Offshore drilling study by Houston consulting firm wins favor with LUKoil

By Patrick Reynolds

January 2004

HOUSTON – Signa Engineering Corp., a Houston-based oil and gas drilling consulting company, will continue in the role of technical advisor after completing a technical study of LUKoil’s Kravtsovskoye D6 offshore drilling development project in the Baltic Sea.

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Signa was originally retained last quarter by LUKoil-Kaliningradmorneft, a subsidiary of the Russian oil giant LUKoil, to perform a due diligence study on a multi-well drilling operation in the Kravtsovskoye oil field, the largest field off the Russian enclave of Kaliningrad. Signa engineers presented the study last week to a delegation of LUKoil representatives who flew from Russia to visit Signa offices in north Houston. The outcome was “very favorable,” Signa officials reported.

“The work was completed on time and LUKoil readily accepted the results,” said Signa Engineering President Bob Davis, who previously met with the LUKoil representatives in Russia. “The report was so well-received, Signa Engineering will continue to provide engineering support to LUKoil for the continued development of the Kravtsovskoye D6 project.”

The purpose of the study was to determine computational accuracy and conceptual feasibility of 21 directional wells planned to be drilled generally in the same direction and horizon from an abnormally tight grid on the D6 platform. Signa’s job was to determine if the well paths would potentially intersect and how to avoid possible wellbore collisions while drilling.

In the report, Signa engineers made observations and specific recommendations that can significantly enhance operational safety at the Kravtsovskoye project and greatly facilitate efficient drilling execution.

LUKoil began developing the Kravtsovskoye oil field more than 20 years ago to extract oil on the Baltic Sea Shelf near the Courland Spit (Kurshskaya Kosa), which is approximately 13.5 miles from the shore of the Kaliningrad Region, and roughly three miles from the Russian-Lithuanian border.

Vladimir Putin, president of the Russian Federation, and other government officials are reportedly planning to visit the D6 platform at an undisclosed date in 2004. State Fisheries Committee Chairman Yevgenii Nazdratenko, who traditionally has spoken against developing oil reserves in the Baltic Sea, admitted that exploiting the oil might be necessary if the Kaliningrad enclave finds itself in "energy isolation" after expected European Union expansion to include Poland and Lithuania, according to the RFE/RL Newsline website.

An article in the Russia Daily Journal describes plans by LUKoil-Kaliningradmorneft to launch a satellite that will monitor the D6 field starting in the first half of 2004. Yuri Kadzhojan, the company's general director, said the 24-hour monitoring system should be able to spot the formation of oil stains, their size, speed and direction in the event of a spill. Kazhdoyan said the money for this project would be funded by LUKoil-Kaliningradmorneft.

The D-6 (Kravtsovskoye) oil field was opened in 1983, and LUKoil-Kaliningradmorneft holds the exclusive license to develop the field. Production is expected to begin sometime this year. According to preliminary estimates, output is expected to total approximately 13,900 barrels per day (about 600,000 tons annually).