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Shale Goes Global
Can the West Keep Fracking Technology from Russia?

Russia is sitting on staggeringly large reserves of oil trapped in Siberian shale formations, but it will need Western technology to tap this bounty, estimated to be worth upwards of $8 trillion. Bloomberg reports:

Without Western expertise and technology, it’s unlikely Russia could sustain its current production levels, much less increase them, David Pursell, an analyst at Tudor Pickering Holt & Co., said in a phone interview. The country has “zero chance” of exploiting deep-water reserves without Western help, he said. […]

“We need to bring mainly know-how” to drill unconventional deposits in Russia, Jacques de Boisseson, Total’s head of exploration and production in the country, said in Moscow today.

So how likely is it that we might keep Western fracking and horizontal well drilling technologies from Russia as a form of energy sanctions—a move that would effectively consign Moscow to a slow but steady decline in production from its massive conventional oil and gas fields? Chief executives from nearly every oil major are meeting at the World Petroleum Congress summit in Moscow this week, and most already have significant investments in Russia. Royal Dutch Shell partnered with Gazprom Neft to explore Siberia’s Bazhenov shale formation, drilling its first well this past January. Exxon Mobil is also interested in that formation—which may be the world’s single largest reserve of shale oil—and is developing a $300 million pilot project there with the Russian firm Rosneft. Similarly, Italy’s Total has partnered with Lukoil to explore the Bazhenov. BP is in on the action as well, having “signed a preliminary agreement last month to evaluate shale reserves in the Volgo-Urals region,” according to Bloomberg.

The French will sell Russia warships, U.S. technology will help them develop their hydrocarbon reserves, Germany will buy their gas, and the British will bank all their profits. Each Western power may be acting in their own best interests, but in the end, it’s Putin who appears to be holding the best hand.

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  • Alex K.

    “So how likely is it that we might keep Western fracking and horizontal well drilling technologies from Russia?”

    It is only possible to keep Russia from importing the latest in these technologies, the cutting edge that makes shale oil production not merely viable but increasingly efficient (although it could be too late). Also, I agree that “the country has “zero chance” of exploiting deep-water reserves without Western help”.

    Russian oil and oilfield service companies are already drilling horizontals and performing multistage fracs. Horizontal wells currently account for 30% of onshore drilling footage, although their horizontal sections are much shorter than is typical of shale wells. Likewise, Russia has been fracking aggressively since the 1990s, although multistage fracs are still relatively new (but growing fast).

    However – a major caveat – most of this drilling and fracking is targeting non-shale reservoirs. It is merely a means of boosting flow rates both for new and old wells. US and Canadian onshore producers had been doing the same for decades before the shale boom. The shale revolution happened, roughly speaking, when oil companies learned to drill very long horizontal sections with phenomenal precision.

    Russian companies will probably master this art with or without Western aid because technology transfer has been steadily happening since the 1990s and Russian oil companies are not nearly as backward as they were back then. Think of BP’s contribution to TNK-BP, now part of Rosneft – not merely technology but training adequately qualified Russian engineers and geologists. Same goes for Schlumberger and Halliburton, both active in Russia since the 1990s.

    Sanctions may slow down Russia’s progress, however. In fact, it is unclear whether – even with Western assistance – full-scale commercial production from Russian shales will be possible within 5-10 years, since Russian shales are not exactly equivalent to Bakken in terms of geology.

  • Jacksonian_Libertarian

    Please, you are assuming that these corporations aren’t going to milk this situation for all the profit they can. They’re Capitalists, their proprietary fracking and horizontal drilling knowledge is going to be sold for all the market will bear (LOL bear Russian Bear get it? LOL). In addition these corporations are fully aware of the kleptocratic nature of the Russians and other nations, and are sure to protect themselves from exploitation. I don’t expect large investments from these companies when the returns are so much greater and safer in the US and other Western nations. So the Russians and others will be made to pay through the nose up front for any western development of their shale oil resources.

  • Andrew Allison


  • lukelea

    “So how likely is it that we might keep Western fracking and horizontal well drilling technologies from Russia as a form of energy sanctions”

    In the long-term? Practically zero.

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