From Gulag to High-Tech Fields

ReutersRosneft workers operating machinery at the Vankor oil field in temperatures of about minus 40 degrees Celsius.
VANKOR FIELD, Krasnoyarsk Region -- Half a century ago, Josef Stalin banished his foes to labor camps in east Siberia. Now, volunteers are lining up to drill the frozen wastelands for their vast reserves of oil.

A 130-strong team of drillers, hardened frontiersmen that live in barracks set in sparse fir forests, have so far drilled 12 exploration wells.

Set in the frozen tundra, the Vankor field has recoverable reserves of 2.5 billion barrels, enough to supply booming Asian markets for decades to come.

"The project stands out because of its gigantic reserves, the severe climate we are working in and the complex technology that we will use," said Yevgeny Popov, general director of state oil firm Rosneft's VankorNeft unit.

The country's rulers long used the desolate area for banishing their enemies, and Stalin himself was exiled to the neighboring village of Kureika when he fought against the Tsarist government at the beginning of the last century. Later, he imprisoned his own opponents in camps in the area, where the weak glare of the low sun gives little respite from the biting cold.

Today's oilmen live in more comfort. They work one month on, one month off, and replace each other several times a day to cope with the freezing temperatures.

"It's all right, you can say it's warm today. It's almost windless," said one, working at a well on a November morning of minus 42 degrees Celsius.

As the winter Arctic sun rises above the horizon for only a few hours per day, oil drillers are often working under artificial light.

They hope to pump the field's first oil in August 2008, with peak production of 660,000 barrels per day expected in 2014. That would be enough to meet one-tenth of China's consumption last year, or more than 3 percent of U.S. consumption.

The flow rate from the first wells was so great that the results almost tripled the field's estimated reserves to 2.5 billion barrels from an initial 912.5 million barrels. Advanced drilling technology is expected to add another 474.5 million barrels. To reduce the number of wells and increase efficiency, most of the 200 or more production wells will be drilled horizontally. Around 60 percent will be "smart wells" equipped with sensors to monitor oil flow.

As Vankor's production grows, Rosneft also plans to send some crude by rail to the Pacific coast for shipping to Japan, South Korea and other Asian markets.

But first, Rosneft has to link up to the eastward pipeline, due to be completed in the end of 2008. Most of the 540-kilometer connecting pipeline from Vankor will be above ground, since its route runs across the Siberian permafrost.

Rosneft has no worries about people stealing its oil.

"Who is going to tap the pipeline illegally? Nobody lives here except for bears and deer," chief engineer Alexander Nazarenko said.

The field lies beyond the Arctic Circle in the north of the Krasnoyarsk region, 140 kilometers from the nearest town, Igarka.

Some of the town's 7,000 inhabitants are gradually moving away under a government resettlement program.

But Rosneft's migration is in the other direction. Its high salaries attract workers from all over the country, while many of VankorNeft's managers have had long careers in Rosneft.

"If you come here in spring, you will see quite a different picture with a new settlement for 1,200 workers," Popov said.

Rosneft's contractors have brought some 25 brand new trailers, equipping them with a sauna, a medical center and a relaxation room.

This would still not be enough to persuade a worker from comfortable west Siberian towns to move to the east Siberian desert, so Rosneft has to pay wages above the industry's average.

Popov has worked for 32 years in the country's oil industry and used to be first deputy head of Purneftegaz, Rosneft's second-largest production unit. But he said he had no regrets about being sent to Siberia.

"Not every oilman is lucky enough to have to grow a project like this from the very beginning. I have started many projects, but never something of this scale," he said.