Commercial production starts at Vankor

An official ceremony took place on August 21 to mark the beginning of commercial production of crude oil at the Vankor field in Krasnoyarsk Territory. Field development is being carried out by the largest Russian oil company, Rosneft. Commercial production at the major new field began at a signal from the Russian Prime Minister, Vladimir Putin.

Mr Putin was at the head of a high-level delegation, which took part in the field launch ceremony. Other members of the delegation included Anatoly Kvashin, the Russian Presidential Envoy in the Siberian Federal District, Sergei Shmatko, the Minister of Energy of the Russian Federation, Alexander Khloponin, the Governor of Krasnoyarsk Territory, Sergey Bogdanchikov, the President of Rosneft, as well as other guests representing various government ministries and departments, and subsidiary and partner organizations of Rosneft.

Commercial production at the major new field began at a signal from the Russian Prime Minister, Vladimir Putin.

The importance attributed to Vankor is natural, since the field has strategic significance for the Russian economy. Together with 14 adjacent sub-soil blocks, licences to which are owned by Rosneft, Vankor represents a whole new oil & gas province – the first to have been discovered and brought into production in the history of post-Soviet Russia. Production launch at Vankor also marks the start of practical implementation of sub-soil development in Eastern Siberia, whose resources will provide the foundation for long-term production growth in Russia, compensating for exhaustion of reserves at fields in traditional oil producing regions, particularly Western Siberia, where about 70% of Russian oil is currently produced.

Prime Minister of Russia, Vladimir Putin

Launch of the Vankor field will help Russia to reverse the recent slowdown in oil production growth rates. So implementation of the Vankor project represents an important part of Russia’s energy strategy, which aims to ensure national and global energy security.

Vankor is an integral development project for East Siberia and the Far East. Oil from the field will be the main input to the first stage of the Eastern Siberia - Pacific Ocean (ESPO) pipeline system, which is now under construction. This project will help to strengthen economic unity of Russia’s regions and support development of related industries: transportation, refining, petrochemicals and power generation.

Vankor and other fields in Eastern Siberia will ensure that Russia achieves consistently high levels of crude oil production and delivery to Asia-Pacific countries in the long term. In particular, oil from Vankor will be the main source for deliveries to the People’s Republic of China (about 15 million tonnes of crude oil is to be supplied to China beginning from 2011) and to the planned Far East Refinery, which will have annual capacity of 20 million tonnes. This will enable Russia to establish itself on the promising and fast-growing Asia-Pacific market, lending support the country’s geopolitical interests in the region. Growing energy needs of the Russian Far East are also an important consideration.

The launch ceremony was attended by the Prime Minister of Russia, Vladimir Putin, the President of Rosneft, Sergey Bogdanchikov, Minister of Energy of Russia, Sergey Shmatko, the Governor of Krasnoyarsk Territory, Aleksandr Khloponin and the Authorized Representative of the President of Russia in Siberian Federal District, Anatoly Kvashnin

As well as its huge importance for the oil & gas industry, Vankor makes a major contribution to development of other sectors of the Russian economy. More than 80% of equipment bought for purposes of Vankor development was procured in Russia and some of it is made-to-order and unique.

Recoverable reserves at the Vankor field are estimated at 520 million tonnes of oil and 95 billion cubic meters of gas. The field is being developed by the Rosneft subsidiary, Vankorneft. It is expected that further prospecting at licence blocks around the main field will give major additions to overall reserves of the new province.

The Vankor field was discovered in 1988, but no practical steps for field development were undertaken at the time. In 2003 Rosneft became the first Russian company to acquire a foreign company, whose shares were traded on the London Stock Exchange, and the acquired company gave Rosneft development rights at Vankor.

August 21, 2009 Launch of Vankor field

Practical steps for development of the field began after Rosneft became the licence holder. Total capital investment by Rosneft at Vankor had exceeded 200 billion roubles by August 2009.

At current levels of international prices for crude oil, project implementation will provide total tax revenues of 4.5 trillion roubles to all levels of the Russian state budget, representing nearly a half of the country’s entire annual budget.

Current daily output of crude oil at the field is 18,000 tonnes (130,000 barrels) and will increase to 30,000 tonnes (220,000 barrels) by the end of the year. The output target at Vankor for the whole of 2009 is about 3 million tonnes (22 million barrels). Annual crude oil recovery at peak production should be 25.5 million tonnes (510,000 barrels per day).

Transportation of oil from Vankor will be via Rosneft’s own 820-mm diameter pipeline, which runs for 556 km to the pumping station at Purpe (Yamalo-Nenets Autonomous District), from where oil will be carried onwards through the Transneft trunk pipeline network.

August 21, 2009 Launch of Vankor field

Development of the field has to contend with a harsh northern climate and enormous variations of temperature, from minus 60 degrees celsius in the winter to plus 30 in the summer. Vankor is in the permafrost zone and has very heterogeneous sub-surface structure. Economics of the project have been further complicated by almost complete absence of infrastructure.

August 21, 2009 Launch of Vankor field

The Vankor project is one of the largest in modern Russia, involving more than 150 equipment suppliers, including 65 manufacturing plants. A total of 450 contractors and sub-contractors are working on the project, and 12,000 construction workers were employed using 2000 vehicles at the peak of construction work. Vankorneft employs about 2000 full-time personnel.

1685 infrastructure facilities have already been built at Vankor, as well as 148 km of field oil pipelines, 60 km of gas pipelines, 97km of roads, reservoirs with capacity of 140,000 cubic meters, a mini-refinery, and two modern settlements for shift workers, capable of housing 2000 people. A total of 425 development wells are scheduled to be drilled at the field, of which 307 will be horizontal.

August 21, 2009 Launch of Vankor field

Facilities include an unique oil treatment unit, which separates initial output into oil, water and gas, and brings the crude oil into saleable condition. Full annual capacity of the unit at Vankor will be 13.5 million tonnes of saleable crude oil, and capacity of the first stage is 7 million tonnes. This compares with average maximum annual capacity of 3 million tonnes for analogous units in Russia. The only Russian unit with comparable capacity has been installed as part of the Sakhalin-1 project: its annual capacity is 6 million tonnes.

August 21, 2009 Launch of Vankor field

Field equipment will be powered by a 200-megawatt gas-turbine power station and two gas-piston power stations with capacity of 42 megawatts each. The main feedstock for these stations will be associated petroleum gas. Total length of power transmission cables at the field will be in excess of 770 km.

The trunk pipeline from the Vankor field to the Purpe pumping station is a unique large-scale project in its own right. Total length is 556 km, of which 330 km are underground. Use of the latest anti-corrosion technologies will ensure that the pipeline is useable for a period of 35 years. Four posts with modern equipment have been installed along the pipeline for localization and resolution of any spillages of crude oil.

The airport at Igarka, 142 kilometers from the field, is currently being rebuilt to ensure year-round transportation of personnel and cargoes. This work should be completed by September 2010. The airport will be capable of regular handling of large aircraft (Tu-154, Il-76 and Il-86), and the airport hotel and long-stay buildings will be able to accommodate up to 200 people at one time. The airport is already in use: about 160,000 people and more than 3600 tonnes of cargo were handled in 2006-2009, and a total of 12,000 flights by aircraft and helicopter have been routed to and from the airport.

July, 2009. Infrastructure development of Vankor field. Oil field support base and drilling site 4

Development of the Vankor oil & gas field and construction of trunk pipelines is being carried out by top-class Russian and western specialists with extensive experience of drilling and construction work in northern regions. Use of the latest drilling and oil & gas recovery techniques make Vankor the main center for innovation in Russia’s oil industry today.

July, 2009. Infrastructure development of Vankor field. Camp, oil field support base, tank battery, gas-turbine power station

Use of latest international experience at Vankor extends from application of modern technologies to implementation of measures for environmental protection. All relevant types of computer-assisted design have been applied, and use of the latest construction technologies for installation of ground facilities enabled significant reduction of lead times for field launch. Pre-assembled modules reduced time for construction and assembly work at the site by 67% and ensured highest-possible module quality, since testing had already been carried out at assembly plants.

July, 2009. Infrastructure development of Vankor field, Camp, helicopter survey

Modern technologies have been employed at Vankor for all stages of field preparation and development. In particular, their use in geological work and well construction has enabled reserve gains per exploration well, which are 30 times higher than the Russian average and 15 times higher than the world average. The latest approaches are also used during drilling. For example, rotary-directed well drilling systems gave an increase of drilling efficiency by 2.5 times.

July, 2009. Infrastructure development of Vankor field, Gas-turbine power station Helicopter survey

Another important factor is use of wear-resistant equipment in field operation, which will enable high levels of well productivity. Daily output levels will be up to 1500 tonnes (430 tonnes on average), compared with average 39.5 tonnes in Russia as a whole.

July, 2009. Infrastructure development of Vankor field. Roads, pipeline to Purpe.

Vankor development includes an integrated approach to environmental protection. The project’s all-terrain vehicles are fitted with tubeless, extra low-pressure tyres, which prevent damage to soil and soil flora.

It is also important that development of Vankor will make maximum use of associated gas in the field production cycle. In excess of 1 billion cubic meters of associated gas will be used by the gas turbine power station. Some 2.5 billion cubic meters of associated gas will be re-injected annually for maintenance of strata pressure.

July, 2009. Infrastructure development of Vankor field, Water separation unit, helicopter survey

Vankor is remarkable for its commitment to 100% utilization of waste generated in the process of field development and operation. Disposal of drilling waste at the field will be carried out using reverse pumping of drill cuttings (ground and mixed into a pulp) into rock strata selected for the purpose. This technology is used in all the world’s main oil & gas producing regions and represents the latest, environmentally-safe approach to waste disposal.

The 120 km of roads at the site have been built using modern environmentally-friendly construction methods. The moss and plant cover underneath the road surface is not removed: instead a geo-mesh is laid down for reinforcement, filled with a turf and sand mixture and seeded with indigenous perennial grasses.

July, 2009. Infrastructure development of Vankor field. Pipe house, helicopter survey

The Vankor project has major importance for economic development in Krasnoyarsk Territory. New jobs are being created, educational and scientific resources are being developed, and new, highly efficiency technology solutions are being applied. The project has given an impetus to development of industrial, transport, engineering and social infrastructure in northern parts of Krasnoyarsk Territory. More than 100 new companies have been created in a single district of the Territory (Turukhanskoye District), and Rosneft has spent more than 500 million roubles on social infrastructure in the Territory since 2006.

The Vankor field has given rise to many social projects. The largest among them are reconstruction of Igarka Airport, support for Turukhanskoye District, construction of an Oil & Gas Institute at the Siberian Federal University (SFU), which will be supplied with the latest laboratory and educational equipment. Rosneft has spent about 700 million roubles for the SFU project, and construction of the building should be completed in August 2010. Rosneft also plans to create its regional study centre at SFU as well as a new R&D institute. New training courses have been opened at technical colleges in Krasnoyarsk Territory to provide qualified oil industry workers (more than 200 people will complete these courses each year).

July, 2009. Infrastructure development of Vankor field. Floating by barge the pig receiver

A total of 800 million roubles has already been spent, out of a planned final sum of 1.6 billion roubles, for reconstruction of Igarka Airport and improvements to various facilities in the town of Igarka. Two years ago the regional parliament in Krasnoyarsk was looking at ways of resettling the inhabitants of Igarka to central and southern districts of the Territory. Now, however, development of Vankor has made Igarka the economic centre of Turukhanskoye District. Growth of business activity in the District has boosted employment and income levels. Investments in the local economy rose by nearly four times between 2005 and 2007 and were more than 30 billion roubles in 2008.

Rosneft is also implementing a social programme in Krasnoyarsk Territory, which includes industrial and social development, support to pensioners and charity actions.

July, 2009. Infrastructure development of Vankor field. Exploratory well

Eastern Siberia is a zone of strategic interest for Rosneft. Development of the Vankor field is the biggest Company project in Krasnoyarsk Territory, and will serve as the foundation for other projects of lesser, but also considerable scale.

Rosneft Information Department