Siberian Shale Drilling Progresses

By Stephen Rassenfoss 17 Feb 2014

A new generation of drilling is beginning in the Bazhenov formation, which after decades of work remains an enormous enigma. Salym Petroleum Development said recently it began drilling its first horizontal appraisal well in January as part of a five-well test using multi-stage fracturing technology in the unconventional oil play in Western Siberia.

The Gazprom-Shell joint venture is following up on a 3-year study in which it drilled three vertical wells to gather extensive information on geology of the formation using 3D seismic, coring, and well logs. It is going to be joined soon by a Rosneft-ExxonMobil partnership, which also announced plans for evaluation work in 2014 and 2015.

“We hope that the pilot project will allow us and our shareholders to make a decision about moving to a large-scale development of the Bazhenov formation,” said Oleg Karpushin, chief executive officer at Salym.

The Bazhenov presents enormous potential. It is the primary source rock for huge fields in western Siberia that have long supplied much of Russia’s oil. It covers an area that is 1.5 times the size of the US state of Texas, with oil in the ground estimates ranging from 180 million bbl to twice that high.

The wide range on the estimate is just one of many hard-to-pin-down facts about the formation where permeability, production rates, and geological makeup remain unclear. Typical of its history, which dates back to the 1960s, was a powerful blowout from a well drilled in 1968 which intensified interest, according to a recent story in Rogtecmagazine. But the results from wells drilled nearby were inconsistent, with nearly twice as many wells with little or no production as wells that produced prolifically.

The two joint ventures are looking for a path to more consistent production in a formation where drilling by three Russian operators—Surgutneftegaz, Rosneft, and Ritek—has shown that thousands of tons of oil per year can be produced there, according to Rogtec. Now large international oil and service companies are trying to use what has been learned from tight formations in North America to take western Siberian development to a higher level.
ExxonMobil agreed to provide up to USD 300 million to support geologic studies and drilling to evaluate the possibility of “large-scale development” of the Bazhenov and the adjoining Achimov formation.

The future for both projects will depend on Russian geology and government policy. Officials with the companies have said the cost of developing these tight rocks exceeds the likely after-tax return under the current Russian tax system. A law passed last year provides for lower rates in low-permeability formations. Government agencies still must determine key details, such as the exact rates and what formations will qualify.

Stephen Rassenfoss is the Emerging Technology Senior Editor for the Journal of Petroleum Technology.