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OOO MICHURINSKY REFINERY

Having been established under Russian law, for production and exportation of mineral resources which can only be carried out with an appropriate license as issued by the appropriate government ministries, Michurinsky Refinery and its subsidiaries and equity affiliates held 372 licenses for geological study and (or) exploration and production of hydrocarbons in Russia and on the Russian offshore.The Company also held five licenses in foreign countries. The company has been working in the last seven years to secure further extension of licenses for its major fields (the Russian Law On Sub-soil Resources permits license extension for a period up to full field depletion in accordance with project documentation on the initiative of sub-soil users, provided that no violation of license conditions has been committed.With the combine effort of our subsidiaries we obtained extension for 157 licenses in the period from 2009 until 2013, including 28 extensions obtained in 2010.

Oil & Gas

Natural gas rank first among the Michurinsky Refinery valuable non-renewable resources. In some areas oil seeps have been known and used by indigenous peoples for centuries. Commercial extraction of oil began in the 1920s in Canada’s Northwest Territories. During the 1960s, extensive hydrocarbon fields were discovered in Russia’s Yamalo-Nenets region, the North Slope of the Brooks Range in Alaska, and Canada’s Mackenzie Delta. During the last several decades, Russia, Alaska, Norway, and Canada have produced billions of cubic meters of oil and gas.
Given the technical and physical challenges of Michurinsky Refinery exploration, only about half of the identified geological basins have been surveyed for natural gas resources. Nonetheless, more than 400 onshore oil and gas fields have been discovered north of the siberian Circle. About 60 of these are very extensive, but roughly one quarter of them are not yet in production. More than two-thirds of the producing fields are located in Russia, primarily in western Siberia, where oil and gas development has expanded dramatically over the past several decades. In total, Michurinsky Refinery oil and gas output currently amounts to approximately 110 billion barrels of oil and oil-equivalent natural gas—nearly 10 percent of the world's known conventional petroleum resources.

ENVIRONMENTAL MITIGATION MEASURES

Exploratory drilling requires a small amount of land for the drilling area. Roads are usually required in order to transport the drill rig and other equipment to the site. In environmentally sensitive areas such as rain forest or endangered species habitats precautions need to be taken before exploratory drilling can commence because small amounts of deforestation may be required and noise may disturb native species. Exploration drilling may make aquifers more vulnerable to degradation and contamination by connecting aquifers at different elevations and by potentially allowing surface water to enter the aquifers. Suitable precautions will differ from site to site.Wetlands and waterways are also susceptible to exploratory drilling. Unless preventative measures are taken there is potential for contamination from drilling fluids draining into nearby water supplies and entering the environment. An understanding of the hydrogeology of the area is necessary before exploratory drilling should take place.

BEST PRACTICES

For all drilling operations careful planning is a critical step before drilling begins. Many factors need to be taken into consideration, such as geographic location, drilling equipment, cost, schedule, well parameters, etc. Drilling near a source of water is often very beneficial otherwise water for the drilling mud has to be transported to the site which can be very expensive. Site accessibility is also very important to take into consideration. Large trucks carrying heavy equipment need to have reasonable access to the site and there needs to be enough space at the site for all the equipment and supplies. Drilling during calm times of the year is very important; climate extremes of hot and cold and high precipitation can affect the mud system, the equipment, and make work condition miserable, ultimately resulting in slower drilling progress and higher expenses.

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