The Sakhalin II Phase 2 Project The New Energy Source for ... · AGENDA • Introduction •...

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The Sakhalin II Phase 2 ProjectThe New Energy Source for the Asia Pacific

Transforming the Vision into Reality

Scottish Oil Club, Edinburgh, Oct 13th 2005

David J. Greer OBE C.Eng. FIMechE.Sakhalin II Phase 2 Deputy CEO / Project Director

AGENDA

• Introduction

• Sakhalin Island and its Resources

• The Sakhalin II PSA

• Phase 1 Development


• Phase 2 Project Benefits

• Russian Resources

• The Challenges Ahead

• Questions/ Discussion

PiltunAstokhskoyePiltunAstokhskoye

Lunskoye Lunskoye

Sakhalin IslandSakhalin Island

• Yuzhno -Sakhalinsk


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AGENDA


Lunskoye Lunskoye




• Introduction









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• Territory: 87,100 km2 (Scotland 96,000km2).

• Length: 948 km.

• Min. Width: 30km.

• Mountain Areas 67%.

• Population: Approx. 550,000. Stabilised in 2002 after 10 years of decline.

• Regional Centre: Yuzhno-Sakhalinsk.

• The executive power of Sakhalin is the Regional Administration (“Oblast”).

• The legislature is the Sakhalin Regional Duma.

Sakhalin Island at a Glance

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• 17 administrative districts, 19 towns, and 33 urban-type settlements.

• Major cities are Yuzhno-Sakhalinsk, Kholmsk, Korsakov, Okha, Poronaisk.

• Major industries are oil & gas, fishing, agriculture, coal and timber.

• Transportation: seaports, railroad and local airports.

• Proximity to Hokkaido and Japanese port of Wakkanai assists logistical operations.


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Sakhalin Island GeographySakhalin Island Geography

2/3 of Sakhalin area is mountainousMore than 16,000 lakesSeismically activeLarge temperature difference betweenNorth & SouthWinter average : - 6 to - 24 degrees CSummer average: - 10 to +19 degrees COne of the most productive fisheries in the world is offshore SakhalinRich in wildlife generallyIndigenous PeopleNumerous Endangered Species

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Sakhalin Island - Summer Sakhalin Island – February Ice

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• Minimum winter average temperature –24 deg. C.

• Heavy sea ice for 5 months.

• Typhoon area.

• Approx. 6 month weather window.

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Sakhalin Shelf: Hydrocarbons In-place

III

I

III

II

III

IV V

VI

VIIIX

VIII

III

GAS-IN-PLACE ( 196 Tcf )

10%

12%

14%

20%

0004%

Sakhalin I

Sakhalin II

Sakhalin III

Sakhalin IV

Sakhalin V

Sakhalin VI

Sakhalin VII

Sakhalin VIII

Sakhalin IX

40%

OIL-IN-PLACE (60,500 MMbbls)

13%

7%

26%

8%

34%

7%

3% 0.5%1.5%

NORTH SEA (Proven Reserves: 2005)

Oil: 14.8 billion bbls

Gas: 169.8 TCF

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Sakhalin II Hydrocarbon ResourcesIN-PLACE (8,700 MMboe)

42%

11%10%

37%PA Oil

PA Gas

LunskoyeOil/Cond

Lunskoyegas

RECOVERABLE (4,900 MMboe)

21%

13%

8%

58%

PA Oil

PA Gas

LunskoyeOil/Cond

Lunskoyegas

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• Discovered: 1984.

• Exploration/appraisal: 7 wells.

• Mostly gas and condensate - thin oil rims located on the reservoir flanks.

• In place volume: 18.6 TCF gas, 931 MMbbl oil and condensate.

• Excellent reservoir quality - high rate producers.

• One platform (Lun-A) can sustain a 20 year production plateau for two LNG trains.

• Location:

Distance from shore: app.15km.

• Number of production wells:

17 (+possible 10 oil rim wells).

5 km

The Fields .... Lunskoye

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The Fields .... Piltun / Astokh

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• Discovered: 1986.• Exploration/appraisal: 17 wells.• Sandstone reservoirs of variable

quality.• Complex field of large areal extent.• Predominantly medium light oil, but

also gas and condensate.• In place volume: 5.6 TCF gas, 3,630

MMbbl oil and condensate.• Pressure maintenance will be installed.

• Location:• Distance from shore:15-20km.

• Number of producing wells:• Producing wells: 13 (PA-A).• A phased development approach

is being pursued with 30 new wells planned initially.

5 km

AGENDA

• Introduction










Lunskoye Lunskoye




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SupervisoryBoard

SupervisoryBoard

100%

25%

Mitsui & Co. LtdMitsui & Co. Ltd

Mitsui Sakhalin Holdings B.V.

Mitsui Sakhalin Holdings B.V.

100%

20%

Mitsubishi Corp.Mitsubishi Corp.

Diamond GasSakhalin B.V.

Diamond GasSakhalin B.V.

55%

100%

Shell Petroleum NVShell Petroleum NV

Shell SakhalinHoldings B.V.

Shell SakhalinHoldings B.V.

Shareholders Agreement

Shareholders AgreementProduction Sharing

Agreement (1994)

Production Sharing Agreement (1994)

Russian FederationSakhalin Oblast

Russian FederationSakhalin Oblast

Sakhalin Energy Investment Company Ltd.Sakhalin Energy Investment Company Ltd.

Sakhalin Energy - PSA Structure

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The Sakhalin II PSA• Sakhalin II was the first Russian offshore PSA, signed in June 1994.

• The PSA is a Contract Based scheme not Taxation Based scheme.

• It is fixed for the duration of the project.

• Fixed royalty payable.

• Cost recovery from nett remaining income.

• Revenues then distributed between Russian party and the Company, based on IRR calculation.

• Profit Tax payable by the Company.

• First oil in 1999 from Phase 1, the Astokh development.

• The Phase 2 project has a nominal maximum capacity of 9.6 mtpa of LNG, which will be exported to the Asia Pacific market.

• Over 75% of LNG capacity has been sold on long term contracts.

• Peak oil production will be approximately 150,000 BPD from Phases 1 and 2.

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AGENDA

• Introduction










Lunskoye Lunskoye




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Sakhalin II Project Phase 1

Vityaz Complex: Molikpaq, SALM and FSO. First offshore oil production in Russia.Produces 60-70,000 b/d oil production during six month ice free summer season.

Oil Production2000 12.4 million bbls2001 15.1 million bbls2002 10.8 million bbls2003 10.3 million bbls2004 11.7 million bbls2005 12.0 million bbls (target)

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Phase 1- Supplying crude oil to customers since 1999

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On 30 June 2005, Sakhalin Energy loaded the 100th oil cargo from the Vityaz Production Complex

AGENDA

• Introduction










Lunskoye Lunskoye




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Sakhalin II Phase 2 Project

• Piltun-B platform.

• Astokh year round production.

• Lunskoye A platform.

• Onshore Processing Facility.

• 1,870 km oil and gas pipelines.

• LNG plant & Oil Export Terminal.

• Infrastructure Upgrades.

Sakhalin II Phase 2 ProjectA Challenge and a Privilege

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• To deliver the Sakhalin II Phase 2 Project in line with performance and stakeholder expectations.

• To design and operate facilities to Russian Federation and International standards.

• To maximise Russian content.

• To minimise adverse impacts on the environment.

• To maximise the social and economic benefits for all involved.

Sakhalin II Phase 2 Project “The Mother of all Projects”

• > 16,000 people involved at peak!

• > 60 million man-hours a year!

• > $US 100/second spend !

• Global Involvement – Russia, Norway, UK, Holland, Italy, Abu Dhabi, Japan, South Korea.

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• Multiple Stakeholders – Shareholders, Russian Party, Indigenous People, NGO’s.

• Complex Environment – wildlife, earthquakes, typhoons, winter sea ice.

• HUGE in every dimension !

Sakhalin II Phase 2 Project – Global Participation

A Globally integrated Project

AMEC (UK)Topsides Design

Parsons (UK)OPF Design

Starstroi (Russia)Onshore Pipeline Design

AKQuattrogemini (Russia)CGBS Construction

MTI Design

Offshore Pipeline Design

SHI (South Korea)Topsides Construction

Saipem (Italy)

ABB(Holland)

Aker Kvaerner (Norway)CGBS design

TLU design NSC (Holland)

CTSD (Japan)LNG design

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Sakhalin II Phase 2 Project: Current Status

• All major parts of the project are under construction with Engineering close to completion.

• 2 Concrete Gravity Substructures were successfully towed to and installed in the field during summer of 2005.

• The Onshore Process Facility civil work is complete and last main items of equipment will be delivered during summer of 2005.

• Some offshore pipelines have been installed and further pipe-lay will take place in the 2006 season.

• Onshore pipe-lay is progressing well with over 50% welded.

• LNG civil work and design are complete. Major equipment deliveries have started to arrive and construction is well advanced. Nearshore Jetty and TLU installation progressing well.

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LNG & OET Plant

LNG Sales Agreements Volumes

Type of

Buyer Agreement Term (Years) Quantity• Tokyo Gas SPA 24 1.1 mtpa• Tokyo Electric SPA 22 1.5+0.5 • Kyushu Electric SPA 22 0.5• Toho Gas SPA 24 0.5+0.07• Baja Mexico(SETL) SPA 20 1.6 • Korea Gas Corp SPA 21 1.5• Hiroshima Gas HOA 20 0.2• Tohoku Electric HOA 20 0.4

Total 8.0 mtpa

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Overview of the Offshore Platform Structures at Lunskoye and Piltun

Offshore Platforms

• Lunskoye (LUN-A)4 leg concrete gravity base.Topsides 22,000 tonnes.Gas production 1800 MMscf/d.30 well slots.Possible oil rim production.

• Piltun(PA-B)

4 leg concrete gravity base.Topsides 28,000 tonnes.Oil production 70,000 b/d.Gas production 92 MMscf/d.45 well slots.

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Sakhalin II Phase 2 CGBS Construction Project

LUN-A Concrete Gravity Base Structure

Key Facts• Topside weight: ~26.000 t

• Water depth: 48,8 m

• CGBS size: w/l/h - 105m/88m/72m

• Concrete volume: 35.000 m3

• Rebar quantity: 16.000 t

• Post tensioning: 1.100 t

• Mechanical Outf.: 2.800 t

• Structural steel: 2.500 t

• No. of wells: 27

• Risers (incl. future):

3 x Ø20’’, 3 x Ø30’’, 1 x Ø4’’

• Gas production: ~52 million m3/d

• Peak liquids and condensate

~8,000m3 /d (34,000 bl/d)

• Peak oil: ~2,500 m3/d (16,000 bl/d)

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PA-B Concrete Gravity Base Structure

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Key Facts• Topside weight: ~33.000 t

• Water depth: 30 m

• CGBS size: w/l/h - 94m/92m/54m

• Concrete volume: 28.000 m3

• Rebar quantity: 12.500 t

• Post tensioning: 1.000 t

• Mechanical Outf.: 2.500 t

• Structural steel: 1.900 t

• No. of wells: 45

• Risers: 2 x Ø14’’

• Oil production: ~70,000 bl/d

• Associated gas: ~100 MMscf/d

Vostochny Port – CGBS Undeveloped Site

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Offices, Canteen, Clinic and Social Premises

Casting basin for construction of GBS’s

Batching Plant, Aggregate and Silos

Formwork Prefab Area Rebar Fabrication Area Mechanical MaintenanceMMO Prefab & StorageWarehaouse


Construction Site

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Casting of CGBS

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CGBS: Preparation of Casting Basin Floor

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LUN-A and PA - B – CGBS at June 2004

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Construction – Slipforming of cell walls

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CGBS – Top slab complete and shafts started

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Casting Basin (from south)

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CGBS Completion of Slipforming May 2005

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Casting Basin Flooded - June 2005

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Casting Basin Flooded June 2005

The Basis of Structural Elegance…………

First find your model and then - - - - it takes a bit of “handling” to work out the scale factor !!!!!!!

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Marine Operations – Mooring & Float Up

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TOWING ROUTE TO FIELDPA-B

LUN-A

Vostochny,Casting Basin

LUN-A• Towing distance ≈ 960 nm.• Duration of tow ≈ 16 days.• 3 Tugs, each of 150 Tonnes.• 1 Tug to assist during tow.

PA-B•Towing distance ≈ 1020 nm.• Duration of tow ≈ 17 days.• 3 Tugs, each of 150 Tonnes.• 1 Tug to assist during tow.

Target Milestone 5LUN-A, install 15th July 2005.Target Milestone 6PA-B, install 15th September 2005.

Tow to Offshore Location

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CGBS – Lunskoye-A under tow

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CGBS Construction – Vostochny

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T O W I N G R O U T E T O F I E L DP A - B

L U N - A

V o s t o c h n y ,C a s t i n g B a s i n

Max W

ater Depth = 50.75m

Min W

ater Depth = 47.70m

19%

8% 0%

0%

0.3%

5%

0%

0% 0%

LUN-A INSTALLATION SEQUENCE

45

19%

8% 41%

30%

0.3%

13%

0%

0% 40%

47.7 -50.75m

46

19%

8% 69%

69%

0.3%

21%

0%

0% 68%

47.7 -50.75m

47

19%

8% 72%

72%

0.3%

21%

0%

0% 70%

47.7 -50.75m

48

19%

8% 82%

81%

0.3%

22%

0%

0% 80%

47.7 -50.75m

Pressure = 0t

49

19%

8% 90%

90%

10%

22%

0%

0% 90%

Pressure = 3492t

47.7 -50.75m

50

19%

8% 90%

90%

10%

22%

25%19% 90

%

Pressure = 5450t

47.7 -50.75m

51

19%

8% 90%

90%

10%

22%

49%38% 90

%

47.7 -50.75m

Pressure = 5908t

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19%

8% 90%

90%

10%

22%

74%57% 90

%

47.7 -50.75m

Pressure = 3421t

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19%

8% 90%

90%

10%

22%

88%57% 90

%

47.7 -50.75m

Pressure = 2876t

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Pressure = 28767t

35%

27% 98%

98%

27%

42%

98%98% 98

%

47.7 -50.75m

55

98%

98% 98%

98%

98%

98%

98%98% 98

%

47.7 -50.75m

Pressure = 70465t

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LUN-A CGBS – Installation – July 2005

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LUN-A CGBS – Installed 3rd July 2005

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Piltun – B CGBS installed 1st August 2005

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CGBS – Concrete Gravity Base Structures

CGBS PA-BCGBS LUN-A1st August 20053rd July 2005Installed:

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Lunskoye–A Topsides August 2005, SHI Korea

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Piltun-B Topsides October 2005, SHI Korea

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Topsides Tow Out Barge - Status

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Integrated Topsides Deck Construction

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• The integrated Topsides deck was constructed by Sembawang Marine Offshore Engineering, Singapore

• Weight: 11,504 tonnes

• Provides accommodation for up to 42 crew

Topsides Transportation to Site

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Integrated Topsides DeckLoad-out and Sail-away

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15 - 16th February 2001

1st March 2001

Molikpaq Tie-in (MTI)

MTI Module Units Fabrication in Abu Dhabi

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Molikpaq Platform (PA-A)

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Overview of the Offshore Pipeline Construction

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Western Gray Whales

Construction at Piltun – Alternative Routes

• Offshore pipelines - assessed 3 alternatives:

• Base Case routes installed during winter months.

• Alternative 1 (blue): routed approximately 15Km away from feeding grounds.

• Alternative2(green): routed approximately 6Km away from feeding grounds.

• Alternative 1 has been selected.

• Onshore pipeline re-routed accordingly.

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Semac – 1 at Lunskoye

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Lunskoye Pipelaying

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Overview of the Onshore Processing Facility

Construction

OPF

November 2001 – OPF site selected

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OPF Security Guard

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Mosquitoes …What Mosquitoes?

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The Challenge – getting to the site! May 2001

The necessary infrastructure upgrades

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Vervili River bridge and approaches:–Constructed by Baltic Construction Company (Vostok)Opened for traffic June 200342 metre long concrete Tee beam span bridge1000 metre length of new road approaches

Onshore Process Facility - Parameters

• Main Design Contractor – Parsons UK.

• Main Construction Contractor – BETS.

• 1800 MMSCFD gas capacity.

• 65,000 bbls/day of condensate.

• 2 process trains for gas and condensate treatment.

• Power generation of 100 MW (equivalent to a town of 125,000 people).

• Provides power via subsea cable to LUN-A Platform.

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Onshore Process Facilities – plant schematic

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OPF – View Looking North

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OPF Winter 2004

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OPF Progress at end July 2005

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OPF Beach Landing Facility August 2005

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Overview of the Onshore Pipeline Construction

Onshore Pipelines – Route (looking South)

Onshore Sections 1592 Km

•PA to OPF 20”x1 Oil & 20”x1 Gas

•LUN to OPF 30”x2 Multiphase

•OPF to LNG 48”x1 Gas

•OPF to OET 24”x1 Oil

•OET to Shore 30”x 1 OilPiltun A & B

Lunskoye A

LNG/OET

BS-2

OPF

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Onshore Pipelines

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Onshore Pipelines

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Onshore Pipelines

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Onshore Pipelines – Status

Lowering at KP 589

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Onshore Pipelines - Status

Pipelaying in Onor District

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Onshore Pipelines

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Pipeline approaching LNG Plant

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Overview of the LNG Plant and Oil Export

Terminal

LNG Site prior to Construction

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LNG & OET Facility - Parameters

• Main Contractor Chiyotec (Chiyoda, Toyo and Russian contractors)

• 2 Liquefaction trains each of 4.8 million tonnes/year.

• Dual mixed refrigerant cycle process.

• 2 x 100,000 cubic metres capacity LNG storage tanks.

• 3 loading arms for LNG tanker loading.

• Crude oil production of 170,000 BOPD through the Oil Export Terminal loaded to tankers offshore via the TLU.

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Plant Site Overview

UtilityUtility

Train 1Train 1

LNG JettyLNG Jetty

OETOET

MOFMOFLNGTankLNGTank

Train 2Train 2

LNG & OET Panorama June 2005

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LNG July 2005

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LNG Train 1 September 2005

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Aniva Bay Dredging for Jetty

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LNG with jetty construction foreground

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LNG and OET Jetty Erection in Progress September 2005

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Concept•All Year Round export of crude oil & condensate.•Un-manned facility.•30-year design life.•General Trading Tankers in non-ice conditions.•Lightly-modified bow loading tankers in ice.•Cargo parcels up to 1 million barrels.•Oil pumped via 30” x 5km pipeline from the OET.•Electrical power provided by cable (3kV) from shore.

Substructure•Piled Substructure (PSS) – approx. 1500T total.•Resistant to Ice, Seismic and vessel forces.•Access via boat landing & internal ladders to topsides.

Rotating Head Topsides•445 Te, rotates through 360° on 5m dia. slewing bearing.•21” circ. mooring hawser.•Loading hose suspended from boom.

•Summer – Floating (24”+ 2 x 16”) x 310m long.•Winter - Catenary 20” x 74m long.

TLU Facts and Figures

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TLU

Artists Impression

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Tanker Loading Unit (TLU)

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AGENDA

• Introduction










Lunskoye Lunskoye




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Project Benefits

• Benefit to RF from direct income payable under the PSA.

• Benefit of indirect tax income from high Russian labour content,establishment of office in Yuzhno and profit tax.

• Creation of 1000’s of jobs for Russian nationals.

• Delivery of Offshore Project experience directly to Russian industry.

• Delivery of LNG experience directly to Russian industry.

• Substantial contribution to local infrastructure:• Ports, airports roads and bridges.

• Telecommunications facilities.

• Health facilities improvements.

• Waste management projects.

• Community and sustainable development projects.

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Kholmsk Fishing Port Kholmsk Fishing Port -- DredgingDredging

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20”and 48” linepipe in laydown area Kholmsk

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Infrastructure Upgrades

Extensive upgrades to Sakhalin Island’s infrastructure are essentially complete.

These upgrades collectively referred to as the Infrastructure Upgrade Project (IUP), involve approximately $US 300 million worth of improvements to Sakhalin Island’s roads, railways, bridges, ports, docks and airports.

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AGENDA

• Introduction










Lunskoye Lunskoye




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Russian Resources• Tremendous pool of highly educated,

hard working, proud and capable resources.

• Great industrial and regulatory heritage.

• Great depth in sciences & mathematics.

• Keen to be associated with success, keen to learn and keen to accept responsibility.

• Eager for career growth and personal development.

• Global Mobility.

• Huge Talent Pool for global deployment.

• Relatively Simple EVP.

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AGENDA

• Introduction










Lunskoye Lunskoye




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Sakhalin II Phase 2 Project – The Challenges

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• A huge frontier undertaking in a tough environment.

• 24/7 routine.

• Unparalleled socio-political and environmental challenges.

• Russian approvals are rigorous and contribute to a large element of delay and unpredictability.

• Stakeholder Management

• Remote location results in major logistical challenges as well as staffing attraction difficulties.

Dredger Aground

The Challenges Ahead

• To deliver the Sakhalin II Phase 2 Project safely, on time, and in line with performance and stakeholder expectations.

• To design and operate facilities to Russian Federation and International standards.

• To maximise Russian content.

• To minimise adverse impacts on the environment.

• To maximise the social and economic benefits for all involved.

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•A landmark, integrated oil and gas project being executed safely, responsibly and on schedule for the benefit of Shareholders, the Russian Federation and the people of Sakhalin.

•Relentless focus on the 6 key project tenets.

•On track for 1st LNG export by Q3 2008.

•Sustainable Development in action striving to balance economic, social and environmental considerations at all levels.


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Discussion & Questions

The Sakhalin II Phase 2 Project The New Energy Source for ... · AGENDA • Introduction •...

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