Future Development Of Russian Arctic Offshore
Authors: Reshnetnyak Y.M. , Fretheim I.B. , Surkov A.V. , Churcher A.C. , Ciring Jakub 
Published: October 2008

This Paper summarizes exploration in the Western Russian Arctic offshore regions and the reasons for the recent drop in activity. After ranking the regions for ease of development and discussing the application of year-round Beaufort Sea technology, the roles of both Russian and North American Arctic offshore enterprises are discussed. The impact of international versus domestic pricing and fiscal terms on reservoir threshold size are discussed. The Paper concludes that the technology and experience exist for the immediate development of reservoirs in the Pechora Sea providing equitable fiscal terms can be agreed upon.

INTRODUCTION

A review of the most recent Russian government publications, as well as the latest presidential decrees, indicates clearly that foreign investment in Russia is viewed as an important means to sustain the Russian economy and stimulate market reform. Despite the efforts of the Russian Government and the interest of international investors, the process has been disappointingly slow. Foreign investors are awaiting the implementation of market reform but market reform can only flourish with foreign investment.

The rich geology of the Russian Arctic offshore offers potentially attractive investment opportunities. Development of these prospects can provide Russia with hard currency and employment in the former military defense industries and also assist them in developing year-round Arctic offshore technology and international business practices.

Analysis indicates that neither Russian nor Western enterprises are equipped to take full advantage of these opportunities in isolation. The Authors believe that these advantages can only be won by working together in a "win-win" environment and that a clear understanding of each other's goals and expectations is critical to success.

EXPLORATION

Large scale oil and gas exploration in the Western Russian Arctic offshore began in the early eighties. This included seismic survey using the common depth point method and deep well drilling. This survey suggested that not only did the prolific Timan-Pechora Basin extend offshore but that there were further basins in both the Barents and Kara Seas. To initiate the exploration and development of these Basins, a number of specialized enterprises were established in the City of Murmansk. These included Sevmorgeofizika (SMG) for geophysical research and Arktikmorneftegazrmedka (AMNGR) for deep exploratory drilling. The prospective areas are shown in Figs. 1 and 2.

Based on the geological data, environmental conditions and the equipment available, initial efforts concentrated mainly in the South Barents Sea Basin (Murmansk and North-Kildinskaya areas). The work then moved to the east and north, towards the Pechora and Western-Siberian Plate, and today, has reached 76° north in the Luninskaya area. The combined seismic survey and drilling process was highly effective. AMNGR has drilled over 40 wells. Seven out of every ten holes drilled yielded positive results. At the end of 1993, there were twelve discoveries (some with more than one well) on the western Russian continental shelf - ten are offshore, two are on Kolguyev Island.