No. 1, 2004
Yelena Berezina, VNIIGAZ (JSC Gazprom)
GAS IS THE FUEL OF THE FUTURE
On October 16-17, 2003, The Research and Development of Natural Gas and Gas Technologies International Conference was held at the All-Russia Research Institute of Natural Gases and Gas Technologies (VNIIGAZ) to celebrate the 55th anniversary of the research institution for the gas industry of Russia.
Considering what has been achieved
The plenary session of the conference was opened by the Deputy Chairman of the Board of Gazprom, Alexander Ananenkov. He began with greetings and congratulations to the Institute, and then presented the audience with a comprehensive report. He analyzed worldwide trends in the development of the gas industry and showed Gazprom's role in the changing conditions of today. The key factor in maintaining the corporation's leading positions consists in the industry's diversification in all spheres: sales markets, LNG-driven transport development, gas reserves and gas plant products. Mr. Ananenkov also noted that Gazprom actively used the latest scientific and technical achievements in its production activities and links its further development strategy with the science of natural gas.
VNIIGAZ is now the chief research center of JSC Gazprom, the biggest gas-producing company in the world. It works in all technical spheres, from prospecting to gas processing and its use in means of transport. The Institute's broad and diverse activities made it possible to bring together a large group of Russian and foreign experts in the most varied fields. They presented their new developments and processes and their own vision of the urgent problems facing the world gas industry.
The next speaker was the General Director of VNIIGAZ, Prof. Rudolph Ter-Sarkisov. In his speech, he showed how scientific thinking in the leading research institution on the Russian gas industry had developed, from the construction of the first trunk pipeline from Saratov to Moscow to the establishment of the Unified Gas Supply System of Russia (UGSS), from participation in developing gas fields in Ukraine to tapping the unique gas fields in Western Siberia, from the designing of underground gas storage units and to gas processing.
Prof. Ter-Sarkisov believes that the initiation of the development of the super-giant gas fields on the Yamal Peninsula constitutes the most important aspect of the strategy for Gazprom's future progress.
The Vice-President of Ruhrgas AG, Christian Beckervorsandforth, outlined the main spheres of the 30 years of joint activities of VNIIGAZ and Gazprom and Ruhrgaz AG in the scientific and technical sphere, the aim of which was to optimize gas transportation and storage regimes, protect pipelines against corrosion, and address environmental issues. In the near future, the main projects for interaction between the German company and VNIIGAZ may be: an energy audit of technical equipment and underground gas storage units; pipeline trouble shooting; elaboration and introduction of new-generation energy-saving technologies.
The technical director of the Blue Stream Pipeline Company, Salvatore Caruso, spoke about the joint venture of Gazexport and ENI Gas & Power Trading which was set up for implementing a Russian-Turkish pipeline construction project. The Blue Stream marine segment runs at a depth of 2 150 m in an aggressive hydrosulphuric acid environment, so special technical innovations were used to increase reliability.
Focus on the problem of reserves
Gazprom possesses the world's biggest natural gas reserves, constituting 20% of the explored world reserves and 60% of those in Russia. Within the framework of the new strategy, entitled “From Stabilization to Growth,” and announced by Alexey Miller, Chairman of Gazprom Managing Board, at the general meeting of shareholders in June 2003, major attention is focused on the reproduction and development of mineral resources.
The President of DeGoyler & MacNaughton, Gary McGilvray, presented interesting results of an independent assessment of Gazprom's reserves. In his opinion, the fact that the current market value of Gazprom's reserves amounts to $59.5 billion, which is almost 2.5-fold more than the current market capitalization of our gas concern, reflects its potential most objectively.
Jerome Maniere, Schlumberger lead engineer, spoke of the enhanced gas recovery methods developed jointly with Yamburggazdobycha exports and used on the Yamburg field. The problem of falling production rates is now at the forefront for the biggest Russian gas fields in the Nadym-Pur-Tazovsk region, and many Russian and foreign research institutions are working on it.
VNIIGAZ , as the chief developer of the conception for tapping the Yamal fields, naturally presented its technologies and technical solutions. Prof. Gurami Odisharia, departmental head of VNIIGAZ, spoke on this topic.
He unveiled a program for the comprehensive development of the Yamal Peninsula fields, including such topics as forecasts of gas, gas condensate and oil production, hydrocarbons transportation routes, the technical parameters of well drilling, the characteristics of the gas transport network under construction, ecological problems and an applied software program for supporting the entire set of implemented measures.
For foreign investors and companies, the Shtokmanovskoye field project is the most attractive at the moment and not only because it is being implemented on the PSA terms. The reserves here are quite large compared with the existing gas fields in Europe and their development is very attractive for foreign investors.
One of the participants in the consortium for developing the Shtokma-novskoye gas condensate field, Dag Onshuus, departmental head of Norsk Hydro, took the opportunity to talk about the prospects for developing the continental shelf of the Arctic seas, as well as the possible processes that might be used.
There are several options for developing this field, but Norsk Hydro proposes using the processes employed at the Norwegian Ormen Lange field. The gas would be brought up from the deep-water well along a subsea pipeline to a land-based gas receiving and processing plant. The compressor station for pumping the gas would be located on an offshore platform. The pipeline would be laid at an average depth of 250-300 m and be 600 km long. In Mr. Onshuus' opinion, this approach would be optimal under the existing conditions and provide for better economic performance of the project.
Development of the Russian projects in the sphere of gas production will also improve the country's position on the European gas market. The prospects for the development of the gas market in Europe and the assessment of Russia's possibilities for increasing exports to the region were covered by Hans van Lamoen, Vice-President of Shell EPRussia. The European countries' growing dependence on imports of natural gas offers Russia a good opportunity to increase its exports. Mr. Lamoen stressed that the main obstacle to implementation of these plans was the situation on the Russian gas market, namely, energy prices disparity, transport facilities wear, and declining production in the main gas fields. In order to resolve these problems, multibillion investments are required for supporting the UGSS and designing new export routes, as well as for developing gas fields, above all those of the Yamal Peninsula. The sustainable development of gas production in Russia thus constitutes a major element in the energy security of Europe as a whole.
Has the LNG era begun in Russia?
It is particularly worth mentioning that the conference focused special attention on LNG projects. The average annual LNG growth rate is 6.5-7%, while that of supply-line gas is only 2.5-3%. Thanks to LNG, Algeria is consolidating its positions in Europe, Qatar is mastering the markets of Britain and the United States, and the trade in gas in the Asia-Pacific Region is almost entirely based on LNG from the Persian Gulf, Southeast Asia and Australia. LNG technology obviously also provides Russia with a chance to take a share of the APR market and possibly, also, the U.S. market. For this reason, conference participants focused their attention on the technological aspects of the liquefying of gas and its delivery to the markets.
Allyn Risley, ConocoPhillips Chief Manager, presented his company's LNG technology. The gas liquefying plant in Kenae (Alaska) was built in 1969 using the Phillips technology and is now operating successfully. Risley brought to Moscow a new technology for LNG plants, specially developed for working under conditions of super-low temperatures, which might be of interest to Russia. Thanks to these innovations, the production efficiency of a plant will reach 95%.
Developments for LNG plants were also presented by Hidefumi Ohmori, Chief Engineer of the JGC Corporation. The company has considerable working experience and is currently engaged in designing and building LNG plants in Malaysia, Indonesia, Nigeria and other countries. JGC offered innovative technical solutions for increasing the productivity of existing plants and improving the processes for cooling the gas as it is liquefied.
Development of the LNG industry is unthinkable without tanker fleet expansion, which was confirmed again in the speech by Kuniaki Motohashi, Chief Manager for LNG transportation business development of the company Mitsui O.S.K. Lines. This is the biggest Japanese operator, owning 29% of the entire world tanker fleet and carrying out trans-Atlantic shipments of liquefied gas. The Mitsui company's calculations showed that Russian LNG supplies to the United States would be competitive compared with those from the countries of the Persian Gulf and the Asia-Pacific Region.
The focus on gas processing
Another interesting and promising line of development of the Russian gas industry was presented by John Hutton, general manager of Syntroleum Corporation. This question touches on the key topic of diversification of the end product of Gazprom. Syntroleum plans to introduce GTL (gas-to-liquid) processes in Russia.
The GTL processes have, according to some experts, a number of major advantages. First, gas processing generates considerable value added at the marketing stage; second, GTL processes make it possible to supply the already processed gas to hard-to-reach parts of the country by means of ordinary tanks and tankers. In addition, a major aspect in the development of GTL production in Russia is the increasingly strict EU environmental requirements on fuel, which envisages the mass use of GTL technologies in the near future on transport to provide an alternative to the current gasoline and diesel fuel. This opens up broad prospects for exporting Russian GTL to Europe.
The economic aspect of the construction of gas plants with enhanced propane/butane recovery was assessed by Richard Harris, Vice President for project development of the ABB company. ABB presented several different variants of industrial production processes based on the economies of scale, which ensure optimum returns on investments.
The plenary session part of the first working day of the conference was summed up by the General Director of VNIIGAZ, Prof. Ter-Sarkisov, who noted the high level of efficiency of the work of the conference and the intensive interaction between the participants. Indeed, the topics covered touched on the main lines of development of Russia's gas industry and were of interest not only to the Russian participants, but also the foreign guests.
For technical experts and engineers, on the second day of the conference, six sessions were held to deal with various technical aspects of development of the gas industry – geology, gas processing and ecology, Underground gas storage facilities, the sea shelf, and the development, production and drilling, and transportation of gas. Representatives of the biggest world companies – Gaz de France, MOL, Statoil, Total, Verbundnetz Gas, BASF, Emerson Process Management, and the leading research and design institutes in Russia and the CIS spoke at these sessions.
The conference's audience were able not only to hear the general and economic aspects of the development of the Russian gas industry, but also to consider the technical results of activities without which this development is impossible. On the basis of the results of the conference, the VNIIGAZ and Gazprom management took a decision to hold such conferences annually, in order to ensure that Russian students of natural gas keep up with current world trends and exert their own fruitful influence on them.
