Russ Oil-Gas

NOVY URENGOY - MOSCOW. (Vasily Zybkov, RIA Novosti economic commentator) - A well-paved road leads north in the direction of Yamburg. A speed limit does not allow a modern bus to exceed 80 km per hour. But this is understandable because every day buses deliver builders, gas and road workers to their job sites in the radius of up to 100 km from Urengoy. In more remote places, they work in weekly or even monthly shifts. All in all, Gazprom has an 18,000-strong army of workers here. The view outside is like a still from a film: the loden forest tundra with feeble birch trees, small lakes, creeks and endless marshlands. A two-month arctic summer has just started. The more northward, the scantier the flora is. It is gradually replaced with snowdrifts in roadside ditches and ice-covered lakes. Local nomads - Nenets and Selkups - are not there, either. Only once a small herd of deer ran past. Well beyond the Arctic Circle there appear high permafrost-created mounds, some of them as high as a ten-storey house. The locals do not know what they are called, but they look impressive. Everywhere there are piles of gas and oil pipelines of different diameter, high transmission lines along the track, hundreds of bright yellow stop cocks, Cyclopean wells, burning gas torches, compressor stations, and plants, which process gas before it is pumped into the pipes. A one-track railway leading to Yamburg runs parallel to the highway. Orange, blue and yellow houses are instant eye-catchers. All buildings look gigantic in the empty and table-flat tundra. There are no people anywhere. But the road is not idle - the bus catches up with pipe carriers, drive trailer trucks, dumpers, and some special-purpose vehicles. There are rutted tracks of cats by both sides of the highway. There are no cars at all, although we had been told that there were parking problems in Novy Urengoy. The number of cars has increased many times over lately. All the roads in the sub-arctic tundra near Urengoy belong to Gazprom - 600 km of them are paved, and double the number unpaved. Private individuals and other organizations are not allowed to use them. By and by one gets accustomed to the unreal industrial landscape under the low northern skies, which periodically produce snow or drizzle. I suddenly realize that I have been on a bus for three hours, passing through a huge desolate workshop. But if this is just one workshop, how big is Gazprom? We are heading for the northernmost deposit, Pestsovoye, which is operated by Urengoygazprom. It is 300 km away from the Kara Sea or the Gulf of Ob. Out of 61 diamonds in Gazprom's crown, this is the biggest and most valuable. Before the Zapolyarnoye deposit was commissioned, Urengoy was Gazprom's number one producer of gas for a long time. In different years its share in the annual production of gas fluctuated between 25% and 60% (140 billion cubic meters in 2005, and 304 billion cubic meters in 1987). This year the world's biggest oil and gas condensate deposit celebrated 40 years since it was discovered. During the years of its operation, it has produced more than six trillion cubic meters of natural gas (out of 11 trillion cubic meters, which were proven). The Pestsovoye deposit is Urengoygazprom's trump card for the near future. It is one of Gazprom's seven big producing facilities, which have been commissioned recently. It has more than 120 operational wells (20 more will be placed on production later). The deposit's annual capacity is 27.5 billion cubic meters of gas. This is how much gas Russia exported to France and Italy last year. Its gas treatment plant (UKPT-16) is the newest and most powerful. It has the most up-to-date equipment, and a price tag of $1.5 billion. "Two thirds of this sum are the costs of the transport infrastructure - roads and pipelines, hotels and other facilities for workers and engineers," explained deputy director Dmitry Nureyev. Even without this remark, it is clear that the further north a deposit is, the more expensive its gas. Nureyev thinks that it will take the local gas about two weeks to cover several thousand kilometers and reach Moscow. In another fortnight it will get to France and Germany. It is quite probable that it will go into the North European Gas Pipeline, which is under construction now. The gas treatment plant employs several dozen people in one shift. Alcohol ban is enforced in the local settlement. Maintenance workers make a $1,000 a month, and the deputy director $3,000. A drilling foreman and his assistant get $2,000 each. Many want to get these jobs, so the administration can choose. The gas-treatment plant has a very comfortable hotel, and a big well-equipped gym. Labor is arduous, and the conditions for rest and leisure must be adequate. I have been to the North several times, I was an explorer myself, and lived in sub-arctic towns and settlements with barracks and trailers downtown. Everything was temporary and hopeless. People lived in line with the in-and-out principle. They came to make money and returned home. These towns were phantoms without a future, and without the past - there were no old people or cemeteries. In Novy Urengoy I've seen a different Russian northern city for the first time. It does not evoke a sad feeling of would-be parting. This city has comfortable houses, numerous shops, and a ramified network of social facilities. It has 21 schools, affiliates of colleges and vocational schools, and a powerful industry (even without Urengoygazprom). The construction of a chemical plant is now on the agenda. It will produce 300,000 tons of laminated and granulated polyethylene, and will meet a third of the domestic demand. A no less promising project is an LNG plant. Liquefied natural gas is an amazing and very valuable by-product. It has half the weight of petroleum, although its specific heat is 12% higher, and its octane number is 15% bigger. LNG occupies 85% in the energy balance of Japan, and 25% in that of the United States. Russia is now completing in Sakhalin the construction of what would be one of the world's biggest LNG plants with a capacity of about 10 million tons of LNG a year. Novy Urengoy is the first city in the Far North to have launched the production of diesel fuel, LNG, and low-octane petroleum from gas condensate. Oleg Obukhov, chief process engineer of the gas condensate processing plant said that after adjustments for inflation, the plant would now cost $2.5 billion. Pipelines deliver these valuable products to a petrochemical plant in Tyumen. Novy Urengoy is a bridgehead for the further onslaught of geologists and gas workers on the bleak North. It is abundantly clear that the huge deposits of the sub-arctic regions and the arctic shelf of the Barents and Kara seas will be the source of Gazprom's future wealth. By the year 2030 its reserves will grow by 14 trillion cubic meters from these deposits alone to reach an astronomical 29.1 trillion cubic meters of gas. By the same time Russia's arctic regions will produce more than 180 billion cubic meters of gas and 11 million tons of oil per year. Now the Russian North has a future - both for hydrocarbons and for people.