ERIELL's extreme logistics
Successful logistics are critical for large-scale capital projects in the oil and gas sector to arrive on time and on budget. ERIELL, a leading oilfield services provider in the CIS region, has had to test its mettle in this area, supporting projects in challenging places across the world, from the cold and remote far north of Russia to double-landlocked Uzbekistan in the heart of Central Asia.
“At first glance, logistics is a fairly simple process: you need to transfer goods from point A to point B,” Vitaly Dokunikhin, CEO of ERIELL Russia, tells NGW. “But the specifics of the oilfield services industry are that this bulky and multi-ton load must be transported in conditions with practically a complete absence of infrastructure, quite often in difficult weather conditions, over long distances, taking into account the seasonality of roads.”
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Logistics is a key component of every project, Dokunikhin says, and greatly affects their success.
“The specialty of our company is that we simultaneously work in several regions: the Russian Arctic, Uzbekistan, Bangladesh and Iraq,” he continues. “To start a new project, in addition to the transportation of the drilling rigs themselves, the weight of which for the Arctic reaches 12,000 tons, each field must be supplied with the necessary materials and equipment.”
The Arctic has emerged as Russia’s main frontier zone for oil and gas development. But the region poses unique challenges not found anywhere else in the world.
Firstly there are the harsh temperatures to contend with. Temperatures average -40 °C in January, can reach as low as minus -60 °C, and are often accompanied by piercing winds that can lead to instant frostbite when skin is exposed.
There is almost no infrastructure, such as roads, electricity, water and communications, and so almost everything must be built from scratch. Roads that do already exist are not suitable for transporting bulky and heavy cargo such as drilling rigs. And making matters worse, there is only a short period of the year when work on so-called winter roads, which have to be rebuilt each year, can take place. Similarly, there are only short periods where rivers are navigable, and during some times of the year the delivery of personnel, equipment and materials is only possible by air.
Climate change has thrown another challenge into the mix. Warming global temperatures mean that the Arctic permafrost is beginning to melt. This further limits the amount of time that winter roads are usable, while additional work is needed to prepare drilling sites.
Nevertheless, ERIELL has managed to carve out a role as a key oilfield services provider in this challenging environment, working with leading Russian oil and gas majors Gazprom Neft and Novatek. Likewise it has established itself as the dominant services player in Uzbekistan, which as one of only two double-landlocked countries in the world, inevitably requires some logistical feats.
ERIELL has chalked up a number of impressive achievements in logistics over the years. In 2017, it mobilised six drillings simultaneously from four locations to the Vostochno-Messoyakhskoye field in the Russian Arctic. The distance covered was 8,640 km, which is comparable to the distance between St Petersburg in northwest Russia and Khabarovsk in the Far East.
In 2021, the company also mobilised a rig for Novatek’s Obsky LNG project on the Arctic Gydan Peninsula over a distance of 12,000 km in just over three months. The 12,000-metric ton structure was delivered from Novy Urengoy via Yekaterinburg to the port of Arkhangelsk by truck and rail, and then brought on two ships to Sabetta.
ERIELL has a presence in Iraq as well, where it once mobilised three drilling rigs from Russia in only four months. They were transported from Novy Urengoy and Usinsk by rail to Latvia, then via the port of Jebel Ali in the UAE to the Iraqi port of Umm Qasr, and then delivered to Lukoil’s West Qurna-2 oilfield by land transport.
Effective logistics has become all the more harder as a result of the various restrictions that have been imposed across the world over the last two years to stem the spread of the coronavirus. The economic fallout from the pandemic has also created serious supply chain problems worldwide, driving up shipping costs and causing delays.
These supply chain issues have affected not only transport costs for oilfield services companies but have also had a knock-on effect on the cost of equipment, materials and services they procure.
“The pandemic has significantly complicated the logistics process and, of course, negatively affected its cost,” Dokunikhin says. “We quickly had to adapt to new conditions and restrictions, since the company's activities are inextricably linked with mobilisations. Each new project involves the transportation of one or more drilling rigs, and in the case of the Russian projects, there is also a very limited period of time due to weather conditions.”
“The beginning of the pandemic coincided with a period when 18 mobilisations had to be carried out, 16 of them simultaneously,” he continues. “For us, this was a first experience of such a large number of simultaneous mobilisations, moreover, under the conditions of coronavirus restrictions. Once again we have proved to ourselves and demonstrated to our customers that we can work not only in completely different climatic, mining and geological conditions, but are also ready for any non-standard logistics tasks.”