Gazprom Neft Courts Middle East NOCs With Digital Technologies as it Seeks Bigger Role in the Region

A delegation from the Moscow-headquartered oil company recently visited Dubai with a slew of advanced technologies to see if anyone was interested in making a deal.

Ali Rashid Al Jarwan met with delegates from Gazprom Neft at the SPE Annual Technical Conference and Exhibition.
Ali Rashid Al Jarwan met with delegates from Gazprom Neft at the SPE Annual Technical Conference and Exhibition.
Source: Gazprom Neft

Far from the Siberian gas fields that it is best known for producing, Gazprom Neft—the oil-focused subsidiary of Gazprom—is taking steps toward a larger footprint in the Middle East. The Russian oil company said it wants to open doors in the region by opening up its portfolio of advanced technologies to national oil companies (NOCs) there.

To that end, Gazprom Neft chose this year’s SPE Annual Technical Conference and Exhibition (ATCE) held in Dubai to showcase half a dozen proprietary developments, some of which remain in the R&D phase while others are being used companywide. They included an in-house-developed hydraulic fracturing simulator, drilling advisory and automation software, a new material for drill bits, and digital twins for its facilities.

Each represents a major investment of time and resources, but the majority state-owned Gazprom Neft said it doesn’t necessarily want cash from those who might use the fruits of its labor; it wants relationships.

“We are not a sales company, we are an oil and gas company,” said Roman Sokolov, the manager of international technology scouting and commercialization at Gazprom Neft. Speaking from the company’s booth at the industry conference, he explained that Gazprom Neft is looking to exchange experiences with other operators “rather than commercializing in the traditional sense.

“Essentially, we are open to partnerships and that’s why we are here—to show [what] we have in our portfolios and see what people are offering,” he added.

Unlike several of the largest US and European oil companies, Gazprom Neft’s Middle East exposure today is relatively modest. It operates a single development, the Sarqala field in the Kurdistan region of Iraq, where production is reported to be about 33,000 B/D.

In 2019, however, Gazprom Neft began its quest to enter the growing UAE market by inking a wide-ranging collaboration agreement with the Abu Dhabi National Oil Company (ADNOC) spanning everything from joint assessments of concession blocks to sharing digital technologies.

At ATCE, the Gazprom Neft delegation made clear it wants to build stronger ties with other NOCs too, including Dubai’s Dragon Oil and Abu Dhabi’s Mubadala Petroleum.

Gazprom Neft’s new friendship campaign comes against the backdrop of economic sanctions that the US and members of the European Union imposed on Russia following its military actions against Ukraine in 2014. As a result, Russian energy companies have been forced to rely more on domestic innovation to keep pace with international rivals on things such as the digital revolution and shale production.

This is of course a position that is somewhat familiar to the Russian oil and gas story. As many remember, it was Russian engineers working inside the then Soviet Union who are credited with making key advances in horizontal drilling during the Cold War in the 1960s.

Russia’s First Domestically Developed Frac Simulator

Without access to much of the oil and gas software used in the US shale revolution, Gazprom Neft helped lead a government-sponsored competition in 2017 to create a new hydraulic fracturing simulator. The result of that project is what the operator said is the first Russian-made simulator of its kind.

Called “CyberFrac,” it was developed in partnership with the St. Petersburg Polytechnic University. Gazprom Neft claims it is 10–20% more accurate in digitally replicating induced fracture characteristics than the commercial models sold by Western service companies and other technology developers.

Additionally, Gazprom Neft told atten-dees at the conference that wells designed with the new simulator use 15% less capital than average, all while showing production uplift ranging from 5–10%.

The company is also touting its processing capabilities which allow the stimulation of an entire multistage well to be simulated in about 3 minutes.

One of the places that the Russian oil company is using CyberFrac is in its tight-rock developments in the Bazhenov formation, considered to be the world’s largest source rock. Meanwhile, Saudi Arabia and the UAE have both begun multibillion-dollar unconventional programs targeting their gas-rich source rocks.

At the conference, Gazprom Neft underlined the applicability of its simulator by pointing out how its unconventional developments were roughly analogous to some of those being explored in the Middle East today.

Taking Steps Toward Drilling Automation

One of the most common features of the digital revolution has been drilling advisory systems—often considered a bridge to fully automated drilling. On this front, Gazprom Neft is advertising several applications that it has recently started using across its own drilling fleet in Siberia.

One is software created to predict the condition of the drill bit during well construction. Another is a machine-learning-based geosteering system that Gazprom Neft developed for its unconventional gas projects to help horizontal drillers stay inside rock layers just 10 ft thick.

The company started using its geosteering software in early 2021 and has drilled almost 50 wells with it. In addition to trying to ensure wellbore quality, Gazprom Neft said it is also seeing 3–5% reductions in total rig time thanks to the geosteering program.

To help make quicker decisions within its drilling monitoring center, the company created what it calls “AI advisors” that predict drilling failures several minutes before they actually take place. On stick/slip issues, Gazprom Neft said its predictive algorithm can identify the earliest warning signs more than an hour and a half before the problem would force the rig to stop drilling.

Like its fracturing simulator, Gazprom Neft is celebrating that the drilling software represents the first ever to be developed exclusively in Russia.

The next step is to combine all of its digital drilling programs into a single robust recommendation system. That effort is set to get underway imminently, the company said. In October, Gazprom Neft also signed a cooperation agreement with one of its drilling subsidiaries to begin developing robotic equipment for onshore and offshore rigs.

The Making of a New Bit Technology

In addition to its automated drilling ambitions, Gazprom Neft is also hoping it can one day introduce a new drill bit. Based on initial tests, the company said its innovation is 30% stronger and twice as resistant to high temperatures as tungsten carbide drill bits.

The key breakthrough is a material called tungsten pentaboride. It is the brainchild of researchers with Moscow’s Skolkovo Institute of Science who in 2017 were using custom algorithms to predict what super-hard materials could be made by combining different elements.

In addition to its high strength and resistance to cracking, tungsten pentaboride can tolerate temperatures of up to 2200°C (almost 4,000°F), according to Gazprom Neft. At such extreme temperatures, the strength of synthetic diamonds used to make PDC bits is cut in half.

Gazprom Neft has tested the new material but acknowledges that it remains at a low technology-readiness level. To bring about a new generation of drill bits, the operator will need to find suppliers and service companies who are up to the task of mass-manufacturing them.

Digital Planning Kills the Spreadsheet

Poor planning or unpreventable delays can mean leaving enormous sums of money on the table for large operators. In solving for this, Gazprom Neft has worked with some of Russia’s leading mathematicians to create optimization algorithms that do the work of human planners.

Elaborate and cost-effective plans can be hammered out by the smart software (and with a couple of smart users) in a few minutes. If there’s a change or a hiccup, a new plan can be made in another few minutes. This compares with the hours, days, and sometimes weeks that it traditionally took teams of people to produce a cohesive and cost-effective plan.

Also gone are the asset manager’s siloed and self-maintained spreadsheets that were once a staple of development planning.

In their place are dashboard interfaces with real-time updates on routes and logistics. They are also easily accessed across the relevant components of the organization. Thanks to this digital upgrade, Gazprom Neft said it has almost eliminated cross-functional scheduling conflicts that were commonplace during the static spreadsheet era.

Digital Twins Take Off

No digital transformation is complete without the adoption of some kind of digital twin. Gazprom Neft said it has checked this box fully after building and going live with digital twins of all its major facilities and capital construction projects in Russia.

The first proof of concept was developed in-house more than 2 years ago. Since then, the company said it is seeing an 80% reduction in operational errors across its asset base.