TNK-BP Advocates Flexible Approach to APG Utilization for Greenfields

German Khan, TNK-BP Executive Director, said to the media that greenfield subsurface specificities and development conditions frequently make greenfield APG utilization uneconomic.
“The law that obliges to bring APG utilization to 95% by 2012 does not consider greenfield structures. It is not always economically viable to set up an APG utilization infrastructure at the initial stage of operation of such fields due to their process and subsurface specificities”, he said.
“The state should exhibit some flexibility in this aspect”, Khan added.
He emphasized that there is no need to change the general deadlines for bringing APG utilization to 95%. What is needed is an amendment to the law with regard to greenfields only.
He stressed that this would not cause great harm in case all companies bring APG utilization in their key fields to 95% by the required deadline. “There will be no problems due to the small volume of greenfield APG. If they flare ca. 14 Bcm of gas now and will flare 3—4 Bcm later on, this will be a significant step forward”, Khan said.
He added that his company sees three key solutions to the APG utilization issue. The first solution is to supply gas produced from APG to Gazprom gas transportation system. Khan stressed that even with no priority access for APG to the Gazprom (RTS: GAZP) system, companies can make arrangements that allow them to supply gas ‘to the pipe’. He referred to a JV between TNK-BP and SIBUR that operates Belozernyi GPP as an example.
The second solution to the issue is to develop a small power generation system. According to Khan, TNK-BP plans to bring the fraction of power generated by its own small generating facilities to more than 50% of the total company power consumption within a decade.
The third solution is to reinject associated gas. “This has more to do with despair”, Khan added. He emphasized that this method allows preserving the product and develop it in the future. “But some gas will have to be flared not to waste money and not to hamper production”, he said.
Khan also emphasized that some regions and some companies are lagging behind the deadlines for transition to 95% APG utilization.
The APG utilization issue and energy efficiency were discussed at a meeting in Belozernyi GPP that was attended by Deputy Prime Minister Sechin on Thursday.