Large gas fields in Ukraine
Sometimes, in order to better understand everything that is happening, it is very useful to get to the bottom of the root cause. Let's try to rewind the chronicle of the events taking place in the South-East of Ukraine and assess the state of affairs from the point of view of the authorities who made the decision to extract shale gas.
Recall that in the early 2010s, a “shale revolution” took place in the technology of hydrocarbon production, which made it possible to develop shale deposits on an industrial scale. If we describe the mining process in a simplified way, it looks like this. A deep hole is drilled vertically, and then its direction is bent at an angle to the surface of the earth. Then, under high pressure, hundreds of tons of a special liquid mixture, which includes acids and various active reagents, is driven into the well. This leads to hydraulic fracturing of formations with the release of shale gas, which rises to the surface and is collected by special equipment. This method is considered relatively cheap for the extraction of gas from depleted rocks, but it is also considered the most "barbaric" because of the contamination of groundwater with hazardous reagents, soil poisoning and violation of the entire ecology in the developed areas. All life around perishes, the earth turns into a "lunar surface".
In the US, the documentary "GasLand", which showed the consequences of the disastrous shale gas production, caused a lot of noise. A wave of popular protests against the extraction of gas in this way swept around the world, but only a few European countries managed to ban it. The "shale revolution" has not spared Ukraine either. Actually, such a decision of the "square", at first glance, seems logical. According to the company JSC "Ukrgasvydobuvannya", their gas fields are depleted by more than 80%, they were even compared with squeezed lemon. And then there is also the volume of gas production due to natural decline is reduced by more than 1,5 billion cubic meters per year.
On the one hand, own production means both the economic security of the country and the refusal to purchase gas abroad, and in a successful scenario, even the possibility of exporting its own gas to Europe. But on the other hand, it is a disregard for their own population living in the territories planned for the extraction of shale gas, and the selfish desire of the temporary workers in power to break the jackpot on the sale of everything that can still be sold.
According to the reports of the well-known scandalous publications in the press, the Burisma company, back in 2010-2011, it received licenses for exploration and production at the Rakitnyanskoye and Niklovitskoye fields in the Lviv region. At the same time, Royal Dutch Shell conducted its hydrogeological research in Krasnolimansky and Aleksandrovsky districts of Donetsk region. Exploration results appear to be encouraging. And in the same 2011, the Cabinet of Ministers of Ukraine approves the holding of an unprecedented scale tender with the conclusion of an agreement under the PSA scheme (production sharing agreement) for the production of hydrocarbons within section Yuzovskaya (territory of Kharkiv and Donetsk regions) and section Oleskaya (Lviv and Ivano-Frankivsk regions). To view these documents, follow the links.
The reserves of the Yuzovskaya site (area of 7,886 thousand sq. Km) were estimated at 3,6 trillion. cubic meters. They contain natural shale gas, central basin gas, methane, oil and condensate.
But the development of these fields requires a lot of money, and in 2012 NJSC Nadra Ukrainy is holding a competition to attract foreign investors. The tender for the development of the Yuzovskaya area was won by the Dutch-British company Royal Dutch Shell, and the American company Chevron at the Oleskaya area. Investors were granted a special permit for the full use of the subsoil of the site (with the restriction of drilling in depth up to 10 km) for a period of 50 years and with the right to extend this period almost forever. The text of this agreement is kept secret.
In January 2013, deputies of the Kharkiv and Donetsk regional councils, most of them members of the Party of Regions, presumably under pressure from “above”, approved an agreement on the production of shale gas at the Yuzovsky block and the division of the extracted raw materials between the state company Nadra Ukraine and Shell companies and Nadra Yuzovskaya ". The shares of the latter, in turn, were divided between the state-owned company "Nadra Ukraine" and one-day companies, whose management included persons close to the incumbent President Yanukovych and Prime Minister Azarov.
Betrayed and sold
By their decision, the deputies of the southeastern regions of Ukraine actually betrayed the voters, their neighbors and friends, giving up four and a half million people of the Donbass population for the extraction of shale gas along with the land of their small homeland. And already in early 2013, the people, outraged by the plans to extract shale gas in their region, took to the streets. Protest performances took place in Slavyansk, which is located in the very center of the Yuzovskaya area, as well as in Mariupol, Kramatorsk, Donetsk, Kharkov, Izyum. The protesters demanded to declare a moratorium on shale gas extraction, as this threatens the destruction of arable land in the Donetsk region, dehydration of already scarce water sources, pollution of underground aquifers and the Seversky Donets River. They offered the authorities to hear, before it is too late, the position of the people, to stop the expansion of Shell and, through a referendum, return the issue of production to the legal channel. But even then, the authorities did not give a damn about the people, nature protection zones and the environment. (A video of the protests is posted at the end of the article.)
Shale gas protests map
Shale gas was planned to be produced in Krasnolimansky, Aleksandrovsky, Slavyansky, Konstantinovsky, Artemovsky, Dobropolsky, Yasinovatsky districts of Donetsk region. The territory planned for gas production includes the coniferous Krasny Liman and the resort town of Svyatogorsk with its national natural park “Svyati Gori”. Sanatoriums and tourist centers of Svyatogorsk, former pioneer camps, passed into the private hands of famous Ukrainian businessmen, everything fell under the distribution.
Map of Yuzovskaya Square sites (click to view).
The reserves of the western Oleskoye field (6,324 thousand sq. Km) were estimated at 3 trillion. cubic meters. And, despite the harsh criticism of Ukrainian politicians and environmentalists, in November 2013, the American Chevron Corporation (Chevron Ukraine BV) and Nadra Oleskaya also signed an agreement on the production of hydrocarbons at the Oleskaya block (Lvov and Ivano-Frankivsk regions).
And then, as we remember, events developed in a dramatic way. The government of Yanukovych and Azarov has discredited itself in the eyes of the people. And the people went to peaceful protests, having every right to do so. But on November 30, 2013, the protests in Kiev took on a sharp anti-government character, which in February 2014 led to a change of power in the country by a “group of persons” pursuing completely different goals. Another wave of Anti-Maidan rallies swept through the cities of South-East Ukraine. The people were shocked by the new course of the Ukrainian government, and in March 2014, following a referendum, Crimea joined Russia. In April, the Donetsk People's Republic was proclaimed. And blood poured ...
On May 2, 2014, in Odessa, radical nationalists drove the participants of the Anti-Maidan into the House of Trade Unions and set them on fire. And on May 9, 2014, in Mariupol, the Armed Forces of Ukraine, which entered the city, brutally shot and burned the local police, which refused to obey the orders of the Kiev authorities, barricading themselves in the building of the Ministry of Internal Affairs.
The burning building of the Ministry of Internal Affairs in Mariupol. May 9, 2014
In June 2014, heavy fighting was already going on, and the militia had to leave Slavyansk. In July 2014 there was aviation catastrophe. A Malaysian passenger Boeing 777 was shot down in a war zone in the east of the Donetsk region. In August of the same year, the famous "Ilovaisk pot" slammed shut, into which the Armed Forces of Ukraine fell.
Against the backdrop of the events of hot August 2014, Royal Dutch Shell announced the suspension of work on the Yuzovskaya area due to the ongoing hostilities, as well as due to the disappointing results of geological exploration.
And in December 2014, Chevron unilaterally withdrew from the project for the development of the Oleskaya area, explaining the decision by the fact that the Ministry of Finance of Ukraine did not fulfill its obligations to bring the regulations in line with the current legislation in time.
Both of these companies hoped that at the beginning of 2015 the first gas would flow from the wells they had drilled, but a farce major intervened and they left.
The new Ukrainian regime that came to power managed to take control of the territories given to investors by force. By shelling and destroying the houses of civilians, they managed to partially drive out the indigenous population from this land. However, they failed to suppress the protest moods and armed resistance of Donbass.
“I would say that in this case, the regime that came to power after the coup d'état in Kiev is using military action against its own residents for economic reasons. They are determined to benefit from the contracts signed by the previous government. ",
- says Nebojsa Malic, an American journalist of Serbian origin.
But not only the hostilities influenced the decision of the largest oil and gas companies to curtail work in Ukraine. There were other reasons as well. Until now, the reserves of Ukrainian shale gas were considered only “predicted”. To determine the real reserves, it was necessary to invest a lot of money and carry out a lot of geological exploration work. The first two prospecting wells drilled by Shell in the Kharkiv region (Belyaevskaya-400 in the Pervomaisky district and Novo-Mechebilovskaya-100 in the Bliznyukovsky district) turned out to be "dry" and did not produce industrial gas inflow.
And in Poland, neighboring Ukraine, out of 68 drilled wells, not a single one produced shale gas in industrial volumes. Experts believe that the Polish and Ukrainian subsoil is a single geological formation. Therefore, oil and gas giants Chevron, ExxonMobil and Royal Dutch Shell have all together closed their shale projects in Poland. In addition, the markets saw a drop in oil quotations, to which the price of gas is also tied. A stalemate has developed in Ukraine: the amounts from the sale of the produced gas will not be able to cover the costs invested in its production.
In addition, the Verkhovna Rada raised the rent for gas production from 20 to 70%, which also negatively affected the profitability of production and shocked private producers. Some companies, such as the British company JKX, are now suing the state.
The peculiarities of business in Ukrainian is when the terms of the transaction are constantly changed by the Ukrainian side after the signing of agreements. All foreign companies attracted to Ukraine by generous promises must be ready for this. After a sharp drop in gas prices on the market, Ukrgasvydobuvannya partially froze new well drilling projects concluded with foreign companies. And the companies that imported their drilling equipment to Ukraine thought about leaving the country or reoriented to private gas producers.
"Now the goal is not cubic meters, but to reduce risks when drilling new fields and increase the likelihood of successful drilling,"
- said Andrey Favorov, head of Naftogaz Ukraine.
Experts predicted that American companies or banks are unlikely to finance shale projects in Ukraine unless the US government itself provides the funds. They looked into the water!
“Of course, the best way to demonstrate your altruism, humanism and commitment to the free market is to criticize the country's corruption, then sponsor a coup that topple the government accused of corruption, and then appoint the sons and friends of American officials to the boards of directors of companies with interests in this country. ... This, of course, is completely legal and very honest. ",
- American journalist Neboisha Malich sneers.
And so it happened that Burisma appeared from the teams of the “second division” to the final. Its website says:
“Burisma Group is the largest private gas production group in Ukraine. The company is the only vertically integrated holding in the country engaged in exploration, production, service and sale of hydrocarbons. "
It is clear that the largest, because the company was able to get licenses for the development of fields in three oil and gas basins of Ukraine: Carpathian, Dnieper-Donetsk and Azov-Kuban.
The "ascent to Olympus" began in 2008, when Burisma Holdings acquired two subsidiaries of the American Sunrise Energy Resources (LLC "Esko-Pivnich" and LLC "Pari"), which since 2004 had permission to develop Ukrainian oil and gas fields. "Esko-Pivnich" - Karaykozivskoe field, Rakitnyanskaya and Roganskaya areas (Kharkiv region), and "Pari" - Niklovitsky deposits of Peremyshlyanskaya and Chukvinskaya areas, (Lviv region), Pilipovskoye field (Ivano-Frankivsk region) and Sheremetyevskoye deposits ( Chernivtsi region).
In 2010, Burisma, having received 5 exploration licenses, drilled its first 8 wells at the Rakitnyanskoye and Niklovitskoye (Lviv region) fields. According to 2015 reports, Burisma drilled 63 wells, and in 2019 there were already 154.
Note that in May 2014, Robert Hunter Biden, the son of US Vice President Joe Biden, joined the board of directors of the Burisma oil and gas holding company, and the company plans to produce shale gas in Ukraine. After leaving the scene of Chevron and Shell, the Biden family, apparently, decided to realize their little gesheft. The United States supported the reforms of the Yatsenyuk government, which, at the request of the IMF, from April 1, 2015, increased the gas tariff for all categories of consumers by an average of 280%. Naturally, the profitability of gas production has also increased. Later, daddy himself, Joe Biden, flew to Kiev, who declared in the Verkhovna Rada that Washington supports the Ukrainian authorities "in the face of humiliating threats." But his "technical assistance package" consisted mostly of recommendations for more efficient energy use and shale gas production from Ukrainian fields.
In April 2019, after scandalous publications in the media, and officially "after the expiration of his term", Hunter Biden resigns as a member of the Board of Directors of Burisma Group. But today there are two outstanding personalities on the Board of Directors of Burisma. Alexander Kwasniewski - President of the Republic of Poland in 1995-2005, under which the country changed course from socialism to democracy. Joseph Kofer Black - ex-head of the CIA's Anti-Terrorism Center in 1999-2002, for his service received the highest CIA award - the Medal of Merit in Intelligence. He is also the vice-chairman of the famous American PMC Blackwater Worldwide (now renamed Academi).
When Biden's son served on the Burisma Group's Board of Directors, there was a series of scandals and arrests. It turned out that in 2014-2016, the company, evading taxes in the amount of about one billion hryvnias, converted profits into fictitious expenses through shell companies. By decision of the Ukrainian court, Burisma was banned from the sale of produced gas and seized 46 wells in five regions. The case was hushed up, but companies close to the Biden family disappeared from it. And already in 2016 Burisma is increasing its Ukrainian investment portfolio by purchasing the KUB-Gas company from the Canadian Serinus Energy. In addition, Burisma has expanded its drilling fleet of 20 rigs with the most powerful SK 3000 rig. The emphasis is on the ability to drill wells to a depth of 10 m. Burisma is gradually increasing its gas production, which in 000 reached 2018 billion cubic meters. The company drills new wells with a depth of more than 1,08 meters and reconstructs old ones using hydraulic fracturing (hydraulic fracturing). But all these are very costly and time-consuming activities on the verge of risk.
There would be no happiness, but misfortune helped ...
Due to the shutdown of a number of industries, Ukraine has begun to consume less gas in recent years. So, in 2014, the volume of own consumption amounted to 42,6 billion cubic meters, and by 2019 decreased to 29,8 billion cubic meters. But even today, despite all efforts, our own production accounts for a little more than half of our own consumption, and the missing volumes are replenished with imported gas. After the refusal to purchase Russian gas, a new trend emerged: Ukrainian UGS facilities offer their services for the temporary storage of European gas. Well, yes, we already know how "leaks" from storage facilities and other "unforeseen" extraction of foreign gas occur.
Here is a map on which I marked the territory of the Yuzovskoye gas field transferred to foreign companies and the border of the separation of forces in the Donbass. Judging by this map, the defenders of Slavyansk would not have had a chance to hold the city. Sooner or later they would have been kicked out of there, if not the Armed Forces of Ukraine, then the American PMCs. Now all this territory is the property of investors who will squeeze everything out of it, scoop out the bowels to the bottom, in order to return all invested millions with interest. The continuation of hostilities on the borders of the field will lead to a further exodus and reduction of the indigenous population. Now the motives of the US government's military assistance to Ukraine and Russia's reaction to everything that happen are becoming clear.
Map of the Yuzovskoye gas field and the line of demarcation of forces in the Donbass
"What about shale gas?" - you ask.
“Ukraine has started to produce gas by the fracking method,” said the head of Naftogaz, Andriy Kobolev, in November 2016. It was reported that "Ukrgasvydobuvannya" was the first to use "fracking" (eng. Fracking) on a gas well. But later, the press service of Naftogaz hastened to reassure the population, saying that the production of "shale gas" is not planned. Most likely, it was about the reconstruction of an old well using hydraulic fracturing (hydraulic fracturing) to stimulate its efficiency. According to the reports of the Naftogaz company, since the fall of 2016, 464 hydraulic fracturing operations in 253 wells.
This year the company is carrying out hydraulic fracturing works in wells with a depth of more than 4000 meters.
What is the difference, you ask. In my opinion, this is practically the same thing, "only in profile." Simply the phrase "shale gas" is a taboo, which was replaced in the media by the words "fracking", "hydraulic fracturing" or the abbreviation "hydraulic fracturing". But the harm done to nature will not diminish from this.
In addition, some experts warn that the consequences of hydraulic fracturing are not fully understood and can cause micro-earthquakes that can disrupt the integrity of the disposal of nuclear waste in the South-East of Ukraine and lead to a large-scale disaster near the borders of Russia.