Dlrccfwait of lniflllKcncc
Uzenase Study of Soviet Mismanagement
CIA HISTORICAL REVIEWAS SANITIZED
Uxenaw Study ol Soviet Nilsmanagement
I aft Hasxmati lit)
of the U'cn oilfield on the Mangyshlak Peninsula] gave Soviei energy planners high expectations for Ihe potential cuniribailon lhai it and the other fields In surrounding Kazakhstan would make to national oil preelection. Development of ihe petroleum resources of West Siberia had not yet begun, and the Soviets were searching for advantageously located ctcposiis in the western USSR rich enough to replace the Volga-Urals fields when Ihey began to decline. Soviet geologists tind assessed the hydrocarbon content of ihe Caspian Sea basin as high and were looking to the future of Uzcn with optimism.
ears later, however, Soviet literature and other reporting suggest that Uien oilfield has not met Soviei expectations. Although ihe field contained enough potential reserves at discovery to place it in the medium-giantoilfield mustillion barrels of recoverable reserves to be considered aengineers have been unable to overcome recovery problems caused by the complexity of the reservoirs and the poor characteristics of the crude oil.esult, the reservoirs have been permanently damaued and annual field output has lagged Tar behind production goals. Our analysis of possible future production scenarios shows that the observed decline offield peaked incontinue at least through thee sec no prospects for anything morelowing of ihis trend regardless of any new strategies the Soviets may employ.
In large rncasurc. Uzcn provides an excellent case study of how poor field management and the traditional Soviei emphasis on initial high output rates can lower long-term oil production. The Soviets arc currently attempting to rehabilitate Uzcnariety of expensive Western -recovery processes and equipment, much of which is inappropriate,to our engineering analysis. This suggests that developers oi other fields in Kazakhstan and perhaps the rest of the country may perpetuate mistakes made at Uzcn. In view of (he likelihood of continueddevclopnient practices aod difficulties in obtaining Western equipmeni, we doubt that Kazakhstan will offer (heignificant source of additionalodoctlon over this decade.
1
Uzenase Stud* of So"icI Mismanage men'
The Kazakh SSR currentlyIhe USSR wilhercent of ill oil supply. Although this coniilbuiloa ii relatively troll, open source* Indicate thai lhc Sovkcu regard both the onthoic and offihore potential of ihe eaiite Kaiakhsten-Cnspinn Sea are*ignificantaiakhtian and lhc Timan-Fechoia region of ibc Komi ASSK arc Ibc iwo arcaa outside of Weil Siberia lhal have shown Ihe greatest growth in pclroleum production during recent years, and many Soriet oil experts rate their potential for future increases as high
Thus far. however, Ihe Soviets have been frustrated In
iheir efforts to make the key oilfields in Kazakhstan
meet cancelations. The high viscosity and paraffin
content of the oil havepecial, and roihci
unfamiliar, challenge lo Soviet engineers, one that hit
led them to
a variety or oil recovery technique* *
From an intelligence stnndpoini the fields ofarc of particular interest fee two reasons;
- Growth in oil output outside of West Siberia has largely comeallime when national oil output is in tho doldrums. Soviet oil prospects during this decade could improve significantly if lhc Soviets could turn their luck aroundegion where large amounts of oil remain and theinfrastructure is already in place Aecotding la Soviet lileralure. some Soviet geologists think that Kazakhstan might beegion.
The Soviet oil industry has been conststendyby its poor execution and faulty fieldpractices. Nowhere has ihis been morethan al Uzen oilfield inseful case sludy of the limited abilityindustry to develop difficult oil
Our Analytical Approach
The Sovitll nave not published dtiolltd fielddata/or some llnie. particularly forilfields. The llllle Informallon ihey have made arallablt has usually been eonflleilns or limply not
credible.<L '
o make mailers worse, lite Savins iteal data concerning their all reservestate setrrl: eonstaucntty. we do noi know what ihey turremly believe Ihelr reserves loless whal those reserves might actually br
To overcome this lack of infortnaiion. we naisrmethodologies ihat permit us lo eiUmotepeoductton and ieserves ot major Soriet oilfields ond to project future yields under alttenetirescenarios. Our approach inndvcS theof advanced leehntouti of gtotoglc and reservoir engineering analysis C_
J. hi valtdltv of lUi,
meihodology rests on the fact that the behavior of an oilfield and its reienairs Is strtttly governedet of fairly well understood physical laws
Ufltld
Uzen is ihe largestcries of major oilfield) toeaicd near the coast of the Caspian Sea in Kazakh-nan's Mangyshlak OMatlhe Soviets discovered the Uzen field1 after bp extensive explorattoo program begun before World War II in Ihe Caspian Sea basin. In thehc Soviets faced an energy supply situation somewhat similar to the one confronting Ihcm today. Most of the oil produclion wos comingingle region, ihe Volga-Uieb. which was teaching its capacity. With
Figure I
USSR: On Ptoduciion History-Toistl vs Knjskhstaii
if Ii
. _
ussi
in national produclion itowing, Sorktwere lockingcries of new, oil-richlocated in the western USSR close to existing produclion infrastructure endtbit coold boost growth and eventually rcpleee the output from the Volgtt-Urals region. At that lime, the Scvicti had not fully evaluatedpotential of West Siberia nor begun produclion operations there. Soviet literature indicates that Uien. which appeared ioossible supergiant. was initially viewedield wilh great promtue that wouldigntficaat role in Soviei enemy resource planning during the '
Oil In Place and Reserves Ournd Soviet geologicthat theat Uicn originally containedillion
barrels of oiL Nevcrtbeleai, the field has been difficult lo develop. We know from reports of Soviet and Western geologists who have evaluated the field that production comes from at leastndividualreservoirs and ihat tbc rock and fluid proper lies vary widely not only from one reaervoir to another bul also within each resetvoir. Producing oil from such heterogeneous, complex reservoirs presents anchallenge'heSoviets have found difficult to meet (figure 1;
The high paraffin content of Uxen oil has aliocauied problems for lhc Soviets. Paraffin remains in solution oi natural lescrvoir temperature and pruiuic bul will
tci|c,
Iliac and collect in rcscrvc-it rock void space and on pipe surfaces svhen the temperature of ihe oil drops. Atdrop ir crude oil (cmperaiurc of onlyCauses paraffin formation. Such narrow temperature toleraneo complicates both the opersiion of the field an*rcaimcoi and transport a'ion of the oil
Because of Soviet inability lo devlie an elTeetive field dcvelc-pment plan and to handle the paraffin problem, wcbaaed on our engineering analyais, lliat no more than one-fourthni oriiirul oil In place will be produced during the lire of theperccnt recovery factor would place Vtcn, recover-able leietves at1 billionin the medium-giant category. Under normalould have been achieve!'
Held Deielopmeni
Production at Uun bcEanS, and ihe So-icii worked to develop the field rapidly to offset opened declines elsewhere In the USSR. By the end of the first year, production was averaging slightly0 barrels perillion barrel, foi tbe firaionths. Although production increased in the neat few yean, the Soviets were nes able to achieve the production goals they had set. The Soviets have admitted the field never reached0 produclion goalnd prematurclv peaked5 at. Production has since, iicaclly declined at oppro.ira.ielyercent each year, and now probably stands at, rsg analysis' ol ihe produclion irem
The original development plin forby (hecalled fot patallcl towi ofinjccilon welli perpendicular to Ihe long axisfield, dividing ihe field inio block* of
Soviet literatureour engineeringUacn'i troubled productionll origins lo reservoir damage thai oocuried in IM? when lhc Soviets, itoon prodaCisoa. iaiiiatcdftelc -ide uueciion program umut eoM. uauealeC Casptsa Sea water. The tooting effect of Ihe injicttd Ki-im caused the paraffin to sslieify and clog lite rueiYOu pore ipaeei. aipccinUy in Ihe areai mrioundUif the injection welli. The paraffin plugging reduced lite ability of the injected water to sweep Ihe oil toward produclion welli. The injected watertendedake the coune ol lean resistance through Iht more permeable rones of the reservoir loch, thai bypassing oil in tome areat and ca osing iapid mei ia thevopoitioai of water produced with the oil
Soviet field managcri werer lhal iapid developmenl of the field could cause udifrieulliei for fuiute rauivor y. bui they prcKCided anyway. According to one opes source, aa early7
al the Moscow All-Union PetroleumResearch Institute rccogniicdiousncxi of tbetJem and recommended 'italic* all ir'eciior. wanr However, (he Kaittn Inuaaie for Design and Planning of Rita bitf IheIndustry, primarily concerned with meeting abort-term production goals, ignored ihe reeommen-datloni.Ita'c leen Ibis pattern repealed ftequcni-ly in the Soviet oil niduiiiy. most recently at several
major oilfields In West Siberia. Had ihe West Siberi* aa licldi not been lest complex and "treat oil of lower paraffin content, prodcetioa would have been more significantly tHarkuaiibed there also
9 the large-icale injection of cold aa It water had caused other negative tide effects. Salts disserved inater interacted with the reservoir fluids to produce corrosive and noncorrosivc deposits on Ihe insldcs of well tubing, surfaceand pipelines This further decreased lifting capibililics and complicated maiaieaancc of surface faealiAcs- The owrotkaa problem was cortspounded by the ptcscaor of highly toxic hydrogen talfidc In the crude oil gas According so Soviet liter slate. Ihe improper ttcatmcnl of this gas resulted in calcmive damage to field produclion equipmeni and pipelines.
Correcting the
Sovietsat meon meeting Urge, eaily production goals ledhe
I'Conceivedplan andlhoitcned
lifespan of the Urcn reservoirs. Thus, mosi of tbc activity al the field daring the pailears has been ic remedy prsvaoot errors ia ordero-er as mcch od as possible. Dtsulfarnsng facilitUi were completed at the main gas processing plant0 to limit corrosion buildup in lhc pipelines and equipment, and injection water Is now Ccssliniicd al Shevchcnko before it ii piped to Uien and injected. The Soviets have also beenatieiv - ecently techniques for Ihe tick'
Hi WawThe Soviets air ibeii tffoiis cm hot water lajceiMM. both soand paraffin damage and lo improveofinjcelioa water ip ihe oil towelli. We knowthat,
to dale, ihis ca peti mental ion hat been successful neither in checking lhc paraffin accumulation nor in reversing the buildup. Slowenial ion is part of
the problem According la Soviet litcraiuic. six yeais after "Oil wdli hot water injection begun.onlyoercent ol tile injection water woi heated.lie time hot water injection received the neededpriority, Ihe buildup of paraffin had become loo profuse to counter the ill cffeeti of the cold water injection
We do not believe thai the hot water injection would have significantly increased the movement of oil to production welli. At reservoir temperature andf c. Uzen'a oilalready In the normal range for denaity Oi" API; ond viicoiityhcrmnl method, such as hot water injection, hai Utile if feet on she viieosity nod. thus, the mobility of ihli type of oil. Our analysis indicates lhat the only real benefit from ihe hot waier injcc-lon would probablyeduction in the paraffin pluigini in areas adjacent to the injection wclti thai had earliermost of che cold injection waier. Alleviation of the plugging problem around these well! wouldwater injection rates but wouldroduclion raici
There nre other siraificant disadvantages iohot
watet iiiici^mn program at Lfacn. Theit
relarivcly costly and'ihe heaters each consume luclrate ol'e
Based on Soviet reports
and Our analysis, water-sealing problems with the healers have also added lo iht operational difficulties. Altogether ihen. our analysis suggc. that the Sovi-eta" lack of success with hoi water injection will
continue. Once paraffin iali higher
icinixraturc than ihe deposition temperature Isto melt Ilic paraffin and return il to solution We do not believe the Sovicit will be able io Generate enough thermal energy bycurrently available economic met hud to reverse the deposition process and ctriin uo the damaged Ur.en reservoirs.
Steam Injection. lhai ihe
Soviets recently astempted to purchase US-designed nnd Japanese-built steam generators and pipeline equipmeniicain-injcctisn project at Uicn.
Accordinghese sources, (he Soviets hoped to use aicom to boost production up to SO percent over the present rale
Engineering analysis which we haveteam-inject Ion program would decrease the amount of paraffin around iucctioo wells butoffer only negligible Improvement in the overall mobility of oil through the reservoir to produetkn wdls.team-injection program requires closdy and evenly spaced wellschieve good results. Tbe Soviets would find ii extremely expensive la change Uxen'a irregular well pattern andwatcr-iEjection rows to an effickatroject would Involve conversion of some producing wdls to injection wellsassive drillin? program to even out the well spadng. The longer (he Soviets delay in beginning (heand they have yet toless in benefits will be relative to the remaining productive lifespan of the field.
There arc other engineering reasons why steamis inappropriate for Uaen. Injecting steam into ecservoirs deepereters has questionable
cnaineering advinwaoi. Tin haul of the ileumdissipates as It travels through the wdl bore: by the time the steam wouldeep retervuii. much of il would have condenied. Because Uxen'i mam pay tones. a( depth!ie ai (Ik low end of ihe heat effectiveness range the nei effect would probably be no better lhan for normal hot water injection, which hai already provedal Uxcn. In addition, because of the greater difference In dcruily between the oil ond (he steam, (he steam would also (end io bypass the oil. moving leas of il than even hO( water would move. Finally, although hot waier heatersreat deal of fuel oil to run. steam sencrmors require even more
Inhe Soviets suspended efforts lo obtain Wcsiern sieam generators and insulated pipe for Uaen. reportedly because o( hard currency luobleim.
In our judgment, it ll more likely that ihey Itavc reevaluated the potential foieciit* and discarded it at an option
Potymtt"V'pite promisingindicate that the Soviets have
alio abendoneu polymer injection ealisticoptionzcn. The problem is lhai sufficient omounts of the essential equipment end chemicals ore expensive and arc iivnilablc primarily in Ibe West. Adding polymers to iajecsion vmler would thicken the water, cnablint it to push more oil toward thewells. This could increase recovery efficiency ard reduce the amount of Injection water required. The Sovlels liraltedly icxied various chemicals at Uceo5eportedly with good results. But even If enoufh equipment were procured, the Soviet) could noi use full-scale polymer injection to produce the fieldource of supply had been established for the large volumes of polymers needed. Thit they have yet tooreover, polymer injection it -sophist tea led. costiy. and risky technique: in the pun. the Ministry of Petroleum lndus:ry has generally avoided the widespread use of such an uncertain procedure.
Cm Lift. Gns lift Imt given better remits than any other recovery technique tried at Uzcn. The Soviets used an Indigenously designed syxicm for most of the oil produced1 at ihtas-lift system injects compressed gas Inio the well bore, lightening the fluid column and increasing ihe rate of fluid production. Though it will noi significantly increase total oilcan sharply increase dailyrates
Experimental ion wiih ihe gas-lift lyticm began at Vien9 ond recovery efficiency IncreasedThe syatem wat rapidly expanded, andai-lifi welts were producing approximatelyercent of Uxen's oil (averaging moreer well withcrcsnt water cut) Ai that time the Smtcts claimed to be convening
wells lo gas lift each year.
about JO perceni of .nilon gas
lifl Soviets plnn to
expand the exbung system ana naverench Turn for the equipment.
Tbe operation of ihe gas-lift network athas been continually plagued by paraffin deposition In the well bores and cen*roslon in the gas lineshange in gai source from ihe Tenic field to the Kaiakh Cat Refinery caused further complications In ihe cui-Ufi process The refined gasuch hiaher concentration of Impurities and water than the sysicm could tolerate, and the lower gas temperature also caused noncoriosivcto restrict flow tn the ft lines. We know liom Soviet literature lhat. of ihe various measures taken to improve the conditions, the uw of chemicals as corrosion inhibitors has proved moil effective
Produclion Forecast
To estimate the future coniributionn to Soviet notional oil supplies, W. evaluatedate caseest case scenariohe baie Caaeontinuation of the current field develop-nient matcgy with no major changes in operating practices That is. conventional pump-lifting methods would pedomin.lt. the rsdwckof gas-lift -ells would not exceed approximatelyercent of the tola! number of .veils in use. and limited expert mcali-tion with hoi water Injection would continue. Under thisecline curve analysis reveals that Uien's production will continue to drop by someercent annually, to5 andy (hexpected ultimate oil recovery wm<vt aboutercent of original oil in place
"the best esse, which postulates an expanded gas-lift urogram, represents lite maximum the Soviets can reasonably expectccomplish at U'.en. Thisassumes ihe refuihishment of Ibe existing gas-hfi well network and the conversion of someonven-tional wells annually lo gai liftith no
iiiv iv.il count ol working wells. This scenario, which appeau to he what the Soviets are now trying to do, doc> not Include additional thermal operation) bccauie we believe they would not be effective. Our decline curve analysis in Ihi) scenario Indicates that produclion at Uxco would drop toecrease to0 andy theapected ultimate oil recovery would be" percent of original oil in
told us that1 the
Soviets planned to insiall new compressor facilities and add mote gas-lift wells io the present system. Uaen's producing well) arc already ai optimumhowever, making it unlikelyarge number of
new wells would be drilled to expand the gas-lill system, bul rather lhai the cabling "dl. would be convened.
As indicated in Ihe oil produclion foieeast.elieve that an cspantlon of Ihe gas-lift syiicm at Uren would resultemporary produclion increase. Production would be slightly higher than the base cose but still decline at approximately the same rate: and ulilmitc oil recovery would beercentage points higher. Thus, in light of the ineffectiveness of steam urid ihe polymer supply problem, the"lke Soviets can do to alter the fate ol Ur.cn.
rrr
lnw.1riot learned
Tbe So<lcia haveainful liul useful lesion from iheir development errorstcn oilfield. The currentnd lacgclr unsuccessful attemptaintain peodueiloa at tlii once-pie*ninine giam tn
Omen borne Ihe impociinee of instituting an effective field development program in ibe early itagei. That
(he Soviets have learned ai lean ibis much ii evident in (heir etlcmpt lo implement systematic ibermal
recover* prof rami at Kalinin and Karathanbai.
the ncighborlnii fields <vi Mangvihlaa Oblasl's
Buiachi Pcuintuli
At the same time, however, lac iuiituticoal and technical shortf the So>iel oil industry ai^ienr to be limiting the full application of thit experience. Theur example, arc currently attempting to purchaseensiveproe circa for Uicn. much ofor uie at ihe field And despile sotncwhai belter Initial planning, even KalamXai and Karaihenbai vera put oa linteny manner in
order to itarteon ai penntie and ai
any con
Outside of Kinilman. the lessens of Urea appeal lo have had even lest rorvnci Oar continuing analysis of hey Soviet oilfieldi rcveab) lhai. mott notably in oil-rich West Siberia, Soviet field managcn continue to apply hail) and sometime) illeoneeivcd field develop mealagitnsi the adv.ee of t'en onm scientific experti Tbe end icauli of ihU ii thai the Soviet! are trading lurgcr, stable oil recovery in favor of high but shorter lived production raiei. With growih in Soviet oil productionear standstill, however, the true cent of ihunow be becoming even more appircnl
Original document.
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