2.2. Hydrocarbon Production and Reserves
Gazprom boasts a rich resource base and leads the world in terms of gas reserves. In 2019, the Group’s reserves replacement ratio stood at 1.11, i.e. consistently above 1 over the last 15 years. The Gazprom Group’s efforts to replenish its resource base are regulated by the Mineral Resources Base Development Program until 2040 and the Long-Term Development Program for 10 years.
As of December 31, 2019, Gazprom’s explored reserves of natural gas in accordance with the Russian classification (А+В1+С1) reached 34.9 tcm. Based on an independent evaluation of the resource base under the international PRMS standards, the Gazprom Group’s proven reserves of natural gas amounted to 17.7 tcm.
In 2019, the Gazprom Group’s А+B1+C1 reserves in Russia grew by 556.7 bcm owing to geological prospecting and exploration (GPE). The key regions for GPE were the Yamal-Nenets Autonomous Area, Eastern Siberia, and the Far East, as well as Russian seas. The growth of gas reserves was mainly attributable to the Kruzenshternskoye field on the Kara Sea shelf and its coastal area in the Yamal-Nenets Autonomous Area, as well as to the Dinkov and Nyarmeyskoye fields on the Kara Sea shelf. In 2019, the GPE operations in the gas business covered 144 license blocks, including 22 offshore areas. The expenses for GPE (excluding UGS) amounted to RUB 68.7 billionPJSC Gazprom and its subsidiaries.
For more details on the Gazprom Group’s gas reserves see pages 12–21 of the Gazprom in Figures 2015–2019 Factbook and pages 82–86 of the PJSC Gazprom Annual Report 2019
The ongoing Program for Development of Unconventional and Hard-to-Recover Gas Resources of PJSC Gazprom includes an evaluation of the resource base, analysis of existing and prospective production technologies, and rationale behind the choice of priority areas for exploration and production at unconventional gas deposits. As part of the Program, 2019 saw continued efforts to produce coal-bed methane in the Kemerovo Region, with the Naryksko-Ostashkinskoye field yielding 2.2 mcm of methane. Everything is ready for building three exploration well clusters to test and prove the high potential of coal-bed methane production using new well construction and field development technologies.
In 2019, the Gazprom Group’s production of natural and associated petroleum gas reached 500.1 bcm (501.2 bcm including the Group’s share in production of organizations in which it has investments classified as joint operations), which is 0.5% or 2.5 bcm more than in 2018.
Gazprom Group’s gas production in the Russian Federation, 2016–2019 (excluding the organizations in which the Group has investments classified as joint operations)
For more details on the Gazprom Group’s gas production centers see pages 86–88 of the PJSC Gazprom Annual Report 2019 and Pages 10–11, 32–37 of the Gazprom in Figures 2015–2019 Factbook
In 2020, Gazprom plans to increase its gas reserves through GPE by at least 467.8 bcm. The growth of reserves will be mainly attributable to the Kara Sea shelf, namely, to the Leningradskoye and 75 Years of Victory (75 Let Pobedy) fields. The GPE expenses (excluding UGS) are expected to reach RUB 60.1 billionPJSC Gazprom and its subsidiaries.
To ensure the required gas production volumes in the medium term, PJSC Gazprom will continue developing the existing fields and ramping up their capacity to the respective design levels in a more efficient way, as well as establishing new gas production centers.
Questions from Stakeholders
Does the Gazprom Group monitor gas emissions related to the melting of permafrost formations around the wells? What do you do to control and minimize this phenomenon?
Permafrost melting around the wells causes the accumulated intrapermafrost gas to release. Unlike gas in producing horizons, intrapermafrost gas contains considerable nitrogen impurities, along with a different balance of light and heavy carbon isotopes. In the Yamal fields, this kind of gas emerges from a depth of up to 180 meters posing risks to the industrial safety of facilities.
We constantly monitor the condition of permafrost rocks containing gas wells and intrapermafrost gas, in particular at the Bovanenkovskoye field. Research shows that seasonal vapor-liquid cooling systems and vacuum insulated tubing (VIT) can significantly mitigate the risks of permafrost melting.
Currently, 349 wells of the Bovanenkovskoye OGCF are equipped with VIT operating at a depth of 50 m. The plan for 2021–2024 is to build 178 gas wells with VIT to be placed at a depth of 150 m. We implemented a number of temperature-stabilizing solutions that helped prevent well pads from sinking, stop the development of wellhead cavings and behind-casing gas shows, and reduce excessive load on well structures.
Along with VIT and seasonal cooling systems, the Kharasaveyskoye GCF uses conductor casing pipes with polyurethane-foam heat insulation (PU foam thermocases) operating at a depth of 40 m. The VIT running depth is set to reach 150 m.
As of the end of December 2019, the Gazprom Group’s proven reserves of oil and gas condensate in accordance with the international PRMS standards amounted to 707.5 mmt and 730.2 mmt, respectively. In accordance with the Russian classification (А+В1+С1), explored reserves stood at 2,005.7 mmt of oil and 1,569.7 mmt of gas condensate.
In 2019, owing to GPE, PJSC Gazprom expanded its А+B1+C1 liquid hydrocarbon reserves in Russia by 11.7 mmt of gas condensate and 29.0 mmt of oil. Gazprom Neft’s GPE expenses amounted to RUB 53.5 billion.
Unconventional and hard-to-recover oil reserves (the Bazhenov formation, the Achimov, Domanic, and Paleozoic deposits) located in hardly-accessible areas play an important role in the replenishment of the liquid hydrocarbon reserves. The hard-to-recover reserves account for nearly 70% of Gazprom Neft’s portfolio. Such reserves will only pay off if high-tech horizontal and multilateral wells are used.
For more details on the Gazprom Group’s liquid hydrocarbon reserves and resource base replenishment see pages 12–21 of the Gazprom in Figures 2015–2019 Factbook and pages 82–86 of the PJSC Gazprom Annual Report 2019
Questions from Stakeholders
At which fields does the Gazprom Group perform geo-ecological monitoring of seismic activity?
The Group’s own seismic monitoring networks are up and running at three fields, namely, the Orenburgskoye, Astrakhanskoye, and Kirinskoye fields. The Naryksko-Ostashkinskoye and Kovyktinskoye fields rely on information from a regional network that monitors for technogenic seismic events mainly caused by coal mining.
2019 saw no material seismic events reported at the above fields.
In 2019, the Gazprom Group produced 57.5 mmt of liquid hydrocarbonsExcluding the Group’s share in production of organizations where it has investments classified as joint operations. Oil production amounted to 40.8 mmt (48.0 mmt including the Group’s share in production of organizations where it has investments classified as joint operations), which is slightly less than in 2018. Gas condensate production reached 16.7 mmt, which is 4.9% more than in 2018.
For more details on the Gazprom Group’s oil and gas condensate production see pages 88–90 of the PJSC Gazprom Annual Report 2019
* Excluding the Group’s share in production of organizations where it has investments classified as joint operations.
The Group will expand its resource base and develop hard-to-recover and unconventional deposits of liquid hydrocarbons. In 2020, the plan is to increase liquid hydrocarbons reserves by 13.0 mmt through GPE. It is planned to continue using innovative digital technologies to increase the potential of the existing active fields.