Interview with Yury Maksimov, Deputy Chief Executive Officer, Conceptual Engineering and Capital Construction Support at Gazpromneft Science & Technology Center


Conceptual engineering for field development planning and also mature field re-engineering today constitutes an integral functional area of expertise for any major oil and gas production company. Looking for the best and most cost effective layout for surface facilities consistent with processes occurring in reservoirs and wells is considered a crucial phase of project preparation. Yury Maksimov, Gazpromneft Science and Technology Center's Deputy Chief Executive Officer, Concept Engineering and Capital Construction Support, told OGJRussia how engineering and searching for the best option is done at Gazprom Neft Group.



— Yury Valerievich, how is conceptual engineering defined at the Science and Technology Center?

— The term itself includes the two keystone definitions: this is a concept and an engineering. The engineering means calculations to be performed from the inception of a field model integrating the surface and subsurface parts. And the concept means a scenario of asset development based on project context details and geological uncertainties of a field. 

Our mission is to formulate a concept and decide on project development stages to put in perspective all possible risks concerning a range of aspects –from geology and economics to country specifics when it comes to foreign assets. For example, previously, when high profile projects were in development, no such focus was evident. As preparations are made for field development, only the basic production profile was defined providing the basis for a feasibility study. As a result, there were situations when geological assumptions were not confirmed calling for adjustments to the infrastructure set-up and capacity. More often than not we get some update changing our initial view of the in-situ geology until the commencement of drilling. However, by this time infrastructure is already in place or any alterations to its set-up will, in fact, result in a complete change of plan for the project concept. Today, when reserves become more challenging, and their development is increasingly costly, we should avoid such situations factoring into uncertainties and risks as much as possible. 

When developing conceptual projects, we are looking for the best options for all systems including subsurface, drilling and surface infrastructure. Given all conditions and uncertainties and also technologies available to us at a specific point in time, we are opting for the most cost effective project solution. For example, by applying this tool at the Messoyakhskoye field, we increased the project net present value (NPV) by 23%. Benchmarking studies show that unless any conceptual engineering methods are applied, the cost of running a project will hike by 10-40%. Considering the amount of investment in field development, these are some big figures that can be translated into tens of billions of rubles for a company. 

— That is, conceptual engineering is a tool producing the best problem solving option by taking as much as possible data for various segments? 

— Yes, it is a tool that is the key to finding the best integrated solution taking into account all parameters of subsystems that are used to construct the field development scenario.

— And when is re-engineering carried out?

— Re-engineering is applied at mature fields that are already past their peak production and, for example, have excessive infrastructure. We assess the situation looking for energy balance so that operational costs for maintaining a project are kept to a minimum. This enables us to identify new solutions and improve development economics, in fact, extending the life of a field. Normally, solutions address opportunities to create capacities for processing or commercializing APG, reducing electricity costs, optimizing pipeline operation costs through advanced design options and materials. 

Today we have expanded the project scope adding an analysis of potential scenarios for residual oil development. The upshot is a comprehensive study to improve a project's economics, increase or optimize production, and to abandon the operation of non-commercial wells. This year we performed such work at Gazpromneft-Vostok's Krapivinskoye field with some good results culminating at formulating measures offering the prospect of increasing the project's NPV by more than 10%. 

— What is cost engineering all about? 

— At present, one of the most serious challenges confronted by oil and gas producing enterprises is the efficient decision-making process at early project development stages. An error in initial cost estimate leads to selecting other than best scenarios for running a project and eventually to its failure. 

To mitigate such risks, Gazprom Neft has created a unified cost engineering system making it possible to form reasonable cost decisions and keep track of projects. Underlying this system is a database of physical and cost parameters amassed at the company. Existing capital and operational cost estimating tools are being extensively applied by cost engineers and technical experts to support their decisions. The estimate accuracy varies subject to the availability of input data, but generally does not exceed established error margin limits. When conceptual projects are developed, it is necessary to find the best option for all systems: subsurface, drilling and surface infrastructure. The Science & Technology Center has come up with its own software product solution making it possible to create conceptual projects based on the need to look for the best solutions. 

— Please tell us about IT-developments in the field of conceptual engineering. 

— The Science & Technology Center has come up with its own software product solution making it possible to create conceptual projects based on the need to look for the best solutions. The software consists of two modules: a link to the subsurface and surface parts, i.e. geology and infrastructure, well clustering; and a way of selecting the method of production, cost estimation and a project's economics analysis. The unique solution is based on a set of calculations to find the best option allowing for uncertainties and interference between all systems. The software dubbed ERA.ISKRA runs calculations for thousands of variations and offers the most cost effective scenarios. A single digital platform makes it possible to speed up calculations by hundreds of times. 

In cost engineering, the Science & Technology Center is developing a software package on a fully-fledged IT platform to improve the accuracy of calculations for all costs in oil production: subsurface, drilling and surface infrastructure. Such solution enables any authorized corporate network user to get online access to calculation modules and receive prompt expert support. 

— Do you develop such software yourself or in partnership? 

— At the Science & Technology Center we are supposed to analyze business needs, set tasks and develop unique algorithms and techniques to address them. Those algorithms are run using software by IT partners. There is much talk about the development of specific software products. 

— Are there any plans to put them on sale? 

— We are primarily focused on solving our own specific needs to be dealt with by the company. 

— Is there in the world anything like conceptual engineering products developed by the company? 

— The review of similar software products showed that there are some packages on the market enabling tasks to be solved in individual areas. However the market has nothing to offer in terms of an integrated approach to finding the best option allowing for all uncertainties and risks. We are trying to make sure that all reserves available to the company are put into development. However, for the time being, a portion of those reserves, although classified as recoverable, is below the break-even point. Our new software put to wide use by us last year gives an insight into the application potential for new technologies so that those could be included into operations at a profit and go into development. 

— How is this potential determined? 

— Before the Technology Strategy was adopted in 2014, the process of applying new technologies came down to looking for offers on the equipment and services market followed by their adaptation and integration into oil production processes. We used to go with the flow rather than in the driving seat. Today we are addressing the task of finding and applying new technologies through the development of a technology management system. 

It gives us a consistent basis for doing some math and figuring out the value of oil production processes, for identifying the improvement potential through the deployment of new technologies. This makes it possible to set tasks and seek solutions in tandem with equipment manufacturers and service firms. 

Cost engineering tools allow accurate estimation of budgeted costs at every field development stage. A new job has recently appeared – a cost engineer. Regarding the surface infrastructure, the main vistas of applying new technologies are the lower cost and the faster pace of construction work on surface infrastructure facilities. Equipment specifications and modular design solutions are being currently formulated in collaboration with the manufacturers and design institutes. Such equipment is particularly needed in the Yamal region where the climate is a challenge so is logistics, and it's small wonder that construction work will cost you giving food for thoughts of how to cut costs. 

— What companies do you work with? 

— Now there are several leading domestic companies in the Russian market. We conduct regular technological workshops, where we discuss our needs and receive confirmation that plants are ready to switch to that type of equipment. We are also looking at foreign similar products to develop our expertise. I am confident that over time we will be able to achieve the best practices in the world in terms of technology, and, most critically, value. 

— Please illustrate the key applications of such technologies. 

— Such technologies may have generally all applications for surface development infrastructure, for example, now we are extensively using polymer-based pipelines that come in large drums. It is an easy and quick to use solution: get on site, roll out and assemble a pipeline. And all work is done without welders. The second example is a pre-assembled oil treatment unit deployed at the Kuyumbinskoye field in Eastern Siberia and at the Messoyakhskoye field in Yamal-Nenets Autonomous Okrug. What normally used to take 1.5-2 years to set it in place, now was done with a span of 4–5 months. 

— Are there any new materials that have recently come on the market regarded as game-changers for the design of some facilities? 

— Naturally, there is an increasingly larger volume of composite materials, but there are no signs yet that, for example, metal will no longer be in use. Although it has not been long since we started looking in this direction, we can already see that the market offers opportunities for adding strength, reliability and durability to road surface in permafrost conditions by using composites. I think in 2-3 years' time there will be more ideas which innovations can be applied to make work cheaper and better. 

— Can we say that the design business is currently on the doorstep to a revolution? 

— A revolution is in progress for us. But, unfortunately, the norms and rules dating back to the Soviet era remain unchanged. We are already in a position to develop safety case studies or technical specifications to reduce costs and improve efficiency without deviating from standards and allowing for corrective action. But we have room for development and lessons to be learned from foreign practices, where norms are not so conservative and industrial safety standards are certainly not inferior to ours. 

— How is training provided to personnel involved in conceptual engineering? 

— First, the company has developed an in-house training program 'PROconcept' that is unparalleled in Russia. The enrollment competition is very tough. The best professionals experienced and competent in developing integrated solutions are selected. The company's employees trained under this program acquire knowledge from related disciplines and study in-depth the holistic decision making approach based on the uncertainty analysis of all systems. 

Second, together with the Tyumen State University, we put together the first domestic master's program on conceptual engineering producing professionals with broad-based cross-discipline knowledge. Leveraging the opportunities spawned by an expanded customized program they are trained in all disciplines required in the search for the best option. The Science & Technology Center 's staff experts are enlisted for training as part of the syllabus.

It should be noted that a new job has recently appeared – a cost engineer. It is a professional who should be able to estimate the cost of facilities, based on the best engineering solution to be selected, the current pricing system and the cost of resources.


Yury Maksimov has held the position of Deputy Chief Executive Officer, Conceptual Engineering and Capital Construction Support at Gazpromneft's Science and Technology Center since 2013.
He graduated with honors from the Udmurt State University in gas & oil field development and production. He started his career path at JSC Udmurtneft switching between jobs: from production operator to operations manager. He continued to work at TNK-BP; was part of the team running the Kamennoye field development projects and the Uvat project; developed engineering, conceptual design and project management disciplines.

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