Shtokman field

Shtokman field

Location of Shtokman field

Country Russia
Region Barents Sea
Offshore/onshore offshore
Coordinates 73°N 44°E / 73°N 44°E / 73; 44Coordinates: 73°N 44°E / 73°N 44°E / 73; 44
Operators Shtokman Development AG
Partners Gazprom, Total, Statoil
Field history
Discovery 1988
Start of production 2015
Production
Estimated gas in place 3,800×10^9 m3 (130×10^12 cu ft)

The Shtokman field (also Stockman field; Russian: Штокмановское месторождение), one of the world's largest natural gas fields, lies in the northwestern part of the South Barents Basin[1] in the Russian sector of the Barents Sea, 600 kilometres (370 mi) north of Kola Peninsula. Its reserves are estimated at 3.8 trillion cubic metres (130 trillion cubic feet) of natural gas and more than 37 million tons of gas condensate.[2]

History

The Shtokman field was discovered in 1988. It was named after the Soviet geophysicist Vladimir Shtokman (Russian: Владимир Штокман), a descendant of German emigrants, whose name was originally spelled Stockmann.

In the early 1990s, Gazprom started talks with a group of five Western companies to participate in the field's development. In 1992, the foreign consortium was pushed out by the Rosshelf consortium, a Gazprom subsidiary that comprised 19 Russian companies. in August 1995, Gazprom and Rosshelf signed a letter of intent with Norsk Hydro of Norway, Conoco Inc. of the United States, Neste Oy of Finland, and Total S.A. of France to evaluate the possible joint development of Shtokman field.[3][4]

In January 1996, a project of a large floating liquefaction plant was designed, but this plan was abandoned and in March 2000, Rosshelf began developing plans for production and construction of a natural gas pipeline from the field via Murmansk to Vyborg.[3] In 2001, Gazprom announced its intention to develop the gas field together with Rosneft. In 2002, the license for the field development and recovery was transferred from Rosshelf to Sevmorneftegas.[4]

On 20 June 2005, Russia and Norway signed a number of agreements related to development of Shtokman field. On 28 June 2005 Russia signed a memorandum with France. In August 2005, Gazprom received bids from ConocoPhillips, ExxonMobil, Norsk Hydro, Statoil, Mitsui, Sumitomo Corporation, Royal Dutch Shell, Chevron Corporation, and Total to develop the field.[3] In September 2005, Gazprom selected five companies—Statoil, Norsk Hydro, Total, Chevron and ConocoPhillips—as finalists in a search for partners to develop the field, but in October 2006 decided to reject all potential partners.[5][6]

On 13 July 2007, Gazprom and French energy company Total signed a framework agreement to organize the design, financing, construction and operation of the Shtokman phase one infrastructure.[7][8] On 25 October 2007, similar contract was signed between Gazprom and StatoilHydro (now Statoil).[9] The consortium of three companies, Shtokman Development AG, was established on 21 February 2008 in Zug, Switzerland.[10]

Due to the global LNG oversupply and the United States shale gas, the shareholders of the project decided in 2010 to postpone it for 3 years.[11] Based on this, the pipeline gas production might start in 2016 and LNG production in 2017.[12][13]

The shareholders agreement expired on 30 June 2012 without development started. Statoil wrote off its investment into the project and handed shares back to Gazprom.[14] In August 2012, Gazprom put the project on hold with a final investment decision on the first phase postponed until at least 2014, citing high costs and low gas prices.[15][16] However, the company confirmed being in talks with foreign partners to find a new business model for the project.[17] There are speculations that Royal Dutch Shell may become a project partner.[14]

Development

The field so far was not developed owing to extreme Arctic conditions and the depth of the sea varying from 320 to 340 metres (1,050 to 1,120 ft).[18] In September 2006, Gazprom completed drilling of appraisal well No. 7 in the field.[18] Russian scientists have warned that the Shtokman's development may face problems as global warming unleashes vast icebergs into the Arctic.[19] The Shtokman Development Company plans to address this challenge by using floating removable platforms, which can be moved around in case of emergency situations.[20]

Originally it was planned to ship Shtokman's gas to the United States as liquid natural gas (LNG). Later it was indicated by Gazprom that the majority of produced natural gas would be sold to Europe via the planned Nord Stream pipeline.[21][22] For this purpose, the pipeline from the Shtokman field to the Murmansk Oblast and further via Kola peninsula to Volkhov in the Leningrad Oblast will be built.[23] The LNG plant will be laid in by the village of Teriberka, about 100 kilometres (62 mi) north-east of Murmansk.[22][23]

The front-end engineering and design (FEED) is divided between different companies. The onshore transportation and technological complex, including an LNG plant, will be prepared by Technip.[24] DORIS Engineering will prepare the subsea production system and the offshore technological platform.JP Kenny, a subsidiary of Wood Group, will design together with Rubin Design Bureau and Giprospetsgaz, a subsidiary of Gazprom, the 600 kilometres (370 mi) long 44 inches (1,120 mm) subsea pipeline from the Shtokman field to south of Murmansk.[25][26] WorleyParsons and its subsidiary INTECSEA will perform FEED of the production vessel, which will process produced gas before transportation onshore.[27]

Geology

The main reservoir is of Upper Jurassic age, with a smaller amount of gas in the Middle Jurassic and the trapping structure is a large anticline, sealed by Upper Jurassic shales.[28]

Technical features

At the initial stage the project is expected to produce 22.5 billion cubic meter (bcm) of natural gas and 205,000 tons of gas condensate annually. Later the production is expected to increase up to 70 bcm of natural gas and 0.6 million tonnes of gas condensate.[18] All extraction facilities will probably be located under water. The development costs are estimated at US$15 billion to US$20 billion, although according to the estimate by Alexander Medvedev, deputy chairman of Gazprom's management committee, the field's development costs will be only US$12 billion.[29]

Project company

The license to explore for and produce gas and condensate on the Shtokman field is owned by Russian company Gazprom Shelf Dobycha (formerly Sevmorneftegaz), a wholly owned subsidiary of Gazprom. Gazprom Shelf Dobycha is a sole customer for the design and construction of the field infrastructure, including a production complex, a pipeline network and an LNG plant, and has all marketing rights for hydrocarbons of the Shtokman field.[7][30][31] Shtokman Development AG was to bear all financial, geological and technical risks related to the production activities.[10] Gazprom owned 51% of shares in Shtokman Development, while Total had 25% and Statoil 24% of shares.[9][32][33] Head of the company was Yury Komarov.[34] Shtokman Development was to own infrastructure for 25 years from field commissioning. Upon completion of phase one, Total and Statoil should transfer their shares in Shtokman Development AG to Gazprom.[7]

References

  1. ↑ Lindquist, Sandra J. "South and North Barents Triassic-Jurassic Total Petroleum System of the Russian Offshore Arctic" USGS Open File Report 99-50N, United States Geological Survey
  2. ↑ Zhdannikov, Dmitry; Mosolova, Tanya (15 November 2007). "Russia's Gazprom ups Shtokman reserves to 3.8 tcm". Reuters. Retrieved 6 January 2008.
  3. 1 2 3 "Investment risky in Russia as politics affects profits" (PDF). Oil & Gas Journal (PennWell Corporation). 16 July 2007. Retrieved 31 January 2009.
  4. 1 2 Nadejda Makarova Victor (January 2008). "Gazprom: Gas Giant Under Strain. Working Paper #71" (PDF). Stanford University. Retrieved 31 January 2009.
  5. ↑ "Gazprom Decides on Short-list of Companies – Poptential Partners in Shtokman Gas Condensate Field Development" (Press release). Gazprom. 16 September 2005. Retrieved 31 January 2009.
  6. ↑ "Gazprom Rejects Foreign Partners for Shtokman". Rigzone. 9 October 2006. Retrieved 31 January 2009.
  7. 1 2 3 "Gazprom and Total sign a Framework Agreement For Cooperation in the First Phase of Shtokman Development". OilVoice. 13 July 2007. Retrieved 30 September 2010.
  8. ↑ "Total signs on Shtokman dotted line". Upstream Online (NHST Media Group). 13 July 2007. Retrieved 13 July 2007.
  9. 1 2 "Gazprom and StatoilHydro sign agreement on main condition for cooperation in phase 1 of Shtokman field development" (Press release). Gazprom. 25 October 2007. Retrieved 26 October 2007.
  10. 1 2 Ferris-Rotman, Amie; Mosolova, Tanya (21 February 2008). "Gazprom confirms Shtokman LNG export start in 2014". Reuters. Retrieved 21 February 2008.
  11. ↑ Socor, Vladimir (2012-08-10). "Gazprom’s Shtokman Project: Relic of a Past Era". Eurasia Daily Monitor 9 (153) (The Jamestown Foundation). Retrieved 2012-08-26.
  12. ↑ "Shtokman partners delay production start". Oil & Gas Journal (PennWell Corporation). 8 February 2010. (subscription required). Retrieved 11 February 2010.
  13. ↑ Paxton, Robin (5 February 2010). "Russia's Shtokman natural gas project". Reuters. Retrieved 11 February 2010.
  14. 1 2 "Statoil writes off $336 mln Shtokman gas investment". Reuters. 7 August 2012. Retrieved 26 August 2012.
  15. ↑ Chazan, Guy; Belton, Catherine (29 August 2012). "Gazprom shelves Shtokman project". Financial Times. (subscription required). Retrieved 29 August 2012.
  16. ↑ Lehane, Bill (29 August 2012). "Gazprom: Shtokman 'too expensive for now'". Upstream Online (NHST Media Group). Retrieved 8 September 2012.
  17. ↑ Bradbury, John (3 September 2012). "Gazprom confirms talks over new Shtokman partners". Offshore.no International (Offshore Media Group). Retrieved 8 September 2012.
  18. 1 2 3 "Shtokman project". Gazprom. Archived from the original on 25 June 2007. Retrieved 18 July 2007.
  19. ↑ "'Iceberg threat' looms over Shtokman". Upstream Online (NHST Media Group). 27 April 2007. (subscription required). Retrieved 26 October 2007.
  20. ↑ "Floating removable platforms for Shtokman field". Barents Observer. 31 January 2008. Archived from the original on 1 March 2009. Retrieved 15 March 2008.
  21. ↑ "Russia prepares for LNG export from Murmansk". Barents Observer. 14 December 2005. Archived from the original on 28 December 2005. Retrieved 26 October 2007.
  22. 1 2 Madslien, Jorn (9 October 2006). "Shock as Russia goes solo on gas field". BBC News. Retrieved 26 October 2007.
  23. 1 2 "Scientists oppose projected Shtokman pipeline". Barents Observer. 13 September 2006. Archived from the original on 19 March 2007. Retrieved 26 October 2007.
  24. ↑ "Technip 'tucks in to Shtokman FEED'". Upstream Online (NHST Media Group). 14 March 2008. (subscription required). Retrieved 14 March 2008.
  25. ↑ "Trio set to feast on Shtokman FEED". Upstream Online (NHST Media Group). 18 March 2008. (subscription required). Retrieved 20 April 2008.
  26. ↑ "JP Kenny has Shtokman gig in the bag". Upstream Online (NHST Media Group). 25 March 2008. (subscription required). Retrieved 20 April 2008.
  27. ↑ "WorleyParsons awarded Shtokman FEED". Offshore Magazine (PennWell Corporation). 11 November 2010. Retrieved 23 January 2011.
  28. ↑ Doré, A.G. (Sep 1995). "Barents Sea Geology, Petroleum Resources and Commercial Potential" (PDF) 48 (3). Arctic Institute of North America. Retrieved July 2014.
  29. ↑ "Shtokman costs cut to US $12 Bn.". Oil and gas net. 15 November 2007. Retrieved 24 November 2007.
  30. ↑ "Gazprom paid 1,7 billion USD for control in the Barents Sea". Barentsinfo. 8 August 2005. Archived from the original on 6 October 2007. Retrieved 18 July 2007.
  31. ↑ "Gazprom Sub and Hydro Begin Drilling Shtokman Field Well". OilVoice. 25 July 2006. Retrieved 18 July 2007.
  32. ↑ "Gazprom chooses French Total as partner for initial phase of Shtokman field development" (Press release). Gazprom. 12 July 2007. Retrieved 12 July 2007.
  33. ↑ Bone, James (12 July 2007). "The Kremlin-controlled gas monopoly has chosen France's Total as its partner in the giant Shtokman gas field". The Times (London). (subscription required). Retrieved 12 July 2007.
  34. ↑ "Shtokman start-up hinges on credit". Upstream Online (NHST Media Group). 8 December 2008. Retrieved 24 November 2007.

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