Recent Developments in Russian Arctic Oil & Gas Ben Seligman
Recent Developments in Russian Arctic Oil & Gas
Ben Seligman
Society of Naval Architects & Marine Engineers (SNAME) Arctic Section
Westin Hotel th 16 October 2019 1 Overview
• Focus of this presentation is on the emergence of Russian Arctic oil and gas projects, over the past decade or so, that move hydrocarbons to market by sea (e.g. taking advantage of the Northern Sea Route) versus more traditional pipelines • Won’t spend much time looking at Russian Arctic projects that are connected to the ‘South’ by pipeline
• Geographically, we’ll spend most time on the West Siberian Arctic, which has been Russia’s gas industry powerhouse for half a century • Oil production in the Russian Arctic started more recently (~25 yrs ago)
• Also spend some time looking at what’s happening in Russia’s European Arctic and East Siberia, as well as a few other Russian Arctic locations • A few slides on ‘Arctic-like’ Sakhalin
• We’ll look at two LNG projects in depth, particularly one that received a positive final investment decision (FID) a month ago
• The importance of the Northern Sea Route (N.E.Passage) to these new Russian Arctic oil and gas projects will become very apparent
• Along the way, we’ll identify some of the main reasons why the Russian Arctic oil and gas industry is booming, in spite of depressed oil prices 2 Russian Arctic / sub-Arctic regions we’ll focus on today
Chukotka
Kola Peninsula West Siberian Arctic East Siberian Arctic Kamchatka (Yamal, Gydan) (Evenkiyskiy, Taymyr) Pechora Sea
Sakhalin
3 Northward trend from traditional West Siberian Arctic Heartland
In the past 10– 15 years: - Less reliance on new pipelines, especially in West Siberia - Emergence of oil and LNG export via Northern Sea Route 4 Russian Arctic Marine Oil/LNG/Condensate Loading Facilities
(Non-Arctic)
Map source: Google 5 Pechora Sea (Russian European Arctic)
Pechora Sea
6 Varandey Oil Export Facility
• Location: Pechora Sea, 22.5 km offshore, 17 m water depth • Operator: Lukoil • Start-up: 2008 • Fixed Offshore Ice-Resistant Offloading Terminal (FOIROT), SPM • Substructure designed for 3m thick rafting ice • Linked to onshore tank farm and pipeline to oil fields in Russia’s European Arctic • Includes accommodation module and helipad • Loads up to 88 million bbls per year • Served by icebreaking support vessels and three dedicated icebreaking shuttle tankers • Shuttle tankers move oil year-round to storage at Murmansk, then conventional oil tankers to Europe Sources: PortNews.ru, • First cargo in 2008 delivered to Come Barents by Chance refinery, Nfld Observer 7 Varandey Oil Export Facility
• First delivery to Asia (China) via the Source: MarineTraffic.com Northern Sea Route (NSR) of oil produced in the Russian Arctic took place last month, using Sovcomflot’s LNG-powered tanker, the ‘Korolev Propsect’ • The oil was Varandey blend, taken to Murmansk using one of the dedicated Varandey shuttle tankers, then loaded on to the ‘Korolev Prospect’ for the journey to China • Favourable ice conditions on the NSR and firmer prices of the key Russian blend ESPO (similar to Varandey blend), preferred by Chinese independent buyers, made the arbitrage via the Arctic route work • Expect more Russian Arctic oil deliveries to Asia via the NSR next year
8 Prirazlomnaya Oil Production / Storage Platform
• Location: Pechora Sea, 60 km offshore, ~20 m water depth • Operator: Gazprom-Neft • Start-up: 2013 • Bottom founded GBS, with drilling, production, storage, offloading capabilities • Sits atop the Prirazlomnoye oil field • Platform has two loading arms • Loads ~40 million bbls per year • Two dedicated icebreaking support vessels serve the platform • Two dedicated ice-capable shuttle tankers, operated by Sovcomflot Pt. Thomson Central Pad • Shuttle tankers move oil year-round to storage at Murmansk, then conventional oil tankers to Europe
9 Sources: Barents Observer, Gazprom West Siberian Arctic
West Siberian Arctic (Yamal, Gydan)
10 Arctic Gates Oil Export Facility
• Location: East coast Yamal Peninsula, 3.5 km offshore in Ob Bay, ~12 m water depth • Operator: Gazprom-Neft • Start-up: 2016 • Single Point Mooring Facility (SPM) • Substructure designed for 2m thick ice • Linked to onshore tank farm and 100 km pipeline to Novoportovskoye field • Loads ~40 million bbls per year (62 mm bbls peak) Pt. Thomson Central Pad • Served by two icebreaking support vessels and eventually six dedicated Sovcomflot Arc 7 icebreaking shuttle tankers (4 in service) • Shuttle tankers move oil year- round to storage at Murmansk, then conventional Sources: Gazprom-Neft oil tankers to Europe 11 Yamal LNG / Sabetta Port
Pt. Thomson Central Pad
Source: Alten / Anotech
12 Yamal LNG / Sabetta Port
Sources: Barents Observer, TechnipFMC • Location: Northeast coast of Yamal Peninsula • Operator: Yamal LNG JV (Novatek, Total, CNPC, Silk Road Fund) • Start-up: December 2017 • Resource base: S.Tambey • Three trains of 5.5 mtpa each • Train 4 (using Russian-made equipment only): 0.9 mtpa, start up in next few months • Served by Sabetta Port • Port and approaches required extensive dredging: Pt. Thomson Central Pad • 2015: 1.6 million m3 • 2016: 17.5 million m3 • 2017: 7.2 million m3 • Dredging contractors: DEME and Jan de Nul • Port used to load in construction materials and VLMs • Now used to export LNG13 and condensate Yamal LNG Modular Construction Approach
Module fabrication in China
Source: CGTN
Source: Total
Asian yards to Yamal
Pt. Thomson Central Pad
• ~150 modules fabricated off-site in Asia, many of them in Chinese yards. Up to 8000 tons each. • Heavy-lift ship delivery via eastern Northern Sea Route in summer (or via Suez and Kola Peninsula in winter) to Yamal site • Audax and Pugnax Arc 7 icebreaking module carriers made deliveries in winter 14 Yamal LNG Modular Construction Approach
• Modules offloaded via MOF (Module / Material Offloading Facility) using 1718 axle lines of SPMTs • Taglu and Parsons Lake (Mackenzie Gas Project) would have used this approach, on a smaller scale
Source: Total
From Asian yards to Yamal Pt. Thomson Central Pad Module offloading at Sabetta site
15 Source: Mammoet Yamal LNG Dedicated ice-breaking LNG carrier fleet
Christophe de Margerie Arc 7 LNG carrier (Sovcomflot) • 15 Arc 7 ice-breaking LNG carriers dedicated to Yamal LNG, of which 13 are in service (each can carry 172,000 m3 of LNG) • Two more to be in service by year end • Also one Arc 7 condensate carrier in service (another one coming) (43,000 tons condensate capacity) • All carriers are double-acting (proceed stern first in heavy ice (1.5-2m thick), bow first in moderate ice) • ~75% of LNG cargoes are currently westbound, and all condensate (year- round) Pt. Thomson Central Pad • ~25% of LNG cargoes are eastbound (7- 8 months/yr) • Share of eastbound cargoes to increase in future • Most LNG cargoes trans-shipped (ship- to-ship), e.g. near Murmansk, to conventional LNG carriers Boris Sokolov Arc 7 condensate carrier (Dynacom)
16 Sources: Aker Arctic and DSME Yamal LNG Dedicated ice-breaking LNG carrier fleet
Year-round
15 eastbound shipments in Q3 2019
Pt. Thomson Central Pad
17 Source: Maritime Executive Yamal LNG Dedicated ice-breaking LNG carrier fleet
• Four of the LNG carriers (and a further two due in service shortly) operated by Teekay LNG may be impacted by US sanctions on COSCO Shipping affiliates
Pt. Thomson Central Pad
Source: Reuters
Both now in operation
Source: Novatek
18 Arctic LNG 2 Project
Source: Novatek Arctic LNG 2 Project
• Location: Russian Arctic, Yamal Nenets Autonomous District (first development on the outer Gydan Peninsula) • Resource base - Utrenneye field: • ~70 TCF gas reserves • 770 MM bbls liquids / condensate • Planned Production: • Up to 2.9 BCF gas/day (~1 TCF per year) • 19.8 million tonnes LNG/year (6.6 MT/yr from three trains) • Up to 1.5 million tonnes condensate/year • First production: late 2023 (all three trains on stream by 2026) • Partnership: Novatek (60%), Total (10%), CNPC (10%), CNOOC (10%), Mitsui/JOGMEC JV (10%) • EPC contractors: TechnipFMC, Saipem, NIPIgaz • Final Investment Decision (FID) taken 5th Sept 2019 • Total project cost estimate: US$21 billion • Significant pre-investment in early works: • Construction of Belokamenka fabrication site • Utrenneye site prep 20 Arctic LNG 2 Project
Arctic LNG 2 Concept: • Three concrete gravity base structures (CGBS), each of which will serve as the foundation for a single LNG train • CGBS dimensions: 300 m x 150 m x 30 m • CGBS weight: 480,000 tonnes (each CGBS will require 420,000 tonnes of concrete and 55,000 tonnes of reinforcement) • Each CGBS will include 213,000 m3 of LNG storage capacity and 75,000 m3 of condensate storage capacity • Topsides / LNG train on top of CGBS: • LNG train weight: 120,000 tonnes • Each train will consist of ~15 modules, each one weighing between 5000 and 12,500 tonnes • Total weight ofPt. each Thomson LNG ‘platform’: Central Pad 600,000 tonnes • Topsides fabrication: • Train 1 topsides to be built in China and transported to the Belokamenka fabrication site, where they will be integrated with the CGBS • Topside modules for subsequent trains will built primarily in Russia, including at Belokamenka • LNG platforms then transported to Utrenneye field • First completed LNG platform to be delivered to Utrenneye in 2022 21
Arctic LNG 2 Project
: Google : Source
Locations www.total.com Source: Source:
Arctic LNG 2 Project Site / Utrenneye
Belokamenka fabrication site Murmansk / Belokamenka to Utrenneye: ~1500 km
22 Source: Google Arctic LNG 2 Project
Belokamenka Fabrication Site: • Located close to Murmansk, Kola Peninsula (Russian European Arctic) • Under construction since 2017 • Will serve as site for fabrication of ‘large-tonnage marine structures’ for Arctic LNG 2 • Two dry docks, each 415 m x 175 m x 20 m, for construction of Concrete Gravity Base Structures (CGBS) • First dry dock to be completed by Fall 2019 • Second dry dock to completed in 2020 • Concrete batching plant • Pipe spool fabrication • Topsides fabrication yard • Topsides / CGBS integration • Six mooring berths, for delivery of freight and workers • Camp for 15,000 workers, most of whom will work on a rotation
23 Arctic LNG 2 Project
Belokamenka Fabrication Site – Artist’s Impression
Pt. Thomson Central Pad
24 Source: Novatek Arctic LNG 2 Project
Belokamenka Fabrication Site – Artist’s Impression
Pt. Thomson Central Pad
25 Source: Novatek, 2018 Arctic LNG 2 Project
Belokamenka Fabrication Site – Artist’s Impression
Pt. Thomson Central Pad
26 Source: Arctic Media World, 2017 Arctic LNG 2 Project
Belokamenka Fabrication Site – Artist’s Impression – CGBS and topsides (LNG train) integration
Pt. Thomson Central Pad
27 Source: Novatek, 2018 Arctic LNG 2 Project
Belokamenka Fabrication Site – Dry Dock #1 (early 2019)
Pt. Thomson Central Pad
28 Source: Sever Na Ladoni (Youtube), 2019 Arctic LNG 2 Project
Belokamenka Fabrication Site – mid 2019
Pt. Thomson Central Pad
29 Source: Novatek Arctic LNG 2 Project
Utrenneye Site, Gydan Peninsula: • Sevmorput nuclear-powered LASH cargo ship took early works materials to site in Spring 2019
Source: Novatek
• GovernmentPt. ordered Thomson dredging Central this Pad summer at Utrenniy Port site and mandated dredging by Belgium’s DEME and client Rosatom • 2019 dredge season wrapping up now. 5.4 million m3 dredged this season • Government Resolution states that 103 billion rubles (~USD 1.5 billion) will be allocated to the Utrenniy Port project. • The estimated total cost of the port is ~144 billion rubles (~USD 2.2 billion) • Some of the Government's funding for the port project will be pulled from other (less fortunate) infrastructure projects 30 Arctic LNG 2 Project
CGBS-based LNG train – Artist’s Impression (old!)
Pt. Thomson Central Pad
31 Source: Sever Na Ladoni (Youtube), 2019 Arctic LNG 2 Project Platform installation at Utrenneye – Artist’s Impression
Pt. Thomson Central Pad
32 Source: Novatek, 2018 Arctic LNG 2 Project
Utrenneye Gas Field & Port – Artist’s Impression
Pt. Thomson Central Pad
33 Source: Novatek, 2019 Arctic LNG 2 Project
Utrenneye Gas Field & Port – Artist’s Impression
Pt. Thomson Central Pad
Future ALNG1
34 Source: Novatek, 2018 Arctic LNG 2 Project
Utrenneye Gas Field & Port – Artist’s Impression
Pt. Thomson Central Pad
Future ALNG1
35 Source: Novatek, 2018 A blast from the past………………
Pt. Thomson Central Pad
36 A blast from the past………………
Pt. Thomson Central Pad
Mackenzie Gas Project
37 Arctic LNG 2 Project
• 17 new Arc 7 LNG carriers to be built for ALNG2 • All to be built at Zvezda (Star) shipyard in Russia’s Far East – first Russian-built LNG carriers • Design will differ from current Arc 7 LNG carriers serving Yamal LNG – narrower hull, better ice- breaking capabilities • Vessels to be delivered 2023 - 2026 • Vessel financing (worth ~USD 4.5 – 5 billion) to come from VEB.RF, a Russian state development corporation • Russian government just announced ~ USD 340 million in subsidies to the Zvezda yard • New Novatek – Sovcomflot JV, ‘SMART’ • Sovcomflot = state-owned petroleum products / LNG shipping corporation • Ensure “safe year-round maritime LNG logistics from Arctic LNG 2 and other current and prospective Novatek projects” • Work with the relevant shipyard (Zvezda) to provide the technical designs for future vessels • Place shipbuilding orders and supervise their construction (first order has already been placed) • Act as the ship-owner and fleet operator • Arrange vessels’ financing • New Novatek – Sovcomflot – COSCO Shipping – Silk Road Fund JV, ‘Marine Arctic Shipping’ • Manage the Arc 7 LNG carrier fleet, comprising existing and new vessels that will transport LNG for current and planned Novatek projects, namely: Yamal LNG; Arctic LNG 2 and others • New Zvezda – Samsung (SHI) JV • SHI will become technology partner of the project and hand over the technical specs, design docs to Zvezda • SHI will also provide assistance in developing working design for the new vessels
38 Arctic LNG 2 Project
- Transshipment terminals to help improve LNG shipment economics – keep the Arc 7 carriers in the North and transship cargoes to conventional LNG carriers for non-Arctic operations - Each will have 20 million tons/yr handling capacity (Kamchatka could be expanded to 40 million) - Novatek received Navy / Min of Defence approval for Murmansk site Source: - Novatek, MOL (Mitsui) and JBIC recently signed cooperation agreement to construct these terminals - Terminals to be operational by ~2022/23 - Novatek sees up to 80% of its LNG, notably from ALNG2, moving to Asian markets - Novatek wants year-round eastbound cargoes by the mid 2020s 39 More Novatek Arctic LNG Projects to come
ALNG3 LNG
Yamal LNG
Ob LNG ALNG2
ALNG1 LNG
40 Source: Novatek More Novatek Arctic LNG Projects to come
• Yamal LNG, Train 4 (0.9 mtpa) • Start-up by Q1 2020 • First application of Novatek proprietary “Arctic Cascade” liquefaction technology using only Russian-manufactured components • Ob LNG (4.8 mtpa) • Resource base: Verkhnetiuteyskoye and Zapadno-Seyakhinskoye fields • Next application of “Arctic Cascade” • Will use Yamal LNG’s Sabetta port for exports • FID due imminently, start-up in 2023 • Arctic LNG 1 (~20 mtpa) • Resource base: Soletsko-Khanaveyskoye, Trekhbugorniy, Geofizicheskoye • Will use Arctic LNG 2’s Utrenniy port for exports • FID some way off, first LNG 2027 + • Arctic LNG 3 (~20 mtpa) • Resource base: North Obskoye • First LNG 2027 ++
41 Russian LNG Growth 2020 to ~2030
Food for thought……………. • Virtually all feed gas for Russian LNG growth will be from Arctic or Sakhalin
42 Arctic Shelf (Offshore)
Kara Sea Shelf West Siberian Arctic
Kara Sea
Current focus area on shelf
Shtokmanovskoye Barents Sea
Pechora Sea
Source: Neftegaz.ru Prirazlomnoye 43 Arctic Shelf (Offshore)
• Activity on the Arctic shelf is limited – why? • Only state-controlled Gazprom and Rosneft have access (but new legislation may change that) – even their shelf activities are minimal • Western companies prohibited due to sanctions – XoM pulled out of Rosneft Kara Sea exploration JV in 2018 • Low oil prices and somewhat cheaper onshore development • Relatively few suitable rigs available • Rosneft and Gazprom – both have drilled on the Kara Sea shelf (close to Yamal Peninsula) in recent years and will continue • Rosneft, with XoM, discovered the Pobeda (Victory) field on the Kara shelf in 2014 – up to 3.5 billion bbls oil resource estimate • Gazprom – 2017, Chinese Nanhai 8 rig drilled at Leningradskoye, after which resource potential was increased to 70 TCF gas • Gazprom – 2018, Chinese Nanhai 8 rig and Gazflot’s Arkticheskaya rig drilled at Rusanovskoye (17 TCF) and Nyarmeyskoye. Gazflot’s Amazon rig possibly drilled at Novatek’s North Obskoye field for ALNG3 • Gazprom – 2019, Chinese Nanhai 8 rig is drilling at Leningradskoye and Skuratovskoye • Gazprom – 2019, Gazflot’s Arkticheskaya rig is also drilling in the Kara Sea – unknown where • Gazprom – 2019, Gazflot’s Amazon rig drilling, likely in Ob Bay • To 2022, Gazprom plans to drill ~5000m of wells per year on Kara Sea shelf • Seismic surveys • Gazprom has carried out ~20,000 km of 3D seismic on the Kara Sea shelf in the past five years • Last week, Gazprom wrapped up a seismic program at North Kharasavey, close the above-named fields 44 Arctic Shelf (Offshore)
COSL’s Nanhai 8 semi-submersible rig Drill rigs active on the Kara Sea shelf or Ob Bay Source for rig images: Barents Observer
Gazflot’s Arkticheskaya jack-up rig
Seismic vessels active in the Kara Sea
SMNG’s M/V Akademik Nemchinov SMNG’s M/V Akademik Primakov Gazflot’s Amazon jack-up rig
45 Arctic Shelf (Offshore)
• Extreme ice management! • To protect its Kara Sea drilling operations, just a few weeks ago Gazprom undertook an iceberg tow (other iceberg tows have happened in last year or two) • This berg: estimated 1.5 million tons displacement, ~200 m long, 80 m wide and 100 m high • Vessels involved in the tow: the Almaz and the Kigoriak
The Kigoriak (now owned by Russia's FEMCO Group), has a long and illustrious history, having started its life in the Canadian Arctic. It was built for Canmar, Dome Petroleum's Arctic drilling subsidiary, and worked in the Canadian Beaufort in the 1980s supporting the massive exploration campaign that took place there. She has been based in Russia, supporting many Arctic operations (e.g. the tow-out of Gazprom-Neft's Prirazlomnaya Platform), since the early 2000s Source: Neftegaz.ru
• Bill being prepared to open up Arctic shelf to private and foreign investors • Deputy PM Trutnev proposed the bill as Gazprom and Rosneft are not, in his view, being proactive enough on the shelf (as they are more focused on their onshore assets) • Obstacles could be opposition from Gazprom and Rosneft and, if the bill passes, low oil prices and sanctions could limit participation by western investors (though not others, like China)
46 Gazprom-Neft Gas to Yamburg
• Gazprom-Neft (GPN) has received approval for gas pipeline crossing Ob Bay from Novoportovskoye to Yamburg (2 BCF/day) • ~70 km subsea section • Similar design to Gazprom’s Baydaratskaya Bay crossing
Source: Gazprom
Baidaratsakaya Bay crossing Pt. Thomson Central Pad (Bovanenkovo – Ukhta) - 2 x 48” dia subsea gas pipelines - 65 km subsea section - Onstream 2012 and 2017
Source: Gazprom-Neft 47 Southern Ob Bay and Taz Bay fields tie-in to Yamburg
• Another focus of Gazprom is to tie straddle (partly onshore/offshore) and shallow water offshore fields into onshore infrastructure • These are in Ob Bay and Taz Bay, just east of the Yamal Peninsula • These fields expected to be tied in to Yamburg in the coming decade
Gydan Ob Bay Peninsula
Taz Bay
Yamal Peninsula
Pt. Thomson Central Pad Yamburg Source: Sozvezdye
Source: Sozvezdye
48 East Siberian Arctic / sub-Arctic
East Siberian Arctic (Evenkiyskiy, Taymyr)
49 East Siberian Arctic / sub-Arctic Oil
• East Siberian (Krasnoyarskiy Territory) Arctic and sub-Arctic oil and gas development started relatively recently, (with a few exceptions) in last decade) • All pipeline connected / minimal marine exports so far……………… • Rosneft’s Vankor field started commercial production in 2009 • Vankor and one or two other E.Siberian sub-Arctic fields pipe their hydrocarbons west into the Gazprom (gas) and Transneft (oil) trunk lines in Yamal-Nenets Autonomous District • Future Developments in the region will still involve pipeline connections to the south (primarily to the East Siberia Pacific Ocean oil pipeline system) but others may involve oil exports via the Northern Sea Route (NSR) • Vankor Cluster (Rosneft) and Payakha (Neftegazholding) • Collectively known as the Vostok (East) Oil Project • Vostok Oil Project aspirations • 180 – 360 million bbls/yr oil exports via a 600 km pipeline to new marine export terminal near Dikson. Then shipments via NSR to Europe or Asia • Wants big tax breaks from Federal Government, not forthcoming so far • Looking to Indian oil companies to invest in Vostok Oil (India already invests in Sakhalin 1, Taas-Yuryakh and Vankorneft) 50 East Siberian Arctic / sub-Arctic Oil
• Vankor Cluster Oil Export Terminal (Rosneft) • Vankor • Suzunskoye • Ladochnoye • Tagulskoye • >5 billion bbls oil Yamal LNG recoverable ALNG2 • Up to 180 million bbls/yr oil
Source: Neftegaz.ru 51 East Siberian Arctic / sub-Arctic Oil
• Payakha (Neftegazholding) • Drilling on first well pad started mid-2019 • ~7 billion bbls oil recoverable • Up to 190 million bbls/yr oil production • Once producing, Payakha would become the northernmost oil field in Russia • In theory, oil would be exported both west and eastbound – see map
Source: Yenisey TV 52 Source: Barents Observer East Siberian Arctic / sub-Arctic Oil
Source: Fleetmon • The only marine hydrocarbon exports from the E.Siberian Arctic are small volumes of condensate produced at the Pelyatkinskoye field, operated by Taymyrgaz (for Norilsk Nickel) • Arc 7 (double-acting) ‘Yenisey’ tanker has been hauling fuel and lubricants in to Dudinka for NN and backhauling the condensate since 2011 53 Sakhalin
Sakhalin
54 Current Sakhalin Developments
• Sakhalin 1 (XoM, Rosneft et al): Source: Gazprom • Limited activity in field • Sakhalin 2 (Gazprom, Shell et al): Source: SEIC • OPF booster compressor station project in construction phase • On-going effort to identify and confirm Train 3 resource base – front-runner now formations beneath Lunskoye (Sakh 3’s Yuzhno- Kirinskoye impacted by subsea technology sanctions, Sakh 1 gas now going to Far Eastern LNG, etc) ‘Northern Lights’ semi-sub (Gazflot) • Sakhalin 3 (Gazprom): • Gazprom drilled top holes at Yuzhno- Kirinskoye in summer 2019 (it is due to come onstream in 2023) • Yuzhno-Kirinskoye development concept - sanctions • Gazprom-Neft conducting more Source: Gazprom seismic this year and next in ‘Polar Star’ semi-sub (Gazflot) Ayashsky block (Neptune and Triton fields) and will drill a well at Neptune before year end 2019
Source: Gazprom 55 Current Sakhalin Developments
• Three Russian Far East LNG projects • Sakhalin 1: • Announced last month that they will Far Eastern LNG – Artist’s impression pursue ‘Far Eastern LNG’ • 6.2 MTPA, start-up ~2027 • Current cost estimate ~ USD 9.8 billion • Plant will be at De Kastri on the mainland • Sakhalin 2 • Have struggled to secure a resource Source: Pro-arctic.ru
base for Train 3 Sakhalin 2/SEIC LNG Plant and jetty • FID not taken yet (2020 earliest) • 5 MTPAPt. (will Thomson bring SEIC’s Central total Pad LNG production to 15 MTPA) • Gazprom • ‘Vladivostok LNG’ • Relatively small scale: 1.5 MTPA • FID taken, construction starts in 2020, Source: SEIC first LNG mid-2020s • Feed gas likely from Sakhalin 3 56 De Kastri ‘Sokol’ Oil Export Facility (non-Arctic)
• Location: Tartar Straits, Russian Far East, 1 km offshore, ~21.5 m water depth • Operator: Sakhalin 1 JV • Start-up: 2006 • Single Point Mooring Facility (SPM) • Substructure designed for 2m thick ridged ice, 1.5m level ice • “Arctic-like” conditions, winter drifting ice typically 0.5 m thick • Linked to onshore tank farm and pipeline from Sakhalin Island • Can load up 88 million bbls per year • Served by five dedicated shuttle tankers
Sources: Bluewater Energy Services 57 Northern Sea Route
58 Northern Sea Route (NSR): Today to 2024
• Putin’s Decree of May 2018 mandates an extremely ambitious 80 million tons of ‘goods’ to be moving along the NSR by 2024 • LNG and oil (and coal) are key to getting anywhere near that number
Year NSR Cargo Tonnage (millions), predictions by various Russian agencies / ministries 2018 (actual) 20.2 2019 26 - 30 2022 32 2023 45 A ‘big’ jump in one year! 2024 80 – 95
• 2024 figures in the table are from Russia’s various Federal ministries – trying to make the President happy – but seem wildly exaggerated • Novatek Arctic LNG production by 2024 likely ~30 mtpa • Oil would need to be coming out of not just Arctic Gates, Varandey and Prirazlomnoye but also East Siberia’s Vankor cluster and Payakha • Coal, etc……………….????? • 80 million tons per year might be achievable by 2030-35, once Novatek’s ALNG1 and ALNG3 come on line 59 Northern Sea Route (NSR): Today to 2024
• Also important for rapidly increasing cargo movements along the NSR, especially for eastbound LNG and oil shipments to Asia: • New gen Arc 7 LNG carriers for ALNG2 and beyond (and for new Arctic oil exports) • New 60 MW nuclear-powered icebreakers (x 5) due to be operational over coming 6-7 years. The first of these, the ’Arktika’, will be working by early 2020 • ‘Leader’ class 120 MW nuclear-powered icebreakers given go-ahead – still requires state funding. These are key to year-round eastbound shipments along the NSR The ‘Arktika’ at Baltic Shipyards
Source: Rosatomflot ‘Leader’ Class icebreaker Source: Rosatomflot 60 Anyone know what this is?
Source: TASS 61 ‘Akademik Lomonosov’ floating nuclear power plant
Chukotka
Source: TASS • The Akademik Lomonosov, owned by state atomic energy corporation Rosatom, reached its first destination, Pevek (Chukotka), a few weeks ago after being towed along the NSR from Murmansk • The plant will power the local coal mines and towns in this part of the RFE Arctic, as two local power stations (one of them nuclear) are being closed • Tenuous oil and gas connection: Rosatom says that the Akademik Lomonosov could be used to power offshore oil and gas production facilities, including in the Arctic! 62 Conclusions
• How is all of this Arctic oil and gas activity possible?’ There are many common themes: • Technological advances, e.g. ice-capable LNG and oil carriers • Significant government ‘support’: favourable regulatory conditions, massive support from Federal and regional governments (availability of incentives, such as tax breaks and state financial support) • Partnerships with foreign investors, mostly Asian • LNG: growing demand for Liquefied Natural Gas (LNG) in Europe and, particularly, Asia, with the Russian Arctic lying between these two major markets, LNG economics helped by cold climate and using Russian- manufactured equipment • Improving navigability on the NSR, with a focus on lengthening the navigation season to year-round in the eastern sector • Russia has an unparalleled resource base in the Arctic - 100s (if not 1000s) of tcf of gas and billions of bbls of oil - and that’s really just West Siberia. There’s more in other sectors of Russia’s Arctic • Russian European Arctic • Relatively quiet but could see GPN’s Dolginskoye tied back to Prirazlomnaya platform • West Siberian Arctic • Traditional pipelinePt. -Thomsonconnected heartland Central of Pad Russia’s oil/gas industry • Recent move to coastal projects with hydrocarbon export via NSR – this is where we’ll continue to see rapid growth in the next decade or two • Offshore (shelf) will see slow growth until other players arrive, oil price increases, sanctions easing • East Siberian and RFE Arctic • Relatively undeveloped oil and gas industry until recently • Mostly pipeline connections, e.g. to China (Power of Siberia and ESPO), with aspirations for export via NSR • Sakhalin – much the same with new LNG developments • Contrast all this with the lack of activity in the Canadian Arctic 63 Thank you!
Ben Seligman, Project Specialist – Arctic / Frontier [email protected] https://www.linkedin.com/in/benseligman46/
64