VYGON Consulting Managing Director Grigory Vygon acted as a key moderator of the VIII Tyumen Oil and Gas Forum (TNF 2017), which took place on September 20-21 in the capital of Russia's leading oil producing entity, the Tyumen Region. He held two panel sessions, the topics of which were announced in the official program of the Forum as "Oil production under new conditions. Economy. Technologies. Environment" and "Modernization of the fuel and energy sector: Service. Innovation. Investments".
TNF-2017 is one of the five largest industrial events in Russia that annually attracts about two thousand guests. They are the representatives of competent federal ministries and agencies, regional authorities, as well as top managers of leading oil and gas companies, producers of oil and gas equipment and oilfield services, heads of scientific research organizations, industry experts and the media. The Head of VYGON Consulting Grigory Vygon acts as a moderator of key discussions of the forum for the second year: he held a plenary session at TNF 2016, which was devoted to import substitution in oil and gas technologies.
The first day plenary session of TNF 2017 covered economic, technological and environmental aspects of oil exploration and production under the new conditions. Minister of Natural Resources and Environment of the RF Sergey Donskoy, Deputy Governor of the Tyumen Region Vadim Shumkov, Deputy Chairman of the Board and First Deputy General Director of PJSC Gazprom Neft Vadim Yakovlev, Board Member and Senior Vice President for Oil and Gas Production of PJSC LUKOIL Azat Shamsuarov, President of Schlumberger in Russia and Central Asia Gokhan Saig, First Deputy General Director of OJSC Surgutneftegaz Alexander Bulanov, General Director of LLC RN Uvatneftegaz Evgeniy Zadorozhny took part in the discussion.
"Today we will discuss, first and foremost, the technologies of oil production. This topic is relevant not only because of the sanctions. Everyone understands that only the development of technologies will allow us to keep up with foreign competitors and even increase our presence on world oil markets. This is a challenge to the Russian oil and gas complex," stated Grigory Vygon in the opening of the plenary session.
In his speech, Head of the Ministry of Natural Resources of the Russian Federation Sergey Donskoy paid special attention to the creation of platforms for the development and implementation of modern technologies for prospecting, exploration and development of hard-to-recover hydrocarbon reserves. "The government has identified specific tasks and requirements for creating new field test sites. In order to implement such an approach, it is proposed to legislatively establish the creation of test sites as a new type of subsoil use, as well as the parameters for developing unconventional reserves," the minister said. Among other proposals are the introduction of a simplified procedure for issuing distributed reserves licenses for field test sites and the replacement of process schemes approval with a program for the development of technologies.
Sergey Donskoy stressed that development of digital technologies in hydrocarbons exploration and production must be continued with the priority placed on the application of process automation, big data tools and predictive analytics. "Progress in these areas is essential for the development of production technologies in the oil and gas industry. They allow to increase speed and improve accuracy of decision making by taking into account the interpretation of large amounts of data, reduce operating and capital expenditure. This will make it possible to increase the oil extraction factor of conventional reserves, to develop and implement the technology of extraction of HTR reserves more quickly," the minister said.
In furthering the discussion, Deputy Governor of the Tyumen Region Vadim Shumkov noted that, despite the fact that regions have no direct control over subsoil that holds hydrocarbon deposits, as well as the transfer of major tax deductions in the federal budget, entities of the Russian Federation have certain instruments of oil production support. That is, first of all, the creation of a favorable investment climate, including the provision of long-term tax benefits to companies for the development of low-yield deposits or any HTR oil reserves. Vadim Shumkov stressed that the region requires continuous activity and search for new forms of partnership between business and government, "since for every region oil production implies not just abstract budget contribution figures, but rather powerful development of social and transport infrastructure, growth of economic potential and predictability of the socio-economic situation."
Vadim Yakovlev spoke about the strategy of technological development currently being implemented by PJSC Gazprom Neft. "This work in the company is structured: 10 programs of technological development are approved, about 100 projects have already been launched. To date, we do not simply select turnkey solutions on the market; instead, we work together with leading technology partners to create the solutions that are fit for our conditions. For example, in accordance with our order class 8 icebreakers were produced for use in the Novoportovskoye field, they operate in shallow waters with ice thickness of about 2 m," the top manager said.
As for additional incentives for the development of HTR resources, Management Board Member of PJSC LUKOIL Azat Shamsuarov highlighted such mechanisms as state support for innovative science-intensive deposits development technologies, state-level coordination of business and academia, establishment of a domestic innovative methodologies database, reduction of export duty on imported equipment used in unconventional reserves development, the analogues of which are not yet produced in the Russian Federation, etc.
"Over the years, we have made significant investments in the Russian Federation, where the Schlumberger infrastructure is represented by more than 120 sites in all oil and gas producing regions. The company's contribution to the Russian economy has exceeded $ 4.5 billion over the past seven years. Despite the difficult situation associated with low oil prices, we continue to invest in the Russian economy," Schlumberger President for Russia and Central Asia Gokhan Saig noted.
When talking about the projects of OJSC "Surgutneftegaz" implemented in the Tyumen Region with the application of new technologies, Alexander Bulanov gave the following example: "Last year we launched Yuzhno-Nyurymskoye oil field in the Uvat district. It is now entering the initial development phase. We pay much attention to environmental safety. Two years ago we launched the GTPP and now we have reached 98% of the associated gas utilization level at this field. By the way, the GTPP is of domestic production."
The second day of the Forum was devoted to modernization and innovation in the oil and gas industry. Deputy Minister of Energy of the Russian Federation Kirill Molodtsov, Deputy Governor of the Tyumen Region Vadim Shumkov, Chairman of the Board of PJSC SIBUR Holding Dmitry Konov, founder and owner of the New Stream group of companies Dmitry Mazurov, Vice President of PJSC NK Rosneft Svetlana Rai, President of HMS Group Artem Molchanov, President of the Distributed Power Division of General Electric Group Carlos Lange, Vice President of Emerson in Europe Travis Hesket, President of DYNAenergetics Ian Graves discussed the issues in the plenary session.
Ministry of Energy of the Russian Federation forecasts an increase in extraction of hard-to-recover oil reserves in mainland Russia by 2035 by more than 2 times – up to 80 million tons per year, said Kirill Molodtsov when talking about the plans for innovative development of all segments of the oil and gas complex. "Priority is the involvement of hard-to-recover reserves, primarily the Bazhenov Formation, in the development, as well as stimulation of unconventional deposits development," Deputy Minister said. Mr. Molodtsov stressed that particular attention in the framework of import substitution program will be given to technologies related to HTR reserves extraction, primarily horizontal drilling and fracking, as well as development of domestic software for HTR reserves. Touching upon the oil refining sector, Kirill Molodtsov stated that oil refining volume reached 285 tons per year. "We continue to increase the depth of processing, continue to reduce the yield of dark petroleum products. By 2025, 128 oil refineries will be modernized," he said.
In his report, Deputy Minister also focused on the issues of technological development of oil and gas chemistry. "At the moment, the priority of both Ministry of Energy and Ministry of Industry, which oversees further redevelopment, is, first of all, the design of technologies for low-tonnage chemistry, support of these technologies, departure from basic polymers for special ones. This is the aim of the measures that we take, including those related to special investment contracts," Mr. Molodtsov said. "A document has been submitted to the government, according to which we propose to give Ministry of Energy the powers related to establishment of special investment contracts," he added.
In answering Grigory Vygon’s question about priority directions of innovative development of PJSC "SIBUR Holding", company head Dmitry Konov expressed the opinion that any industrial company will be much more "digital" in five to ten years. "But these technologies cannot just be ‘taken’. They need to be found, adapted and used correctly. Without this, an industrial company will not be successful in 5-10 years," he added. According to the entrepreneur, digital technologies can replace about ten percent of the current production segment of SIBUR. "Production takes about two thirds of our business. The remaining third – services, similar in fact to those of banks or mail. Industry will remain, but the means of production will change significantly. And while it's a question of survival for the service sector, it's an opportunity for development for industrial companies."
Returning to the topic of new technologies in downstream sector, the Head of New Stream Dmitry Mazurov recalled that last year the Antipinsky refinery launched an advanced oil refining unit. "There are players who are unscrupulous in the tax maneuver. There is a large number of counterfeits. Due to incomplete market unification, there is a number of participants who produce distillate and do not pay taxes. I think that next year there will be no such loophole, and we, those who have invested billions of dollars in Euro-class oil production, will not look back at the dumping of prices created by distilleries," Mr. Mazurov said.
"The era of simple production is over, never again will it be in demand," said the Head of New Stream. However, additional incentives are required for new production. "It is not possible for a privateer to start building a refinery today and achieve good performance with it," he summed up.
On September 20-21 an exhibition of innovative projects and companies operating in the oil and gas industry was held within the framework of TNF 2017. Guests of the exhibition demonstrated innovative technologies in the field of estimating mineral resources and rational use of subsoil resources. Among them was the software product of VYGON Consulting for economic expertise of project design documents, which is in the active development phase. It has wide functionality.
In particular, it will help the experts of the State Reserves Committee to conduct a detailed check of the prerequisites and standards, a comparative analysis of the feasibility of development options, an estimation of profitably recoverable reserves under various macroeconomic, price and tax conditions, and confirm correctness of the choice of recommended option.
For PDD developers, it is intended to become an indispensable tool for rapid assessment of profitably recoverable reserves when making technological and financial-economic changes, both at the stage of development of the project document and in the process of its harmonization in the State Reserves Committee.
Oil and gas companies and state bodies can use it for a wider range of tasks, for example, in a single minute it can assess the effectiveness of transition of any field to the excess profit tax with the demonstration of growth of profitably recoverable reserves, production of hydrocarbon resources, NPV and IRR of the investor, government revenues in the desired macroeconomic scenarios.
The video recording of the plenary sessions is available from the official website of TNF 2017 at http://oilgasforum.ru/tnf-2017/video/