Sakhalin-1 Drilling to Commence This Month

Drilling operations will commence next week at the $4.6 billion Sakhalin-1 project located on Russia's pacific coast. According to Stephen Terni, project executive of Exxon Neftgas, production is expected to begin in 2005. The island's location north of Japan makes its development uniquely challenging in terms of technology, Terni said. "Sakhalin is remote, underdeveloped, earthquake-prone and frigid, with some sea approaches icebound part of the year. Recently, there were three 100-year winter storms in a row," he said.

The consortium has built a 22-story, onshore drilling rig that can drill horizontally as far as 7 miles to tap reserves located under the sea, which will prove useful when the coast is locked in ice. A 248-mile pipeline is being built to carry oil and natural gas to the Russian mainland. Reserves are estimated at 2.3 billion barrels of oil and 17 trillion cubic feet of natural gas.

The Sakhalin-1 consortium is led by Exxon Neftgas and other members are the Japanese company Sakhalin Oil and Gas Development Co., Ltd. (30 %), Indian company ONGC Videsh Ltd. (20 %) and two Russian companies, Sakhalinmorneftegas-Shelf (11.5 %) and RN-Astra (8.5 %).