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6 Oil Wells On Sakhalin Go Offline

14 October 2011

Dysfunctional oil wells at Sakhalin-2 are threatening to decrease production at the field in Russia’s Far East and could be indicative of more serious problems.

The problems on Sakhalin-2 in the Piltun-Astokhskoye oil field were documented in a government report to the State Duma on the implementation of the production sharing agreement, a copy of which was obtained by Vedomosti.

According to the report, the wells are not functioning “due to the need to remove a significant amount of sand after a water breakthrough.” This mishap prompted a shutdown of six of the 13 oil wells on the Astokhskoye section, where the Molikpaq Platform extracts oil.

The unexpected impediment diminished planned production by more than 20 percent over the first two quarters of this year. The report did not elucidate the amount expected.

It is possible they are referring to a loss of pressure, said an official at the Natural Resources Ministry. The situation is not common, he said. Until now, there have only been problems in one or two wells.

The depressurization may be caused by a breakthrough of ground water, said a member of a major oil holding company. This is something that happens during oil spills, he warned. The most recent case similar to this incident is the BP oil spill in the Gulf of Mexico.

There has not been an oil spill at the platform, said Ivan Chernyakhovsky, a spokesman for Sakhalin Energy, operator of Sakhalin-2. Despite the failure of the well’s seal, he continued, “the release from a few of the wells was part of a planned process.”

Sakhalin Energy exploits the Lunskoye gas field and Piltun-Astokhskoye oil field in the Sea of Okhotsk. Three platforms extract natural resources — Lunskloye-A with seven gas wells, Piltun-Astokhskoye operating eight oil wells and Molikpaq.

Last year Sakhalin Energy extracted 6.1 million tons of oil, while Molikpaq yielded 2.2 million tons. If all factors remain the same, Molikpaq will be short 440,000 tons of oil this year, and the production for the entire project will fall short 7 percent.




(1) The inside story of Shell’s Sakhalin II debacle

(2) Shell Fixes Sakhalin Violations (Moscow Times)

(3) Sakhalin Pep Talk From ‘Old Blood and Guts’ (Moscow Times)

(4) Sakhalin Energy’s Greer Steps Down (Moscow Times

Sakhalin Energy’s Greer Steps Down

Friday, June 22, 2007. Issue 3683. Page 5.
By Max Delany
Staff Writer

David Greer, the Sakhalin Energy deputy CEO running the giant Sakhalin-2 oil and gas project, has left the company unexpectedly just weeks after a leaked e-mail he wrote revealed the pressure that managers working there were facing.

Greer’s departure comes as Shell is adjusting to ceding control of the $20 billion project to Gazprom after sustained state pressure.

“I can confirm that David Greer has left the company to pursue other business interests,” Sakhalin Energy spokesman Ivan Chernyakhovsky said Thursday. He did not elaborate on Greer’s future plans.

“He decided to leave the company and left the company,” Chernyakovsky said. “We wish him well in his future after working at Sakhalin Energy for 3 1/2 years.”

Chernyakovsky said any suggestion that the departure of Greer, a 27-year Shell veteran, was connected to the leaked e-mail was “pure speculation.”

Shell spokesman Maxim Shub could not say when Greer had offered his resignation, saying only that the announcement was made Thursday.

Greer could not be reached by cell phone Thursday evening.

Sakhalin Energy’s technical director, Jaap Huijskes, has been appointed as the new project director for the remainder of the Phase-2 development, a source inside Shell confirmed.

A motivational e-mail written by Greer to staff working on the project, originally leaked to an anti-Shell web site,, was the subject of a front-page story in the Financial Times earlier this month.

It also emerged that Greer had borrowed heavily in the e-mail from a speech made by U.S. General George Patton on the eve of the D-Day landings in World War II, with phrases such as “Lead me, follow me or get out of my way.”

Greer’s memo, written shortly after Gazprom officially took control of the Sakhalin-2 project this spring, took the form of a bombastic pep talk.

Citing bad body language and comments at a biannual meeting, the e-mail said that senior managers at Sakhalin Energy were running “the risk of becoming a team that doesn’t want to fight and lacks confidence in its own ability.”

Last December, Shell and its Japanese partners ceded majority control of the project, Russia’s first to process and export liquefied natural gas, to Gazprom after a sustained 1 1/2-year campaign of state pressure over purported environmental violations.

Ian Craig, head of Sakhalin Energy, the project operator, is due to be replaced by a Gazprom manager once the project comes on line. LNG shipments to Asia are due to begin next year.

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