INNOVATION:

Driving strategic development through new technologies

Gazprom Neft’s long-term business strategy is driven by the knowledge that optimum business efficiency and technological versatility are crucial to remaining competitive. In 2013 the Management Board of JSC Gazprom Neft adopted an Innovations Development Programme to 2020, covering specific focus areas and plans for cooperation with external organizations, as well as key performance indicators consistent with the innovation strategy of parent company JSC Gazprom. Key objectives to that end include: viable E&P operations under complex geological and climatic conditions; economically viable and energy-efficient brownfield operations; and further development in refining and petrochemicals.

“Today, for any modern company, utilising innovations is essential for raising competitiveness, increasing production and financial performance, reducing environmental impact, and improving the quality of human life. Developing a programme and actively utilising technological innovations will create a solid foundation for Gazprom Neft to achieve the goals set out in the Company’s Development Strategy,” said Alexander Dyukov, Chairman of the Management Board of Gazprom Neft.

Gazprom Neft’s strategy envisages considerable production growth over the next several years. At the same time, a number of technological challenges will need to be met for the efficient development of new field types, with a resulting increase in the Company’s production profile. Therefore, in order to achieve its strategic production objectives, the Company is taking steps to develop and implement advanced technologies, such as high-resolution seismic surveying, alkali-surfactant-polymer water flooding, horizontal well drilling operations with multi-stage hydro- fracturing, sidetracking, rotary steerable systems, and digital field technologies.

A significant portion of these projects are being implemented as part of the refinery modernisation programme. The reconstruction of existing plants and the launch of new ones will enable the Company to considerably reduce its fuel oil production, increasing the output of light petroleum products to 77% and refining depth to 95% by 2025, in line with the Company’s strategy.

PRIRAZLOMNAYA

In 2013, the Prirazlomnoye field, the first Russian Arctic shelf project operated by Gazprom Neft, was developed. A production well with a horizontal well bore of 780 metres in length was drilled in the field. The starting production rate was 1,600 tonnes per day and the watering rate 0%.

In recognition of the growing importance of the use of innovative technology in its operations, in 2013 the Company developed and approved an Innovation Policy setting out the key principles and approaches to managing innovation development, relating to the analysis of technological challenges and the research and selection of possible solutions, as well as the implementation of innovation projects.

In the second half of 2013, the Company established a Strategy and Innovation Department with a mandate to implement the Innovation Policy, ensure the development of Gazprom Neft’s technology strategies and monitor the implementation of the Innovative Development Programme.

The reporting year marked by the commercial implementation of major cutting-edge extraction technologies throughout enterprises in the Upstream Division, including key strategies for technological development directed at:

  • Improving forecasts of the resource base;
  • Profitable increase of production and the oil recovery rate at current fields;
  • Developing oil and gas condensate reservoirs;
  • Developing fractured reservoirs;
  • Developing offshore fields;
  • Developing the Bazhenov formation;
  • Improving industrial and environmental safety.

A new world seismic surveying record was set at the Shakal block in Iraq, which is operated by Gazprom Neft. During the seismic study, data was transmitted from more than 6,200 sensors using RT System 2 wireless recording. According to Wireless Seismic, Inc., which manufactured the equipment, this is the highest number of sensors ever used in simultaneous wireless real-time data transmission.

Horizontal drilling

The application of this innovative technology will enable the Company to improve the quality of geological surveys, by reducing the time required and improving efficiency. Real-time operations allow the recording of background noises caused by, for example, construction in the study area, and take these into account when collating information.

In 2013, projects to introduce multi-stage fracturing assemblies at horizontal wells were initiated at 10 of the Company’s major fields in order to develop reserves with low filtration properties. Applying five to seven fracturing phases on average at the horizontal well section at a length of 500 to 1,000 metres (from 400 to 700 metres in 2012) allowed the formation coverage area to expand without increasing the costs associated with drilling additional wells. By applying this technology, 139 wells with multi-stage fracturing assemblies were launched (compared to 29 wells in 2012), with a success rate of 93.1% and an average increase in the daily oil yield of 46.4 tonnes. Additional oil production totalled 1,598.4 thousand tonnes as of 1 January 2014.

For the first time in Russia, a horizontal well was brought on-stream following a 10-stage hydraulic fracturing at Gazprom Neft’s Vyngapurovskoye field, operated by OJSC Gazpromneft Noyabrskneftegaz. The depth of the new well is nearly 4,500 metres, and the length of the horizontal section is over 1,000 metres. There was an additional operational difficulty – the formation through which the horizontal section of the well was drilled was only four metres thick. Moreover, the effective horizontal well length (i.e. the section of the well that penetrates the oil-containing formation without coming into contact with the surrounding rock) reached 90%, which is above average even for wells with shorter horizontal wellbores.

Multi-stage hydrofracturing at Gazprom Neft

The flow rate obtained at the well was over 135 tonnes per day, which exceeded the results obtained at horizontal wells with a lower number of hydraulic fracturing stages by approximately one third.

An acid multiple hydraulic fracturing operation was carried out for the first time in the eastern area of the Orenburg oil and gas condensate field as part of Gazprom Neft’s depleted reserves program. Acid multiple hydraulic fracturing involves metered injections of a special gelatinous compound and inhibited hydrochloric acid into the stratum. During the first stage, a viscous layer fills the cracks in the reservoir. Subsequent acid processing makes it possible to achieve a deeper penetration of the compound into the stratum. The treated channels remain open, which allows the cracks to have a high throughput and increases the influx of oil into the well.

The hydraulic fracturing consisted of five stages. The length of the horizontal section was 600 metres. A total of two hydraulic fracturing operations were performed on two separate production wells. Once the operations have been completed, the combined average flow rate of both wells will add up to approximately 80 tonnes of oil per day. The wells function via natural flow.

In the past year, Salym Petroleum Development, a joint venture between Gazprom Neft and Shell, continued the implementation of its pilot project (covering the period 2013-2016) to introduce a technology for alkali-surfactant-polymer (ASP) water flooding to increase oil yield from formations at the Zapadno-Salymskoye field.

  • Adjusting experiments were performed to establish the phase behaviour and formula specification and concentration of the main chemical agents (surfactant, polymer, soda) found in the ASP solution.
  • Core experiments were performed in order to determine the amount of surfactant absorption in rock.
  • Key pilot project facilities were designed.
  • Research began into Russian-produced surfactant analogues.
  • Laboratory experiments were carried out to determine the efficiency of a chemical ‘cocktail’ of ASP and oil from the Pogranichnoye field.
  •  A technical and economic assessment was conducted on the application of ASP water flooding in the Pogranichnoye field in order to determine project optimisation methods.

Another milestone in 2013 was the drilling of multilateral wells. Gazprom Neft drilled the very first Russian four-borehole horizontal well at the Umseyskoye field.

Currently, most Gazprom Neft fields are at stages 3 and 4 of development. It needs to be taken into consideration that some fields have adverse geological conditions which, given the late stages of development, create an imbalance in the proportion of reserves recovered from watering. Sidetracking solves the problem of recovering geologically-complex reserves and immovable oil recovery in the development process, and helps to avoid high watercuts.

In 2013, the rotary steerable systems – a new generation of downhole equipment for drilling wells – reduced capital costs by 0.6%, whilst increasing hydrocarbon production by 0.6 million tonnes. The total incremental increase between 2013 and 2016 is expected to reach 2.1 million tonnes.

A development project at Bazhena is being implemented within the Palianovskaya area of the Krasnoleninskoye field. A model of a fracture-block stratum structure was built based on paleotectonic reconstruction and geomechanical modelling. The model allows the identification of potentially productive zones for the drilling of new wells. The results from the pilot well drilling support the development methods recognised for the Bazhenovskaya suite of deposits. The well revealed that the fracture zone was an oil filtration channel. Where it was impossible to find potentially productive fracture zones for any reason by drilling a well, recommendations were made to carry out acid multiple hydraulic fracturing operations in order to actively develop filtration channels.

NEW BITUMEN PRODUCTION TECHNOLOGIES

In 2013, a “peroxidation – dilution” bitumen production technology was implemented at the Moscow refinery to improve bitumen material quality control accuracy and to obtain higher quality bitumen. The plant started production of БН 90/10 construction bitumen – one of the most popular brands.

At the same time, the plant began to build a polymer-modified bitumen unit based on a technology developed by Total. Polymer-modified bitumen (PMB) is an innovative and modern alternative to road bitumen used in road concrete mix production for road construction. Using PMB ensures a compound improvement in the operational characteristics of road concrete mixes, such as durability and resistance against potholes and cracks.

Approximately 4.5% of the Company’s own production in 2013 was generated as a result of applying technologies such as horizontal wells, multi-stage hydraulic fracture technology, sidetracking, rotary steerable systems and oil-based muds.

In 2013, Gazprom Neft refineries completed their main production modernisation programmes, aimed at improving the quality of product output. All Gazprom Neft refineries switched over to the production of motor fuels to the Euro 5 standard.

One of Gazprom Neft’s key technology development areas is the refining of catalysts. The catalyst line under development includes both catalytic cracking catalysts produced at the catalyst plant of the Omsk refinery, and catalysts of other refining processes.

Gazprom Neft is also focusing on the improvement of its oil refining processes. For example, in 2013, the process of viscosity breaking and Refining of liquid and solid fuels by heating them in the absence of air. As the fuel decomposes, it produces solid coke and volatile particlescoking gasoline refining, without the use of molecular hydrogen, was developed. The method under development will significantly increase the refining depth of thermal process gasoline and the quality of the product output. In particular, the application of the new technology may help to reduce the olefin content in the gasoline output by over 95%, and sulphur content by over 98%, with approximately a 90% output of gasoline fraction mass. Moreover, the octane level of the refined gasoline will increase by 4-5 points.

This year, the Panchevo refinery in Serbia began the production and export of Euro diesel with biocomponents, as well as BMB-98 Euro gasoline.

The Company invests significantly in the acquisition of high efficiency production and refining technologies and pilot testing in order to provide assurance of its new technologies. In addition, Gazprom Neft develops valuable technologies with the active involvement of external partners: national research organisations and universities, and foreign oil and gas companies. The Company’s key areas of cooperation with research organisations and universities in 2013 include research into the area of surfactants, development of catalysts and the improvement of oil refining processes.

R&D investment in 2013 amounted to around RUB 1.8 billion, of which over 95% was for exploration and production projects.

Strengthening its innovation is the only way the Company can implement its long-term strategy, which is based on developing large Arctic fields, redeveloping hard to recover reserves of existing operating assets and practically rebuilding a new oil refining system.

CATALYST DEVELOPMENT AND CATALYTIC
CRACKING GASOLINE HYDROTREATMENT

2013 projects include catalyst development and the catalytic cracking gasoline hydrotreatment process with a minimum decrease in octane levels. Catalytic cracking gasoline hydrotreatment with the use of catalysts currently available on the market leads to a considerable decrease in the product’s octane level. Using the new catalyst will result in an output of catalytic cracking gasoline with a total, maximum residual sulphur of 10 ppm. In addition, the hydrotreatment will lead to a decrease in gasoline octane levels of no more than 1.5 points and in motor octane levels of no more than 1 point, which allows them to be used in compound high-octane Euro 5 gasoline.

The developed catalyst can be used at the Company’s factories to increase the octane level and in turn reduce the final cost of the gasoline produced. In addition, in order to increase the return on investment in the development of innovative products, catalyst production licences may be sold to other market players.