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. Last Updated: 07/27/2016

TNK-BP Digs Deep to Prop Up Flagging Output

Itar-TassThe rigs at the Samotlor field are built on a layer of gravel and sand to prevent them from sinking into the marshland.
LAKE SAMOTLOR, Tyumen Region -- A steel rod hummed and rotated strenuously, drilling through the last meters of hard rock to hit oil that would maintain production at BP's core Russian field.

"It's been drilling for 28 days," said Sergei Romashenkov, service leader with Halliburton, the U.S. contractor that does the work. "There's about two more hours left."

Drilling rig No. 4113, like all those in the area of Lake Samotlor in the Tyumen region, towers on a cushion of white sand and gray gravel that prevents it from sinking into marshland and from being flooded.

It's part of an effort by TNK-BP, a joint venture between BP and its Russian partners, to keep output at current levels and eventually raise it to new highs through bigger investment and better technology.

The Samotlor field yields just under half of the company's output, company executives said. Its oil, discovered by Soviet engineers in 1965, lies mostly under the lake and surrounding swampland.

A grid of access roads -- built on sand-and-gravel cushions -- traverses the lake to link oil wells to the shore. The white color of the sand gives a bizarre air of cleanness to the area, despite occasional cracked concrete slabs and rusting pipes discarded into the rough and muddy water.

Samotlor is expected to pump 240 million barrels this year, a decline of 2 million barrels from last year, Sergei Gorbunov, a local TNK-BP manager, told reporters on a recent press trip organized by the company.

TNK-BP's production target for 2007 is 529 million barrels, compared with 519 million last year, which would maintain the company as the country's third-largest oil producer. The 2006 figure excludes the output by a unit that TNK-BP sold last year, Udmurtneft.

In terms of production growth this year, TNK-BP lags behind Rosneft and LUKoil, the largest and second-largest oil producers, respectively, but it fares better than No. 4 producer Surgutneftegaz, which saw its output decline.

TNK-BP, whose license for Samotlor runs until 2038, is looking at three ways to maintain production here and at its other fields: Step-outs from known oil-producing areas, better drilling services and three-dimensional seismic surveys.

"A portion of employees from BP work on this in our company," said Sergei Brezitsky, TNK-BP's vice president for exploration and production, by telephone in Moscow.

Applying BP technology and expertise to brownfield investment, where the company has a long, successful record, is "obviously, one of the benefits of having BP as your partner," Tom Ellacott, an analyst at oil industry consultant Wood Mackenzie, said by telephone from London.

But the employment of Western managers is perhaps the only thing that sets TNK-BP apart from its main rivals, which also run the latest technology to boost output at their mature fields.

A step-out in the south of Samotlor, where drilling rig No. 4113 worked, comprised another key to maintaining production: State-of-the-art equipment from Halliburton in the form of a bright red truck.

"There are just two of them in the world: One here and the other in Texas," said Igor Tsykin, a senior local manager, proudly pointing to the truck-mounted Elite Cementing Unit used to reinforce oil wells before they start production. "No other Russian company has this."

In an effort to increase -- rather than maintain -- output, TNK-BP applied 3D seismic surveys at a complicated field, Kamennoye, which had largely been untapped until this year. Demand for the technology, which uses sound waves to locate oil traps, exploded in Russia this year, Brezitsky said.

Discovered in the 1960s, the Tyumen region field used to produce too many dry wells, but it has been transformed into TNK-BP's fastest growing field in terms of production in the past months, Brezitsky said.

Rosneft, the country's top oil producer since it acquired the bulk of bankrupt oil firm Yukos' assets, said it also employed new technology for its mature fields and new developments, such as Vankor, which is expected to come online next year.

"All companies -- both small and large ones -- use 3D seismic surveys," company spokesman Nikolai Manvelov said. "All those that want to find oil."