Shale Gas News and Information
Gazprom and fracking: Two faced or two sided?
- Written by Nick Grealy
- Published: 05 December 2011
In any large organisation it's only natural to expect that one hand doesn't always know what the other is doing. On the one hand a few weeks back:
Asked if development of shale gas resources threatened Russia’s dominance of Europe’s energy market, Mr Putin grabbed a notepad to draw diagrams of how “fracking” – the method used to extract such gas – could damage the environment. He also denounced moves by Brussels that would force Russia’s Gazprom energy group to divest pipelines it owns in the EU.
But thanks to the Internet, we can also see that Premier Putin is not in full possession of the facts. Gazprom is a very big organisation, almost as big as the KGB used to be, so perhaps he was simply misinformed. How bad can fracking be if Gazprom was using it to extract oil as far back as 2007:
Hydraulic fracturing is considered one of the most effective oil recovery enhancement methods, however for every admirer there is a critic blaming it for damage to wells and harm to the environment.
Regardless, in Russia, it has been gaining ground rapidly with Gazprom Neft specialists stating that Russia is certainly one of the largest consumers of this service worldwide with the technique used to intensify oil recovery.
This isn't about gas, it's about the much more profitable oil
"Fracturing and horizontal drilling/sidetracking are currently the most used technologies to increase production rates and recovery in Russia," says Chief Engineer of Pumping and Stimulation Department of PetroAlliance Max Mukidjam. "In other areas fracturing is sometimes the only method to stimulate well production."
Hydraulic fracturing is classified as a well conditioning method, however we can consider it a recovery increase technology along with reagent and cleaning system injections," comments general director of service company CATConeft Alexander Prediger, "the usage of frac in Russia has seen skyrocketing growth."
And the reason for that, according to the service companies, lies within the same reason as the oil industry boom we've seen over the past years. "Oil prices increase lies within the realm of economics, it did indeed affect this industry," continues Prediger, "these economic trends made using frac on low profitable wells commercially feasible."
"When the oil prices are high, the pay-out time of a fracturing treatment is shorter, and the use of fracturing is thus more justified economically," explains Max Mukidjam. This comes in direct contradiction with arguments that hydraulic fracturing actually damages wells making it impossible to recover the deep reserves by deforming the reservoir and blocking access to oil containing pores. Industry experts have an answer for that as well.
So Gazprom has a choice. Ban it for gas but keep it for oil? Where do they get the real money? Another point is that companies like Lukoil, Novatek, TNK BP etc that produce oil are surely using the same technology to produce money not only for Russia but for themselves as oil, unlike gas, can be exported outside of state monopolies. But is it bad for the environment? Gazprom Neft have considered that too:
"If environment means something more fundamental than just the area around the well, such as layers and ground formations, we'll find it confusing to even suppose that frac can be damaging to those," says Korolev
He's confused? Join the club.