Sakhalin Energy Drills First Offshore Gas Wells in Russia

Sakhalin Energy Investment Company commenced drilling of first wells from the Lunskoye-A platform.

This platform will be the first gas producing offshore platform in Russia, located in Lunskoye gas and condensate field some 15 kilometers offshore North-Eastern Sakhalin. The platform is designed for a year-round operation in a harsh climate and withstands rough seas, severe ice conditions and high seismic activity.

Sakhalin Energy's CEO Ian Craig said: "2007 is a pivotal year in bringing our project on stream. The commencement of drilling of the first wells from Lunskoye-A platform is a major development milestone. Lunskoye-A will provide the main volume of gas for LNG production, opening the new energy markets in Asia-Pacific and North America for Russia. Other key milestones of this year include the commissioning of Russia's first LNG plant, installation of the PA-B topsides and the completion, testing and commissioning of the pipelines. "

The plan for 2007 is to drill two wells – one for re-injection of drill cuttings and one for gas production. Overall Lunskoye-A Phase 2 drilling program comprises 14 wells, including a drill cuttings re-injection well, an oil rim appraisal well, a produced water re-injection well and 11 gas producers.

Lunskoye-A will operate with zero drilling discharge to the environment, which means that neither drilling waste, nor drilling muds will be discharged overboard. The first well to be drilled will be a special well for re-injection of drill cuttings that will allow safe disposal of all drilling waste.

The drilling waste from the Lunskoye-A CRI well will be transported to and re-injected into a well on the Molikpaq platform, which has practiced the zero drilling discharge approach since May 2004. A similar approach will also be used on the PA-B platform.