The Young Professional's Guide to Sakhalin
In the book A Journey to Sakhalin, the great Russian writer Anton Chekhov described the island, then a “katorga”—a penal colony—as a hellish place. Two centuries later, Sakhalin has changed in numerous ways and has become famous for its enormous hydrocarbon resources that lie underneath the island’s shelf. Even with the considerable infrastructure investments related to oil and gas activity, Sakhalin remains a place of large contrasts: some may find it a sparsely populated island whose few cities are dominated by gloomy concrete apartment blocks and scarce roads, while others will enjoy its spectacular scenery and will keep in their memory the charming bubble of the Okhotskoye Sea.
Sakhalin is the largest island in Russia. This fact alone makes locals proud, as they are the residents of the biggest island in the largest country in the world. Located in the Russian Far East, it is separated from the mainland by the narrow and shallow Strait of Tartary. Japan and the Koreas are among the closest neighbors to the south, and there are clear historical ties with those countries involving commercial, cultural, and geopolitical interests.
Russo-Japanese struggles on Sakhalin date back to the 19th century when the first treaty between the two countries was signed declaring that both nations could inhabit the island. Since then Sakhalin changed hands several times and it became part of the Soviet Union in 1945. Definitely, such a unique history leaves an imprint on the cultural landscape. You can still find a few buildings from the Japanese period, such as the Regional Museum in the capital city of Yuzhno-Sakhalinsk, with a great exhibition of the island’s natural surroundings, culture, and history.
Sakhalin has a long history as a producer of valuable raw materials. It all started with forestry and fishing, then it was coal, and now oil and gas. The katorga was conceived to use prisoners as the main manpower for the coal mines. Even during late Japanese period, during World War II, tens of thousands of Koreans were forcibly brought to Sakhalin to work in the coal mines. Nowadays, Korean immigration represents a significant segment of the island’s population. But for oil and gas exploitation, the required manpower has a more diverse background. People from all over the world have brought their technical skills and enthusiasm to Sakhalin’s world-class energy projects.
The oilfield history of Sakhalin dates back to 1910, when the first commercial oil was discovered in the Okha field. However, the oil boom had to wait for 80 years, the collapse of the Soviet Union, and Russian economic liberalization until the necessary technological and economic resources became available to develop Sakhalin’s promising, but challenging, hydrocarbon resources. So far, a total of 64 fields have been discovered offshore Sakhalin Island in the Okhotskoye Sea. Most are located between 20 and 40 km offshore in
water depths between 25 and 70 m. An estimated 45 billion BOE lie beneath the icy sea of the Sakhalin shelf, a figure that speaks clearly and loudly of the potential and relevance of Sakhalin in the energy world.
In recent years, several production-sharing agreements were signed between a Russian party and major international oil companies, which are working together to deliver best-in-class projects. Conditions are harsh in the Okhotskoye Sea and technical challenges are cumbersome. This is a game for firms with expertise and ability: Russian companies Rosneft and Gazprom; international giants ExxonMobil, Shell, and BP; and major service providers Baker Hughes, Halliburton, Schlumberger, and Weatherford have so far lived up to the challenge.
The first offshore oil was produced in 1998 from the Chaivo field, which is part of the Sakhalin I project operated by Exxon Neftegas. This was Russia’s first experience with offshore developments, which is quite remarkable for a country with an extensive oilfield history. Sakhalin I was developed by a combination of offshore and onshore extended-reach wells, which make it unique. Potential recoverable reserves for this project are 2.3 billion bbl of oil and 17.1 Tcf of gas.
The Sakhalin II project, operated by Sakhalin Energy Investment Company, achieved its first oil from the Molikpaq platform in the Astokh field in 1999. Its recoverable reserves are estimated at 1.2 billion bbl of oil and 17.4 Tcf of gas. Its operations spread all the way from the island’s northeastern shore with three platforms to Yuzhno, and further south to the oil export terminal and liquefied natural gas (LNG) plant. Assets are connected to each other by an oil and gas pipeline system 250 km under water and 800 km over land. Russia’s first LNG plant, with an annual capacity of 9.6 million tons, opened in February 2009.
Geologically, Sakhalin belongs to the early Miocene Sakhalin island arc. This structure was a result of the Okhotsk Plate subducting under the Eurasian plate. Most of the fields are related to anticlines containing stacked oil and gas accumulations in a sequence of shallow marine sandstone reservoirs of Miocene age at depths between 1100 and 3000 m subsea. The most relevant technical features and challenges in Sakhalin are:
- 9⅝-in. monobore wells capable of producing more than 500 MMscf/D
- Record-breaking extended-reach wells
- Harsh arctic offshore conditions
- Subsea infrastructure on highly active seismic area
Oil and gas companies have faced some serious charges from environmental organizations during development. The Sakhalin II project changed its offshore pipe installation route in response to research showing how this could alter the behavior of gray whales. Only 35 of the 130 animals remaining in the area are thought to be breeding females. Similarly, a seismic campaign in the Piltun Bay was suspended to avoid its conjunction with the feeding season of gray whales.
Yuzhno, also called Toyohara by the Japanese, means “rich, fertile valley” and it is the administrative center of Sakhalin. The booming oil industry has ensured an abundance of bars, pubs, cafes, nightclubs and restaurants with English-speaking staff. Here, “expats” with different backgrounds have become part of the island’s everyday life.
The Yuzhno airport has connections not only to major cities in the Russian Far East, such as Khabarovsk and Vladivostok, but also flights to major Asian hubs. Weekend shopping tours to Seoul, Beijing, and Tokyo are common.
Sakhalin’s natural scenery is breathtaking. However, its tourism industry is mostly undeveloped, which often entices those looking for virgin outdoors. If you are moving here for an extended period of time, the first thing on your “to do” list should be to buy an all-terrain vehicle. There is a lot that Sakhalin may offer to you beyond the city and you must take advantage of this unique opportunity.
The island has numerous bird colonies and serves as a breeding ground for sea lions. Moneron Island is a marine park that offers unique diving attractions. It is not uncommon for business travelers and tourists to share their impressions of Sakhalin’s beauty. Volcanoes towering over the violent waters of the Pacific Ocean, waterfalls, geysers and hot mineral springs, and incredibly rich flora and fauna are among the most popular topics for discussion
“There is no bad weather; there are only bad clothes” is an old Russian saying. Because of the Okhotskoye Sea’s influence, the weather here can be quite cold, but milder than in frosty Siberia. Snowy winters have made alpine skiing a popular sport.
Sakhalin's Way Ahead
For Sakhalin’s oil industry, the best is still to come. Regardless of its relative maturity, the oil and gas business in this part of the world is still in its early stages. Fig. 1 shows the historic and forecast hydrocarbon production for Sakhalin with a plateau reaching 1.8 million BOEPD by 2030. New, demanding worldclass industry projects will be coming on stream in the near future. Sakhalin III, with its estimated resources of 5.1 billion bbl of oil and 46 Tcf of natural gas, is still waiting for investors. And this is just part of the pie. Be sure that in a few years you will hardly recognize this island in the Far East of Russia, and hopefully it will be closer to heaven than to hell. There is certainly more to tell about this unique place, but as we all know the proof of the pudding is in the eating. Take a chance, land a job, grab your bags, and come and taste it!
A YP Guide to… is a report on some of the most important oil and gas destinations around the world. In this section, we share industry information, practical data, and insider stories from the places where energy is in the air... and in the ground. This guide is for those planning a relocation, a business trip, attending an industry event, traveling for pleasure, or just curious about the similarities and differences among the places in which we live and work. Travel safely and suggest our next stop at editorTWA@spemail.org. Max Medina and Anton Andreev, Editors, A YP Guide to...
Sakhalin at a Glance
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06 August 2018
13 August 2018