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Tuesday, September 25, 2007

Home Shell Gets Viscous with Tatneft

Sep. 25, 2007 - Kommersant - The Anglo-Dutch Shell Oil Co. has begun its third production project in Russia. On Thursday, Tatneft plans to sign an agreement with Shell forming a joint venture to develop shale oil deposits in Tatarstan. There are 12 such deposits known in the Cheremshano-Bastryksky licensed zone in Tatarstan with a total recoverable reserves of 26 million tons. Tatneft expects the joint venture to produce 1.5 million tons of shale oil per year by 2017. Shell produces 2.5 percent of the world's oil and 3 percent of the world's natural gas. It owns 27.5 percent of shares in Sakhalin Energy, operator of the Sakhalin 2 project; 50 percent of Salym Petroleum Development, the project to develop the eponymous deposits; 27 filling stations in Moscow and St. Petersburg; and 50 percent of Shell and Aerofuels, which fuels airplanes at Domodedovo Airport in Moscow. Salym Petroleum Development is expected to produce 4 million tons of oil this year, and Sakhalin should produce around that amount as well. Shell already produces shale oil in a joint venture with Chevron and Western Oil Sands LP in which Shell owns 60 percent. They produce 7.5 tons of shale oil per year from oil-bearing sands in Canada as part of the Athabasca Oil Sands Project. The company expect to boost production to 12.5 million tons per year by 2010 and to meet 10 percent of Canada's oil needs with it. The 12 deposits in Tatarstan had long been considered unprofitable. That changed when Tatneft succeeded in having them recategorized as high-viscosity oil deposits, freeing them from the mineral use tax under a Federal Mineral Use Agency (Rosnedra) decision earlier this year. Technological developments have also lowered the cost of shale oil production in recent years. Tatarstan is a particularly promising site for its production because its deposits are located at a depth of 80-200 m. instead of 1-1.5 km., which is usual throughout the world.

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