The Shtokman Field, located 600 kilometres north of the Kola Peninsula in Northwest Russia, is estimated to contain some 3.8 trillion cubic metres of gas and more than 37 million tons of gas condensate, making it one of largest such fields in the world. It has also made it a prize for Russia’s giant gas industry, whose rush to develop the field in the vulnerable Arctic environment has caused environmentalists’ great concern.
Recent studies commissioned by Gazprom Oil Shelf itself have revealed how unprepared the companies planning to develop the field are to deal with spills of oil products both large and small, and how far they are from developing these capabilities.
The field’s main developer, Shtokman AG – which consists of Russia’s natural gas monopoly Gazprom, France’s Total and Norway’s Statoil – presented at the November 15 meeting results of its risk analysis of hydrocarbon spills but refused to make its studies public. The company also said it lacked the means to prepare a full environmental evaluation.
Company not prepared for spills
A study prepared by the Scientific-Methodological Centre “Informatika Riska” for Shtokman AG analyzing risks of hydrocarbon spills while developing the Shtokman Field showed that showed that such risks are rather high.
According to “Informatika Riska” the probability of an accidental gas condensate spill while drilling bore holes will be at its highest during the third year of the Shtokman field’s development.
They also said that gas extraction platforms could, during accidents, experience leaks reaching 23 million cubic meters per day. It is well known what happens when uncontrolled leaks from a borehole are allowed to continue for several years. Should a rupture of a whole cross section at the beginning point of a gas pipeline occur, emissions intensity would be extremely high and would continue for several dozen minutes.
Should a rupture of lesser diameter occur, a condensate leak could continue for up to 26 days even with pipeline valves closed. This period of time would be necessary for equalization of pressure within the pipeline with pressure in the surrounding underwater environment. Evaluations of possible spills from vessels carrying condensate showed that the risks increases with the separation of condensate at the source because of additional risks associated with condensate storage, loading and transfer. The company’s representatives also observed that, because of a European Union initiative to forbid the used of heavy oil on ships in the Barents sea, Shotkman AG will have to make provisions for such limits while planning its activities in the framework of the Shtokman project.
“The company has still not worked out a plan for liquidating emergency situations, but it is not correct when it says there will be no impact on nature preserves while the project is being implemented,” said Valentin Zhuravlev, “Informatika Riska’s” chief engineer. “In the case of an emergency spill of condensate or any other oil products, pollution will reach the Kandalashka Nature Preserve [on the Kola Peninsula] within four hours – that is the reserve time to react.”
Zhuravlev also noted that Russia currently has no anti-well gusher services for wells located at sea, and that while the Shtokman project is being implemented, it is critical to provide forces and means for internal fire suppression and operative monitoring for emergency situations.
The framework of the Shtokman project must include the development of specific plans for dealing with emergency situations that can arise during drilling, at coastal and sea installations, along the network of pipelines, at terminals, in coastal water zones, as well as the establishment of a general operating plans.
“Today, the company is not prepared to liquidate oil spills,” said Zhuravlev. “Seventy thousand scenarios of various oil spills were developed. The high changeability of conditions and limited reaction times give rise to the necessity of preparing early. However many means and forces you amass, it is all the same imperative to put internal cooperation into practice. And it is now that we must raise the question of the best available technology for liquidating emergency spills.”
In the opinion of Russian environmental groups, both plans for eliminating emergency spills as well as the materials from the environmental evaluation of oil projects must be made widely available for public for discussion.
As an example, after two years of resisting Greenpeace, Cairn Energy, the British oil and gas company, finally revealed its spill clean up plans during reconnaissance drilling off the shore of Greenland. The plans showed that, should any accidents occur, the coast of Canada would be impacted. Denmark, of which Greenland is a territorial holding, should therefore have conducted international public hearings, which was not done.
Shell put its spill liquidation plans on the internet while it was conducting reconnaissance drilling off the coast of Alaska. However, Russia’s Gazprom is neglecting such practices, and refuses to submit even its engineering plans, as stipulated by law, for public environmental expertise discussions. Neither Gazprom Shelf Oil nor its parent company Gazprom consider it necessary to post their environmental evaluation materials or spill clean up plans on the internet.
“Plans for liquidating emergency situations must be developed now, which will allow on an engineering level an evaluation of accessibility and effectiveness of eliminating petroleum products and gas leaks in Arctic conditions and – especially important – an evaluation the cost of such work and prospective ecological redemption,” said Nina Lesikhina, an expert with Bellona Murmansk. “It is completely incomprehensible how the company plans to adopt investment decisions without a full accounting of financial outflows that are necessary for an adequate response to an emergency situation.”
Company skimping on climate and ecological risk appraisals
At the November 15 meeting, Shtokman AG presented the results of the evaluation of the project’s impact on the environment according to standards of international banks, specifically its impact on climate change. According to the company’s data, greenhouse gas emissions during the construction phase will equal some 355,000 tons per year – and during full-scale operations, some 615,600 tons per year, which collectively exceeds the level of significance and demands an accounting.
In an emergency, the whole volume of gas would burn off in a flare. What amounts of carbon dioxide would be emitted into the atmosphere in such circumstances have not been defined by the company, nor has the company considered the possibility of using Carbon Capture and Storage (CCS) technologies.
At present the company does not have any climate policy for its Shtokman operations, which could lead not only to an increased negative impact on climate change, but to an artificial over-evaluation of the project’s profitability thanks to its underestimation of risks associated with climate change. Such risks include: changes in the quantity and distribution of natural precipitation, ice conditions, increases in storms and hurricanes, increased sea levels, encroachments on existing shorelines, higher rates of illness among the population, among many other things warranting evaluation even at the planning stages.
Introductions to limits on greenhouse gas emissions on a national and international level are already fostering changes in consumer behavior and demand, raising the price of the carbon footprint in the overall price of the project’s infrastructure, and necessitating adherence to new standards of energy efficiency. All of this, as well as the exigency of additional insurance for increased physical risk as a result of climate change, demands additional expenses that are not currently accounted for.
At the November 15 meeting, Shtokman AG failed to have any reaction to Bellona’s suggestions that the company develop a climate strategy for the project, specifically a strategy to analyze the climate change risks both for the project, as well as to flesh out measures for managing greenhouse gas emissions.
The company had a similarly icy reaction to suggesting that it conduct impact studies of the project on local bird life. The environmental evaluation’s materials do not include pssobile impacts on bird life on the Arctic island of Novaya Zemlya, although the distance from the licensed site to the island is significantly less than it is to the shores of the Kola Peninsula.
“The company had fulfilled the formal breadth of the environmental evaluation with the minimum of expenditure,” said Yury Krasnov, an expert with the Russian Bird Defense Union at the November 15 meeting. “The company has taken into account the growth of the oil stain, but is not considering the feeding range of birds. Some 98 percent of eider ducks are under threat, a bird that is listed internationally as an endangered species. But this is not considered in the environmental impact materials. It’s necessary to take into account other such mistakes and investigate the coastal zone of Novaya Zemlya. We suggested this from the very beginning, but the company didn’t take it into consideration.”
Yury Alexandrovsky, Shtokman AG’s manager for ecological monitoring and environmental impact studies said the company didn’t have the financial resources for complex impact studies, saying that, “if the company is rich and wants to additional investigation of something, then of course, but the project has to be profitable.”
The company has still not conducted an evaluation of the acoustic impact of the project, nor an impact study on how the gas-hydrates will impact local flora and fauna, as well as many other things.
Shareholders in Shtokman AG are therefore being forced to make investment decisions in the absence of full information about expenses associated with obtaining an objective environmental evaluation of the project or how the company would pay for and eliminate prospective oil spills. Such costs could make the Shtokman project entirely unprofitable.
Further, the potential for effective extraction and oil refining of petroleum products obtained from already existing wells is far higher than from new wells on the Arctic shelf. For instance, the recovery of 95 percent of oil-well gas alone at existing deposits can save up to 45 billion cubic metres’ worth of energy resources annually – twice as much as what is planned for extraction at Shtokman during the project’s first phase.