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  Last Major Field Goes On Line: How Long Will Siberia's Gas Last?

Last Major Field Goes On Line How Long Will Siberia's Gas Last?

By Christian Wüst

Part 2: The Limits of Production

The abundance of natural gas acts as a tremendous incentive for consumption. Russians are wasteful when it comes to natural gas, the cheapest fossil fuel and the one that is least harmful to the climate, says E.on-Ruhrgas CEO Bergmann. But Western Europeans aren't exactly parsimonious in their use of the highly refined fuel, either. Russia exports roughly one-third of its natural gas, and Germany is its biggest customer.

According to official Russian figures, the country still has viable natural gas reserves of 48 trillion cubic meters (1.7 quadrillion cubic feet). At constant production levels, this would be enough to last almost to the end of the century. But where is this natural gas? Can it even be extracted? A skeptical Laherrere estimates existing reserves to be around 43 trillion cubic meters (1.5 quadrillion cubic feet), but believes that only a fraction of these reserves are in fact extractable.

"The days of easy gas production are gone," says Bernhard Schmidt, the head of exploration for the Wintershall Group. A subsidiary of chemical giant BASF, Kassel-based Wintershall is the only German company currently involved in the development of Gazprom fields.

To date, gas fields in western Siberia have only been tapped to depths of little more than 1,500 meters (4,921 feet). Developing these reserves dating from the mid-Cretaceous period is relatively easy for mining experts. Schmidt, a native Austrian, calls the process "skimming the sugar off the top."

Urengoy and Yamburg were precisely the kinds of sweet finds Schmidt is referring to -- enormous and easily exploited -- and they have been drained at rates corresponding to their accessibility. Both fields are already more than halfway depleted. If they were oil reserves, production would already have been discontinued. However, because gas is lighter than petroleum, up to 80 percent of the underground treasure can be extracted. But once that point is reached, little else can be done. Siberia's largest natural gas reserves are close to this point. Satellite fields like Zapolyarnoye and Yuzhno-Russkoye are still full, but much smaller.

There is more gas to be found, but only at far greater depths. The gas content is especially high in Lower Cretaceous sediments in the region, but they are located at 3,500 meters (11,480 feet) beneath the Earth's surface.

Gazprom, in a joint venture with Wintershall, is currently tapping the so-called Achimov Formation in the Urengoy field. Five wells have already been drilled, and production is expected to begin next year. The German partner's experience is apparently in high demand, because gas is extremely difficult to extract at this level.

Contrary to what some people might imagine, oil and gas fields do not consist of underground caverns. The fuel is found in porous rock formations (the word petroleum is derived from the Latin terms for rock, "petra," and oil, "oleum"), and must travel through the pores into the drilling pipe. In the deep Urengoy sediments, the rock is extremely solid and fine-pored. In addition, the gas has a high content of liquid condensate that can clog the pores. To overcome these difficulties, Wintershall plans to use a high-pressure technology known as "fracturing." In this process, the rock is fractured and sand is forced into the cracks.

Despite all of these efforts, deep drilling will never be as productive as extraction from upper layers of rock. The Achimov Formation of the Urengoy field will yield 2 trillion cubic meters (71 trillion cubic feet) at best, or barely a fifth of the upper-level reserves. Clearly these sorts of finds will not be sufficient to meet Russia's production targets.

These limitations have prompted Gazprom to explore potential new reserves. On the opposite end of the Ob River Delta, northwest of the current drilling areas, lies the Yamal Peninsula. Geologists have already explored the peninsula and have discovered formations indicating the presence of fields containing more than 10 trillion cubic meters (355 trillion cubic feet) of natural gas -- potentially another Urengoy.

But the gas exploration teams are operating in highly challenging terrain. "Yamal is probably the world's most difficult extraction region," says Roland Götz, an expert on Russia at the Berlin-based German Institute for International and Security Affairs. The peninsula is covered with countless rivers and lakes, completely impassible in the summer, and its coastlines are surrounded by shifting masses of pack ice that sometimes tear meter-deep gashes into the ocean floor, making it difficult, if not impossible, to lay pipelines.

Dashed lines representing the pipeline through the Kara Sea that the Russians hope to install within the next few years -- despite doubts from within the industry -- have been shown on maps for some time. But at a meeting on July 19, 2005, the Russian union of oil and gas pipeline builders argued that there are no known "engineering solutions" for the problems associated with building the pipeline.

Another danger, according to Götz, is that the peninsula, which is barely above sea level today, could "sink during the course of gas production and become completely submerged." Gazprom's prospecting creed of preserving the untouched natural environment on the Yamal Peninsula "for future generations" would sink along with it.

But the energy giant brushes off environmental and technological concerns. Within four years, says Gazprom spokesman Sergei Kupriyanov, the company will be pumping natural gas from the Bovanenkovo field on the Yamal Peninsula and shipping it through pipelines. Two years later, the company plans to follow suit in the offshore Shtokman field in the Barents Sea northeast of Murmansk.

Gazprom is also convinced that other reserves in the ice-covered sea off Yamal can be tapped. "Gazprom has such technologies and we don't expect any surprises," Kupriyanov says tersely.

Skeptics are not welcome in the natural gas emirates along the Arctic Circle. The region's wealth of natural resources has created a standard of living well above the national average: A mechanic working in a gas field makes a better living than many a university professor in Moscow.

Within three decades, a medium-sized city developed out of nothing in this icy wasteland. Today more than 100,000 people live in Novy Urengoy, a collection of drab tower blocks. One in two residents owns a car. Supermarkets sell tropical fruit and Californian wine, and the city boasts recreation centers, cinemas and theaters -- and almost everything belongs to the benevolent Gazprom.

Officials proudly take visitors on a tour of the company-owned luxury kindergarten -- complete with a swimming pool and an assembly hall. Well-behaved children in native dress sing songs that sound disconcerting coming from the mouths of five-year-olds, songs about full tanks of gasoline, warm living rooms and the many blessings of an invisible fuel: "The cold is bitter, it bites us on the nose -- but we are not afraid, because we have natural gas."

Elsewhere, economists specializing in natural resources are already conjuring up scenarios of potential shortages. Russia expert Götz, for example, analyzed what would happen if the start of production at the Shtokman and Yamal fields was delayed by a mere five years.

The consequences of this small delay, says Götz, would already be significant. "The natural gas supply in the regions that supply Europe would stagnate at 2005 levels until 2025 at least," he says. But who will have to do without gas in a world in which everyone wants economic growth?

For Götz, the answer is obvious. "A supply bottleneck will affect Russia first," he says. "Export is much more lucrative for Gazprom."

Translated from the German by Christopher Sultan