HOW IT WORKS
Russian Riches: Untapped Heavy Oil

Russian Riches – Untapped heavy oil For decades, Russia has been a major player on the global energy scene. At times, the vast country has even bested Saudi Arabia as the world's top oil producer. Throughout its modern history, the country has relied on its impressive yet largely mature supply of conventional oil. However, with increased world interest in unconventional resources, Russia has an opportunity for the future; technology development is rapidly advancing and the door to heavy and extra-heavy crude production is opening.

Abundant reserves
Finding a reliable estimate of Russia's proved reserves is not as straight forward as some countries, but audit reports for the major oil operators exist, and various parties do, regularly surmise how much of Russia's oil can be realistically recovered. BP and the Oil & Gas Journal are two sources that regularly perform this exercise in conjecture, and their estimates are often cited in government and industry reports. There is a roughly 13-billion-barrel gap between the two sources' figures: BP claims that the country's proved reserves amount to 79.4 billion barrels while OGJ contends the figure is 60 billion barrels.

The BP and OGJ data represented in the above figure make no distinction between conventional and unconventional oil. The U.S. Geological Survey (USGS), however, estimates that Russia has 13.4 billion barrels of technically recoverable heavy oil and 33.7 billion technically recoverable barrels of bitumen.

Production from the Russian Empire to the Russian Federation
Oil has been commercially produced in Russia and elsewhere in the former Soviet Union for more than 150 years. In fact, what is reputed to be the world's first oil well was drilled near Baku in present-day Azerbaijan in the late-1840s. Russia's oil industry expanded through the latter half of the 19th century to the point where, by 1900, the country was producing roughly one-third of the world's oil.

Production fell in the early part of the 1900s, but would return to a growth mode later in the 1920s and into the 1930s. By the onset of World War II oil production surpassed 600,000 b/d.

The USSR's oil industry would benefit from the introduction of more advanced technologies - particularly rotary drilling and the addition of pumps to aid recovery at wells. Indeed the world's first multilateral well was drilled in Bashkortostan in 1953, more than 40 years ahead of the West.

In the middle of the last century, production began to accelerate - particularly with the development of Russia's two most prolific oil-producing regions: the Volga-Ural and Western Siberia basins. These two "workhorses" are home to two of the world's largest oil fields - Romashkino in Volga-Ural and Samotlor in Western Siberia. With oil exports providing a good source of revenue, the government pushed new exploration and production opportunities. Oil production in the USSR would rise through the 1980s, reaching a peak of 12.5 million b/d in 1988.


Production numbers for the Soviet Union include non-Russian production from states that a now independent and are no longer included with Russian oil production numbers.

The focus during this time was on short-term production rather than long-term recovery, and therefore some fields were overproduced: As a result well productivity fell, reservoir pressures dropped, and water cut rose. In the mid-1990s production fell sharply - to a nadir of approximately 6 million b/d. More recently, Russia's crude production is once again climbing steadily.

From the Volga-Ural Basin to Eastern Siberia
The post-peak albeit prolific Volga-Ural Basin, located in the southern portion of European Russia, produces much of Russia's heavy, sour crude. Even after it is blended with light, sweet crude from Western Siberia, heavy, sour "Urals grade" crude from Romashkino and other Volga-Ural fields has a sulfur content of 2.5 percent. In contrast, the benchmark Brent crude has a sulfur content of 0.4 percent. As a result, Urals grade is more expensive to refine and commands a lower market price than Brent and other lighter crudes.

The Volga-Ural Basin also features the Melekess tar sands. Located in the massive Romashkino Field, the vast heavy oil accumulations are located in relatively shallow Permian strata - so shallow, in fact, that the low temperatures of the rocks in the formation contribute to the oil's viscosity. Presently uneconomic, the Melekess oil sands may nevertheless become part of Russia's proved reserves base given the right technological advances.

Russia has an estimated 246.1 billion barrels of natural bitumen in place. Less than 14 percent - 33.7 billion barrels - is considered technically recoverable, though. The remaining 212.4 billion barrels of bitumen cannot be realistically extracted because they exist either in numerous small deposits or in remote areas. Much of this bitumen occurs in the Olenik Highland, which is located in the Lena-Anabar Basin in remote Eastern Siberia.

A Largely Untapped Resource
Technology advances have been used in Russia to help increase production levels in conventional oil. Less common, however, are the specialized technologies needed to produce heavy- and extra-heavy crudes.

For instance, the heavy, sour oil from the Volga-Ural basin is not of sufficient quality for some refiners. Technologies that aid in the treatment of crude with high levels of paraffin and hydrogen sulfide would make the crude more marketable. In addition, technologies that aid in the development of bitumen could help the country tap into its ample supply of the resource. Furthermore, the steep production decline from major provinces such as the Volga-Ural Basin underscores the need to replace reserves.

In line with other heavy-oil rich countries, Russia has begun testing new thermal recovery methods, such as Steam Assisted Gravity Drainage (SAGD), for improving heavy oil extraction. These new technologies have the potential to help the country fully tap into its unconventional heavy oil and bitumen reserves. And that could have important and lasting effects on the future of the Russian energy industry and the world oil picture.

Matthew V. Veazey is the editor of Rigzone.com.

References show references