Our goal is to increase oil production from Bazhen by 30 times.

A unique facility, the Bazhenovsky polygon, will start operating in the district. Scientists from all over Russia will be able to test experimental methods of developing the Bazhenov formation. We asked Alexandr Shpilman, director of the V. I. Shpilman Research and Analytical Center for Sustainable Subsoil Use, how this project is being implemented today, what results are planned in case of successful research, and how they will affect the oil production of the Okrug.
- When did the idea of creating such a unique facility as the Bazhenovsky landfill in Yugra appear?
- At the meeting devoted to the development of hard-to-recover reserves chaired by Valentina Matvienko, the Speaker of the Federation Council, Governor Natalia Komarova openly declared for the first time that the Government of the okrug and the Centre of rational subsoil use had started the construction of Bazhenovsky polygon. In fact, this event should be regarded as a starting point, although, of course, talks about the possibility of creating such landfills have been going on for a long time. The necessity of their creation was substantiated during last 5-10 years. But this task was never set in concrete terms. And now we have begun the direct implementation of the project on the instructions of Natalia Vladimirovna.
- At what stage is the work to create the landfill now?
- All these months we have been doing mainly organizational work. At the first stage we decided where this landfill should be organized. This required geological studies, evaluation of oil-bearing systems. Next, we decided how to organize a polygon - a program of works was required.
- And where will it be located?
- The polygon is 270 kilometers to the north of Khanty-Mansiysk. This is an understudied territory. However this is the area where a lot of oil companies are working, and where they are conducting experiments to test the thermal-hazardous impact on the Bazhenov formation.
- When will the first well be drilled?
- A lot of time passes from the idea to drill the well to the drilling. The legal issues alone take at least a year: environmental approvals, work safety, and land acquisition. I hope we will finish drilling by summer.
- The preparatory period is very long and includes a lot of consultations and approvals. Did you have someone to learn from?
- No, we were pioneers. Nobody had created such polygons before us, so we had to do everything ourselves. Our program of initial geological works was considered by the scientific council, and it was decided that it could be implemented. Then an important meeting was held in Khanty-Mansiysk attended not only by the Governor, but also by the heads of oil companies and the Minister of Natural Resources. The agreement on cooperation between the region and the ministry was signed during the meeting, one of the most important provisions of which was the support for the creation of a scientific polygon.
At one of the meetings it was decided that the first thing to do was to drill the wells. To do this in a well-known area is not a big problem. But in our case, the difficulties were related to choosing the optimal set of geophysical surveys, which would provide informativeness specifically for the Bazhenov deposits. Some geophysical methods do not work at Bazhenov. This is a much more geologically complex object that requires unique studies. So now we are in the process of detailing this program.
The day before we had a meeting in Khanty-Mansiysk chaired by Deputy Governor Sergei Polukeyev with leading experts from all over Russia to choose the optimal set of logging surveys. We decided which probes to use and which methods to use. As a result, we came up with the optimal set, from our point of view.
- Do you have any experience of creating such research facilities abroad?
- In the U.S., a government program was launched when they had an energy crisis, and they went in several directions at once. Test sites were created. Powerful institutes and scientific centers were involved in the research, and after a few years they came to the conclusion that oil shale is the most promising direction.
- Will this project be financed from the federal budget?
- Yes, the initial funding.
- And then?
- It is assumed that a consortium of interested enterprises will emerge, and all the research results will be available to the members of this consortium. This consortium will organize and finance the further work. Because investing state funds into oil production is not permitted by the law.
- The main idea of creating the testing ground is for the scientific community to find new methods of developing the Bazhenov formation. But why is the oil companies' research in this field not enough?
- Oil companies are very closed in the field of Bazhenov studies.
- Are they afraid of competition?
- Of course. The companies think it is their achievement.
We want to stimulate a lot of companies - big, small, medium-sized companies - that are willing to take the risk of developing shale oil.
- What is the advantage of state-supported research compared to the oil industry's own research?
- We can try quite complicated methods in terms of results. It is much more difficult for an oil company to do that. It has to clearly develop a project, determine the production, and accept this project in the regulatory bodies. And deviations from the project are criminally punishable. We declare that the main goal is not to produce oil, but to develop and test technologies. We will also have to go before the commissions, but we can explain that the goal is approbation of technologies. So we will have milder conditions and the opportunity to test more sophisticated methods.
In addition, there is another nuance. All of Bazhen is similar in structure - it is a special dense rock. But, on the other hand, it is very different. It may contain more organic matter, it may contain less, and so on. The consortium will include only interested companies, which have their own sites with Bazhen, in order to exchange geological information.
Besides, I think that the oilmen will also benefit from the experience of setting up a polygon. When we go through the organizational part, the companies, having evaluated our experience, may declare some of their areas as a polygon. We, as a state enterprise, work for everybody. So, if we give the experience to the companies, and they can develop more and further because of this, it will be great - they will pay more taxes and hire more people to work.
- How could the situation with oil production change if research at this landfill goes well?
- We think that if the work goes well, if the price of oil is not too low, in about 10-15 years we may reach the level of 20-30 million tons a year. These are the most general estimates. Now we produce about 700,000 tonnes a year. Our goal is to increase oil production from Bazhen by 30 times.
- Will the production process become cheaper?
- Of course, once they start drilling a lot. The same thing happened in the US: as soon as they started drilling thousands of wells, the cost of drilling and hydraulic fracturing fell several times.
- I can't help but ask a question that many of our readers are concerned about today. Can the oil community predict oil prices in the current environment?
- Alas, oil prices are now in the realm of politics. There are certain price fluctuations that can be predicted. When oil was $100 a barrel, they used to forecast it would be $110, and they were right. But no one was able to predict the crisis falling to 60, 50 or even 48... No one predicted it, because both political and economic factors came into play. Similarly, no one predicted a sharp upward spike when the Iraq war started. Well, who can predict wars, major accidents, disasters? Unfortunately, you can't predict all that, but it all affects prices.
This is not the first time the industry has experienced something like this. The price of oil fell to $15 in 1998, and to $38 in 2008. Some went bankrupt, some didn't. We will survive this situation, too. Oil is being extracted from 100 thousand wells, they are not going anywhere. The volume of extraction will probably go down a bit, but it will not be a catastrophe.

By the way:
According to Alexander Shpilman, Ugra State University has a very strong chemical school. The expert said that the center for rational subsoil use will actively cooperate with Khanty-Mansiysk chemists in the work at the Bazhenov test site. "The cooperation with the training centers was also laid due to the initiative of Natalia Komarova. Last year in Moscow there was a meeting at the Presidium of the Russian Academy of Sciences, where an agreement on cooperation between the district and the Russian Academy of Sciences was signed." One of the areas of this agreement is the development of shale oil. "The fact that Natalya Vladimirovna then decided to rely on fundamental science is very correct, because the RAS base is very powerful," Alexander Spielman believes.