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. Last Updated: 07/27/2016

Shtokman Field Under Iceberg Threat

Itar-TassIcebergs in the Barents Sea, pictured above, could stop or increase the cost of Gazprom's Shtokman gas project.
The Shtokman gas field, one of the world's most challenging offshore projects, will face even greater problems as global warming unleashes vast icebergs into the Arctic, a senior scientist says.

Even if icebergs are unlikely to halt the world's largest single energy development as the global hunger for resources grows, they would make the $30 billion-plus project by Gazprom yet more expensive.

"Our studies show that, as the Arctic climate gets milder, the risks of huge iceberg formation and ice storms in the Barents Sea will grow significantly by 2015," said Alexander Frolov, deputy head of the Federal Meteorological and Environmental Monitoring Service.

"When we talk about such a large project as Shtokman, we can't just ignore these risks," he said.

Gazprom, the world's largest gas producer and supplier of one-quarter of Europe's needs, says it realized that Shtokman would be one of the world's most tough and costly developments immediately after discovering the field in 1988.

Located 550 kilometers from the shore, the field cannot be reached by helicopter from continental bases. With water depths of 600 meters, installing a platform in the stormy sea will be hard. Freezing winds and six months of winter darkness add to the many challenges.

The stakes are high, as the field contains more than enough gas to supply the world for a year.

The field was meant to come on stream in 2003, but its launch has been repeatedly postponed due to a lack of funds and Gazprom's inability to agree with Western partners.

Analysts had expected a breakthrough in the development last year, when Gazprom came close to teaming up with U.S. Chevron and ConocoPhillips, Norway's Statoil and Norsk Hydro and France's Total.

But the deal collapsed amid what experts said was the cooling of political relations between Moscow and Washington and the Kremlin's unwillingness to share the country's natural resources.

Gazprom has resumed talks with the same partners, this time to bring them in as possible contractors, as experts say the Russian company lacks the offshore expertise to go it alone.

"The project foresees a system of iceberg monitoring and the use of special technologies to chase them away," Gazprom spokesman Denis Ignatyev said.

Frolov said Russia had no such experience and the threat from ice formations, which can be more than 100 kilometers long and equal the size of Jamaica, should not be underestimated.

"It was an iceberg that sank Titanic. A platform can't just dodge icebergs. So we need to create a proper iceberg monitoring system, like the one in Canada," he said.

While warmer temperatures may cause larger icebergs to break off polar ice, many experts have said global warming may also help develop Arctic resources, as melting ice will make once inaccessible reserves attractive to oil and gas firms.

The U.S. Geological Survey said one-quarter of all undiscovered oil and gas might be in the Arctic. Countries from the United States to Russia are looking north, partly to help break dependence on supplies from the volatile Middle East.

Shtokman will probably need up to four production platforms capable of withstanding 25-meter waves. Gas will flow to the shore by pipelines, where it will be liquefied for shipment to the United States.

The cost of Norway's Snoehvit gas field, a much smaller development but similar in conditions, exceeds $10 billion.

Frolov said destroying icebergs with bombs could be one of the solutions, but it might raise ecological concerns.

Ignatyev declined to say whether Gazprom could chose a purely underwater development scheme. Analysts say that, whatever plan is chosen, Western technology would be needed.

"Securing foreign participation, even in the form of subcontractors, should help Gazprom attract better technologies and improve the overall management of the project," said Alexander Burgansky of Renaissance Capital.