Shale revolution a la Russe: Shell, Gazprom Neft start fracking in Siberia

Shale revolution a la Russe: Shell, Gazprom Neft start fracking in Siberia
Shell and Gazprom Neft have started testing the shale potential of the Bazhenov formation in Russia’s Western Siberia. It's known to be one of world’s largest gas deposits.

The venture between Shell and Gazprom Neft called the Salym Petroleum Development has started drilling the first horizontal appraisal well in Upper Salym. It’s part of a pilot project which will need a further five horizontal appraisal wells within the next two years using multi-fracturing technology, says a company statement.

The Bazhenov development is an important element of our growth strategy,” Oleg Karpushin, the chief executive of the Salym Petroleum Development, said in the statement. “We hope the pilot project will allow us and our shareholders to make a decision about moving to a large-scale development of the Bazhenov formation in the Salym fields.

The Bazhenov field has attracted foreign oil giants like Shell and Exxon due to its similarity to the Bakken shale field in the US. Advances in drilling technology created a production boom there, says Bloomberg.

This is a big thing for Russia,” said Ildar Davletshin, an oil and gas analyst at Renaissance Capital in Moscow. “Bazhenov holds as much resources as has been produced in Russia to date. The question is what portion of it can be recovered and at what cost.”

Exxon and another Russian energy major Rosneft will also start a $300 million pilot project drilling in a different part of the Bazhenov field this year.

In April 2013 Gazprom Neft and Shell signed a memorandum of intent to jointly explore and develop shale oil and Arctic offshore projects in Russia.

Then it was reported that the parties will create a joint enterprise which will be engaged in new projects and investigate the development of shale oil deposits in the territory of the Khanty-Mansi Autonomous Area.