Sakhalin II — Russia’s First LNG Project

Sakhalin II, one of the world’s largest integrated oil and gas project, was an entirely new type of project for Russia. It is Russia’s first commercial natural gas liquefaction project, with a proprietary natural gas liquefaction process.

The project is a greenfield development covering the production of oil and gas from Piltun-Astokhskoye and Lunskoye offshore fields in the north of Sakhalin island, exportation of crude oil and natural gas in the form of LNG.

For the first time in Russia, six large sub-projects have been simultaneously implemented in a remote region with limited infrastructure and harsh environmental and climatic conditions. The project includes three large offshore production platforms in the north east of Sakhalin, an Onshore Processing Facility (OPF), Russia’s first natural gas liquefaction plant in the south, an oil export terminal and a large onshore and offshore pipeline system to connect all these facilities.

The LNG plant official commissioning ceremony took place on February 18, 2009.

All of the output of the plant was contracted under long-term (for 20 or more years) sale and purchase agreements before the construction completion. About 65% of the Sakhalin LNG delivered to Japan, the world’s largest LNG market. The balance of the project’s LNG is destined for buyers in South Korea and North America.

In 2010 the LNG plant reached its designed production capacity and as a result Sakhalin Energy has become a reliable source of LNG and will account for up to 5% of the global suppliers of LNG.

The Technology

The Sakhalin II Project

The implementation of Phase 1 of the project began in 1996. The PA-A (Molikpaq) platform, which began producing oil in July 1999, was installed in the Sakhalin shelf in 1998.

The first Russian natural gas liquefaction plant was put into service in February 2009. The plant’s output is contracted for the next 20 years to customers from Japan, South Korea and North America.

Offshore Drilling

Offshore wells, including development wells, water injection wells, drill cuttings re-injection wells, are drilled by rigs placed on offshore platforms.

Production and Separation

Oil and gas straight out of the well contain impurities like water and sand which need to be removed at the platform prior to sending the oil and gas via the offshore pipeline to the OPF which further processes the pre-treated feedstock, compresses it and sends it to the south.

Transportation to the LNG Plant

The north of the island where oil and gas are produced has severe climatic conditions preventing access by conventional means of transport. To support operations throughout the year, crude oil and natural gas need to be taken to the south of the island. This required the construction of the TransSakhalin pipeline system to carry oil and gas across the island to Aniva Bay in the south end which remains practically ice-free in winter allowing for the year round navigation.

Liquefaction and Storage

Production facilities at Prigorodnoye near Korsakov include an LNG plant and an oil export terminal (OET). At the LNG plant, gas received via pipelines from the north is liquefied and then stored in two high-capacity storage tanks. Oil is stored in two other specially designed storage tanks at the oil export terminal.

Shipping

Gas and oil tankers are loaded at the Prigorodnoye port to carry the cargo to customers. Now the terminal handles around 160 gas and 65 oil tankers per year.

Offshore Drilling

Natural gas and oil (hydrocarbon fluids) are formed underground as a result of multimillion-year tectonic processes. Hydrocarbons are accumulated in some areas of the earth called fields. To produce hydrocarbons accumulated in the ground, a well must be drilled.

Fields can be either offshore or onshore. In the 1980s Soviet geologists found several large offshore accumulations of hydrocarbons in the north east of Sakhalin—two of them now known as the Piltun-Astokhskoye oil and gas field and the Lunskoye gas field. To develop them, Sakhalin Energy was established in 1994.

Wells in offshore fields are drilled by offshore drilling rigs installed on production platforms or drill ships. For offshore fields, a number of platform configurations are available, including jack-ups, semi-submersible and gravity platforms.

By now, three gravity base offshore platforms are installed: Piltun- Astokhskoye-A (PA-A, or Molikpaq), Piltun-Astokhskoye-B (PA-B) and Lunskoye-A (LUN-A). They are equipped with drill slots and drilling rigs.

An offshore drilling rig is a wind-protected metal structure which supports drilling equipment and a long length of pipe, at the end of which is a drill bit. Drill slots are openings in the concrete jacket of the platform between which the rig can move.

The drilling rig lowers the length of the pipe into the platform slot and rotates it. The pipe, in turn, rotates the bit and causes it to dig through the rock, creating a wellbore. A well must not be vertical: the drill string can be deflected from the vertical to penetrate much more of the reservoir.

One well is not sufficient—to make production more efficient a group of production and water injection wells must be drilled. Higher than atmospheric pressure in the formation drives oil and gas into the well and out of the ground. As the pressure in the formation diminishes, water injection wells are used to introduce water into the formation to maintain the required pressure.

In accordance with the requirements of Russian laws, Sakhalin Energy committed to environmentally safe development of the Piltun-Astokhskoye and Lunskoye fields. To this end, drill cuttings and process fluids re-injection wells were drilled by the Molikpaq, PA-B and LUN-A platforms.

Drill cuttings (separated from hydrocarbons) are injected into the rock, thus preventing the pollution the Okhotsk Sea during drilling and production operations.

In the long term, horizontal wells with super-large deviation exceeding 12 kilometres will be drilled to develop more of the fields from the existing platforms and by jack-up drilling rigs designed for operations in the arctic conditions, thus allowing for well construction during the ice period. Sub-sea wellheads will be stationed on sea floor frames and connected to the existing platforms by sub-sea pipelines.

Currently, the maximum deflection of water-injection wells drilled from the Molikpaq platform is 6.3 km; LUN-A platform—1.4 km; PA-B platform—1.6 km.

Sakhalin Energy will also use Smart Wells technologies for the completion of water-injection wells at the PA-B platform. Such wells may be used for introducing water into different formations. Drilling of the first Smart Well is scheduled for 2010.

Production and Separation

The Lunskoye field is Sakhalin II’s main gas production area where Lunskoye-A (LUN-A)—an ice-resistant gravity base platform—is installed. The platform was brought on stream in January 2009.

Associated gas extracted by the PA-A (Molikpaq) and PA-B platforms is used both for power generation and for filling the pipeline system.

Each platform has well operation and construction control centres. Real-time operational data from the production system are transferred via high-speed satellite and fibre-optic communication channels to the production control centre in the company’s headquarters in Yuzhno-Sakhalinsk. Drilling operations are monitored by drilling engineers, geologists, field development engineers, production engineers, petrophysicists and geophysicists from the company’s headquarters.

With the diameter of 244 mm, wells in the Lunskoye field are the largest in Russia. By drilling such wells the company achieves lower operational expenses and capital costs and increases well output. When they reach full production, each well in the Lunskoye field will deliver 9 to 10 million m³ of gas per day.

The field contains layers of soft rock, which means hydrocarbons straight out of the well may contain sand, creating a risk of damaging the equipment.

To solve this problem, studies have been carried out resulting in an action plan aimed at minimising the production of sand while increasing the production of gas at the least possible cost. The specially designed platform equipment enables operation with a low level of sand production which significantly reduces well development cost and increases the well productivity.

Sand contained in the hydrocarbons is separated on the platform and then re-injected into the formation through a drill cuttings re-injection well.

Process equipment on the Molikpaq and PA-B platforms separates sand in three stages and prepares oil and gas for introducing into the pipeline system.

After removal of sand the gas is sent to the Onshore Processing Facility (OPF) via a system of offshore and onshore pipelines. The OPF processes hydrocarbons before sending them further to the south through the TransSakhalin pipeline system.

Transportation to the LNG Plant

Offshore fields in the north of Sakhalin are situated in the subarctic zone where the sea is covered by ice during the winter months which significantly complicates access to the facilities located there. To make exports possible throughout the year, crude oil and gas are transported to Aniva Bay in the south which remains largely ice-free during winter time.

To this end, the TransSakhalin pipeline system — a vast network of offshore and onshore pipelines running nearly through the whole island, from the north to the south — has been built. One of its main components is the Onshore Processing Facility (OPF) located in the north of the island, near Nogliki, where pipelines from the LUN-A offshore platform cross the shoreline. Pipelines from the PA-A and PA-B platforms further in the north also run via this OPF.

OPF

The onshore processing facility (OPF) covers 62.2 hectares and is located northeast of Sakhalin, seven kilometres from the landfall point of the multiphase pipelines from the Lunskoye-A (LUN-A) platform, and 70 kilometers from the village of Nysh.

The OPF is a processing plant with several functions. Its primary function is the removal of impurities from hydrocarbons, separation of individual hydrocarbons and compression before introducing into the pipeline.

The OPF facility uses some of the gas to generate power for the OPF and for the LUN-A platform at a 100 MW power plant that the OPF facility includes.

The OPF is capable of processing 51 mln cubic meters of gas per day and some 9,500 cubic meters of condensate/oil per day.

When fully operational, the OPF will be capable of processing 51 mln m³ of gas per day and some 9,500 m³ of condensate/oil per day.

The TransSakhalin pipeline system

The total length of the offshore pipelines is 300 km. These pipelines are running in the areas with heavy ice conditions. The impacts of ice on underwater facilities are well known, but Russia had never before built oil and gas pipelines in ice conditions. To protect the pipelines from ice scouring, the pipelines were buried in down to 5m deep trenches near landfall.

The 300 kilometers offshore system comprises these pipelines:

• two 14” pipelines from PA-A to shore;
• two 14” pipelines from PA-B to shore;
• two 30” pipelines from LUN-A to shore at the OPF;
• one 4.5” pipeline from shore to the LUN-A platform;
• one 30” pipeline for tankers from the OET to the tanker loading unit (TLU) in Aniva Bay.

Onshore oil and gas pipelines run from the landfall near the Piltun-Astokhskoye field via the OPF to the Prigorodnoye terminal. Each of the two pipeline strings (one for oil and one for gas) run for approximately 800 km. Booster Station No. 2 is located roughly in the middle of this route, near Gastello, to maintain the required pressure in the pipelines. It includes crude oil booster pumps, gas compressors and accessory equipment, including a nitrogen oxides suppression system.

The entire onshore pipeline consists of these pipelines:

• two 20” oil and gas pipelines from the Chaivo landfall to OPF — 160.5 kilometers;
• two 30” multiphase pipelines from shore to OPF — 6.8 kilometers;
• one 48” gas pipeline from OPF to LNG — 620 kilometers;
• one 24” oil pipeline from OPF to OET — 620 kilometers.

Onshore pipelines cross 19 faults, more than 1,000 watercourses and other natural obstacles. Sakhalin Energy used the most advances methods to complete the construction of fault and river crossings. The unique design of the fault crossings allow the pipe to move within a 5-metre range. River crossings are built in a way that preserves salmon spawning grounds. Once the pipelines construction was completed, Sakhalin Energy implemented erosion control and other remediation measures.

Since Sakhalin is a seismic-hazardous area, a seismic monitoring system has been installed to provide detailed data on seismic events along the entire 800-kilometre route of the pipeline.

Liquefaction and Storage

The central part of the project infrastructure — the Prigorodnoye production facility, consisting of the LNG plant and the oil export terminal (OET) — is situated in the south of Sakhalin, near Korsakov. LNG and oil export capacities are a part of the Prigorodnoye port established in 2008.

The complex includes the following equipment and infrastructure:

• two LNG processing trains, each with a capacity of 4.8 million tonnes of LNG per year;
• two 100,000 cubic meters storage tanks;
• an LNG jetty;
• two refrigerant storage spheres with a gross capacity of 1,600 cubic meters each for propane and ethane storage;
• a heat transfer fluid (HTF) system to supply heat to process consumers;
• five gas turbine-driven generators with a total power capacity of around 129 MW;
• utility systems, including instrument air and nitrogen plants and diesel fuel systems;
• a wastewater treatment plant to treat both sewage water and coil-containing water.

An 800-kilometre pipeline takes natural gas from the OPF to the LNG plant at the Prigorodnoye facility where the gas is liquefied at two trains with the capacity of 4.8 million tonnes of LNG per year. The plant is expected to reach its design capacity of 9.6 million tonnes a year in 2010.

The LNG plant uses Shell proprietary double mixed refrigerant (DMR) process which improves energy efficiencies of the liquefaction process by exploiting the benefits of the cold Sakhalin climate.

The mixed refrigerant used in the trains is a mixture of nitrogen, methane, ethane and propane. It cools gas to -162°C, at which temperature the gas becomes a liquid and is reduced in volume by a factor of around 600 times, making its transportation and storage more efficient.

Storage

LNG produced at the plant is initially stored in two cryogenic tanks with the capacity of 100,000 cubic meters each.

The LNG storage tank includes an outer tank and two inner tanks.

The outer tank is made of concrete with walls varying from 1 metre to 0.5 metre thick from bottom to top. The second tank has a carbon steel wall to insulate the inner tank from oxygen or moisture and to contain gas vapour. The inner tank made of 9% nickel steel is designed to withstand low temperatures of down to -165°C. A layer of one metre of insulation is inserted between the inner tank and the vapour containment wall.

LNG tanks have roofs made of a layer of 0.4 metre of concrete with a vapour containment wall below. The weight of each roof is 600 tonnes.

During storage, LNG is constantly evaporating. This vaporised gas is removed from the tanks to maintain the constant pressure and is used as fuel.

Flare

A key element of the plant safety system is the flare. Flaring is a method by which unwanted gas is quickly and safely disposed of by burning through a high vertical pipe (called a flare stack, which is 125-metre high) with a burner.

The flare is “a safety valve” of the plant. A pilot burner at the top of the flare stack is constantly burning, indicating normal operation. The pilot burner ignites the gas when it reaches the top of the flare stack if excess gas from the process units of the plant needs to be disposed of.

Flaring minimises impacts on the environment and is considered a more environmentally friendly option compared to releasing un-burnt gas directly into the atmosphere.

Shipping

A loading berth connected to the shore and the LNG plant by an 805-metre jetty is the final link in the Sakhalin II LNG chain. Large-size LNG tankers, which due to their size cannot come closer to the shore, are moored to the berth. The water depth at the berth is 14 metres which was achieved by dredging to allow access for the ships. The terminal can handle tankers with the capacity of 18,000 to 145,000 m³. The entire loading cycle, including berthing, etc., takes no longer than 24 hours for each LNG tanker.

Liquid methane (LNG) is shipped by specially designed LNG ships. The gas is kept at low temperature throughout the voyage.

LNG storage tanks are the main element of the LNG ship design. LNG ships also have a cargo section, power units and accessory equipment of the tanks. LNG ships have a double hull in the cargo section to increase safety.

LNG ships run on marine oil and also use the gas that boils off during a voyage as fuel for propelling the vessel, which provides a higher flexibility and energy cost savings.

The industry uses 2 types of tankers today: those with self-supporting, independent spherical tanks and those with membrane tanks.

Spherical tanks are made of aluminum alloy or nickel steel 40 to 80 mm thick and have a diameter of 40 metres; thus, a half of the tank is above the level of the upper deck. The outer layer of insulation is made of polyurethane covered by aluminum foil. The above-deck part of the tanks is covered by steel jackets. Each tank is supported by a cylindrical foundation installed on the second bottom. Membrane tanks are made of 36% nickel steel (invar). The ship’s hull supports the tanks via a layer of perlite or polyurethane insulation over the whole membrane surface.

Each vessel has a capacity of 145,000 m³. These tankers are owned by two Russian-Japanese consortiums which include Russian shipping companies: Primorsk Shipping Corporation and Sovkomflot. These companies provide Russian crews for the ships.

LNG shipping is an entirely new segment in the Russian shipping market. Russian ship owners are gaining valuable experience for future LNG projects in Russia.

In the long term, Sakhalin Energy expects to control a fleet of 5 LNG carriers and 4 Aframax oil tankers to deliver cargos to Asia and North America.

Regasification

Cargos delivered by LNG ships are discharged at LNG receiving or import terminals. A terminal basically consists of a berth, unloading facilities, LNG storage tanks, vaporisation equipment, facilities to handle vapour and boil-off gas and a metering station. The tanks at an import terminal are the same as those at an LNG plant, but have larger LNG storage volumes to provide for variations in cargo deliveries and sendout rates.

LNG regasification terminals commonly use one of the two types of LNG vaporisers—integral heated and remote heated vaporisers—to transform LNG back into its gaseous state. Integral heated vaporisers use a source of heat, usually seawater, which is integral to the vaporising exchanger to warm LNG. Remote heated vaporisers use an intermediate heat transfer fluid (e.g. propane) between the LNG and the seawater, which reduces the potential for freeze-up within the heat exchanger.

Regasification terminals normally use seawater as the source of heat. In an open rack vaporiser, seawater flows downward over the surface of vertical heat exchanger tubes, vaporising the LNG flowing up through the interior of the tubes.

To increase process and energy efficiencies, several methods for utilizing LNG cold in industrial processes are being considered, instead of simply discharging cold seawater into the sea.

Liquefied Natural Gas

Liquefied natural gas (LNG) is a promising and environmentally friendly source of energy of the 21st century. It is produced by cooling natural gas to around -160°C, at which temperature the gas becomes a liquid. In its liquid form, natural gas is reduced in volume by a factor of about 600 times.

LNG is a clear, colourless and odourless liquid, the density of which is less than half that of water. The gas remains liquid at normal atmospheric pressure which makes its storage and transportation by specially designed tankers efficient. Before being distributed to end users, LNG must be returned to its gaseous state at regasification terminals.

LNG produced by the Sakhalin II project is the most convenient and cost-effective way to deliver Russian gas to the Asia-Pacific region. For Russia, that is an opportunity to reach a new market, establish relations with reliable customers for its energy resources and promote long-term sustainable development of the Far East.

Advantages

LNG offers a number of advantages over pipeline gas infrastructures:

• LNG can be delivered from any liquefaction plant to any regasification terminal;
• Liquefied natural gas takes up about 1/600th of its volume in the gaseous state, making its transportation and storage more efficient;
• LNG is the only suitable technology to bring gas to markets across oceans;
• LNG provides better opportunities for holding natural gas for future use;
• LNG is non-toxic and stored in insulated tanks at slightly above atmospheric pressure at some 112 degrees Kelvin, or -161°C.

Oil

Oil Export Terminal

The oil export terminal (OET) is located at Prigorodnoye, next to the liquefied natural gas (LNG) plant. An export pipeline and a tanker loading unit (TLU) are incorporated into the OET where oil is stored prior to loading on a tanker. Oil from the Piltun-Astokhskoye oilfield is supplied to the OET via the TransSakhalin oil pipeline, and mixed with condensate produced from the Lunskoye-A (LUN-A) platform at the onshore processing facility (OPF). Then the oil is placed in storage tanks at the OET. Situated on the eastern side of the LNG plant, the OET shares utility systems and its common plant control systems, based in the LNG control centre.

Oil Transportation

Crude oil from the Sakhalin-2 project is transported to customers by oil tankers “Governor Farkhutdinov”, “Sakhalin Island” and “Zaliv Aniva”. These ice-reinforced vessels were custom built to operate in low temperatures and for the climate of the Sakhalin shelf, especially from January to March. In compliance with Sakhalin Energy’s policy on ecological responsibility, all Company tankers are double hulled. A bow-loading system is used to load the oil, allowing for year-round export.

The “Governor Farkhutdinov” and “Sakhalin Island” tankers each have a loading capacity of 108 000 tonnes, while “Zaliv Aniva” has a capaci ty of 130 000 tonnes.

All oil carriers are chartered by Sakhalin Energy. Oil transportation under the Sakhalin-2 project is also performed on customers’ vessels.

Crude oil Vityaz from Sakhalin-2 project goes to the following countries:

• Japan;
• Korea;
• China;
• Philippines;
• USA;
• Thailand.