It is Technology that makes Hard-to-Recover Oil Resources Accessible

26 november 2015

‘Oil and gas will keep Russian economy afloat for several decades, but never again will they be drivers of growth, for several reasons,’ said Gennady Shmal, the President of the Union of Oil & Gas Producers of Russia, at the round table ‘Current Demands of the Oil and Gas Sector in Development of Hard-to-Recover Resources’ which was held at the Analytical Center. During the event experts discussed changes in the current system of economic incentives for development of hard-to-recover oil and gas reserves, introduction of new systems of subsoil use, development of a test sites’ system and certification centers.

‘Concerning oil there is no shortage in the market, rather the opposite. At the same time we cannot significantly increase oil production, and the main reason is that today oil is extracted from hard-to-recover sources mostly, and there is a technology vacuum both there and in tight oil,’ said Mr Shmal. A standard which will state the definition of ‘hard-to recover oil’ should be create, and that will change the situation, according to the expert. The expert believes that "these are reserves which require new technologies in their production.’

Concerning the Russian tax system, it does not stimulate the development of hard-to-recover resources, so the entire tax system as a whole needs revision, according to the expert. ‘The tax on oil companies' financial results should be introduced. This is a global practice. For example, Norway collects the profit tax, and we - we collect the revenue tax, which is absolutely uneven,’ said the expert. In addition to that, we need to think over a change in the legislative framework, we need a new law on subsoil, according to Mr Shmal. ‘The current law runs dry, it contains more amendments than the US Constitution, and so we should adopt a new version. We need a law on oil activities in which we will be able to define tasks for small businesses, consider creating polygons. There is a whole series of laws to consider and adopt,’ said the expert.

Natalia Andreeva, The Head of a department of the Gubkin Russian State Oil and Gas University, talked on what research and development findings were expected from multi-function test sites: obtaining objective quantitative and qualitative characteristics of equipment and technologies, optimizing and improving technological processes on the basis of  comparative tests results, preparing the research and technology basis for upgrading or developing new engineering standards in accordance with international standards. ‘Moreover we will also support domestic manufacturers, technology and equipment developers and increase the level of technical equipment of subsoil receiving reliable data on consumer properties and possibilities of commercial use of proposed products,’ said Ms Andreeva.

The oil and gas sector rests not on 3 but on 4 pillars: resources, technologies, finance and human resources. The technologies pillar is essential, as it makes resources accessible, according to experts.