budget

How to Determine If Your OSR Team IS Ready

Drills & Training Exercises

How to Determine If Your OSR Team IS Ready

Personnel Turnover

How to Determine If Your OSR Team IS Ready

Equipment Damage During Training

How to Determine If Your OSR Team IS Ready

Safety Index During Training

How to Determine If Your OSR
Team IS Ready
Set Team Goals and Reward Achievement
Make the people want to practice and excel

Senior Managers -- attend
training session and award
ceremonies – Lead by example

How to Determine If Your OSR
Team IS ReadyOne of the most innovative “Table Top
Exercises” I ever attended was a senior
management all day – Oil Spill Exercise
In Cook Inlet

Yogi BerraYogi Berra
Berra, Yogi (Lawrence Peter Berra) 1925–
American baseball player and manager
An outstanding catcher with the New York Yankees(1946–63) Berra was the American League's Most
Valuable Player - 1951, 1954, & 1955, he hit 358 careerhome runs and appeared in 14 World Series. He
managed the Yankees and Mets leading each team tothe pennant (Yankees, 1964; Mets, 1973).
Berra is renowned for his unintended, ironic
humorous comments. -- Berraisms

Yogi Berra

You Can SEE a lot by
Looking !!!

Make it Important – Your Team
Will Be Ready !

IF YOU, THE SENIORMANAGERS, MAKE IT
IMPORTANT -- IT WILL BE
IMPORTANT !!

THANK YOU FOR NOT LEAVING
AFTER THE FIRST SECTION !!

? Questions ?