THE OUTLOOK FOR SOVIET OIL DRILLING IN THE 1980S

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• Sequence Number: 6
• Publication Date: June 1, 1984
• Content Type: REPORT

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Directorate of Top Secret
Intelligence
The Outlook for
Soviet Oil Drilling
in the 1980s
NGA Review Complete
Top Secret
SOV 84-10089CX
June 1984
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 Directorate of Top Secret
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The Outlook for
Soviet Oil Drilling
in the 1980s
This paper was prepared by
Office of-'Global Issues. Comments and queries are
welcome and may be addressed to the Chief, Soviet
Economy Division, SOYA,
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Key Judgments Drilling for oil will rise rapidly during the remainder of the 1980s, as the
Information available Soviets make a major effort to keep oil production stable. This rise will
as of I May 1984 push up the USSR's energy investment requirements and tie up scarce
d
h
was use
is report.
in t
manpower and equipment.
The Outlook for
Soviet Oil Drilling
in the 1980s
The oil industry must expand its exploration drilling rapidly, to find new
formations before the ones currently producing play out. It must also
increase its development drilling, to offset declines in production from
existing wells and to exploit recent finds. These new formations have
generally been deeper and less productive than those they replace and
therefore require more drilling outlays.
We believe that in 1990 the oil ministry will drill some 35-50 million
meters, for exploration and development combined. This will require a
herculean effort-it is far above the nearly 26 million meters drilled in
1983-but even so it probably will not sustain oil production at the 1983
level of 12.3 million barrels per day (b/d)~
The Soviets themselves suggest that maintaining production at the 1983
rate would require drilling to double every five years-to some 60-70
million meters in 1990. Even though drilling probably will become more ef-
ficient in 1984-90, the additional labor and capital equipment required to
drill and maintain 60 million meters of new well would still be too great for
Moscow to muster in a period of slow growth in labor force and investment.
Besides, oil production involves more than drilling. The Soviets are
currently having trouble managing their existing well stock-let alone the
8,000 to 9,000 new wells being added every year. Production problems may
become overwhelming as drilling is accelerated.
Our drilling estimate is based on an assessment of drilling efficiency and of
labor and capital availability in the 1980s. Specifically:
? We estimate that drilling productivity (measured by meters drilled per
drilling brigade per year) will increase by more than one-third between
1982 and 1990. This projected improvement reflects better equipment
and techniques, improved infrastructure in the key oil-producing region
of West Siberia, and an increased proportion of total drilling being done
in West Siberia-where productivity is generally higher than in other
areas.
? Even with productivity gains, the Soviets will need to increase the
number of drillers. We estimate that the oil ministry will add 20 to 60
drilling brigades annually in the period to 1990.
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? Investment outlays for drilling probably will rise faster than drilling
meterage because of increasing drilling costs. We estimate-on the basis
of rising drilling requirements and costs-that oil industry capital
investment will be about 20 billion rubles in 1990, more than double the
level in 1982
The Soviets' chances of keeping oil production close to 12 million b/d
through 1990 will depend heavily on development drilling, and especially
its distribution between West Siberia and other regions. In recent years the
Soviets have made substantial gains by shifting drilling teams from older
regions into West Siberia. We expect them to continue to add resources
there, although the payoff for increases is becoming smaller each year.
Drilling in other regions, where oil output is declining, is likely to level off
for the rest of the decade
The USSR produces most of its own drilling equipment, but it relies on im-
ports to fill some specific needs. In some respects, Soviet drilling technol-
ogy is 10 or more years behind that employed in the West. We anticipate
that the Soviets will continue to seek selected types of Western drilling
technology.
Exploration drilling, principally for oil, is scheduled to average more than
10 million meters per year in 1986-90, about two-thirds more than in 1983.
This increase appears to reflect a desire to compensate for recent neglect of
exploration. Even though it will remain small compared with development
drilling, this planned increase in exploration drilling will require a substan-
tial increase in skilled labor and equipment.
The most promising areas for exploration are offshore. Such areas
currently provide less than 2 percent of total output, but the Soviets plan to
accelerate their offshore drilling activity, concentrating on the Caspian
Sea, offshore Sakhalin, and the Barents Sea. Access to Western offshore
technology has been and will continue to be instrumental to Soviet offshore
drilling and production.
The oil ministry will also be competing with the gas ministry for drilling re-
sources. The gas ministry currently drills less than 10 percent as much as
the oil ministry, and gas drilling requirements are expected to grow more
slowly than oil drilling needs. Nevertheless, gas drilling is usually more
expensive and slower than drilling for oil-principally because of greater
depths and pressures-and expanded gas production is critical to Soviet
energy plans for the rest of the decade and beyond
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Key Judgments
Exploration Drilling
Regional Trends
Development Drilling
Drilling in the 1970s and Plans for 1981-85 .
5
Regional Trends
6
Drilling Productivity
11
West Siberian Development Drilling
14
Development Drilling in Other Regions
16
Exploration Drilling
16
Drilling by the Oil Ministry
17
Impact on Oil
Production
19
A. Drilling Procedures and Organization
B. Drilling in West Siberia
C. Drilling Equipment and Technology
D. Offshore Drilling
E. Drilling Investment as a Basis for Forecasting 37
Oil Industry Investment
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1. USSR: Oil Ministry Drilling, 1965-85
2. USSR: Oil Production and Drilling, 1966-85
USSR: Net Growth in Oil Production per 1,000 Meters of
of Oil Ministry Drilling, 1971-85
USSR: Oil Ministry Production Wells, by Region, 1965-85
USSR: Drilling Efficiency and Well Depth
USSR: Oil Well Flows, 1970-85
9. Development Plan for Samotlor Field, 1973
10. Major Soviet Petroleum Deposits and Oil Pipelines
(foldout map at end of book)
1. USSR: Organization of Oil and Gas Exploration and Production . 1
2. USSR: Exploration Drilling, .1961-90
3. USSR: Effectiveness of Exploration Drilling,
by Region, 1976-80
4. USSR: Oil Ministry Exploration and Development
Drilling, 1970-85
5. USSR: Average Depth of Oil Ministry Development Wells, 1965-85 7
USSR: Active Rigs and Drilling Brigades in West Siberia, 1971-81
8. USSR: Drilling Costs, 1965-90
9. USSR: Drilling Productivity by Region in 1977
10. USSR: Productivity Trends in Oil Ministry Development 14
Drilling, 1970-81
11. Details of West Siberian Drilling Productivity: Estimated 16
Net Effect of Favorable and Unfavorable Factors, 1981-90
12. USSR: Projected Drilling Productivity in the 16
Oil Ministry in 1985 and 1990
13. USSR: Drilling by the Oil Ministry in 1982, 1985, and 1990 19
14. West Siberia: Time Required in the Well Construction Cycle, 1975 23
16. Active Drilling Rigs in Selected West
Siberian Oilfields, 1980 and 1982
17. USSR: Production of Turbodrills, Electrodrills, and
Drilling Rigs, Selected Years
18. Principal Soviet Plants Producing Drilling Equipment, 1984
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The Outlook for
Soviet Oil D ' in
in the 1980s
Drilling-a key determinant of current and future oil
production-has two basic functions. Exploratory
drilling seeks to discover new fields and determine
their extent; it provides the basis for estimating
reserves and planning future production. Development
drilling is critical to. current production, which re-
quires wells for oil production and for water injection.
Table 1
USSR: Organization of Oil and
Gas Exploration and Production
Three ministries are responsible for oil drilling-the
Ministries of Geology, of the Petroleum Industry, and
of the Gas Industry (table 1).' All three drill explora-
tion wells, but only the two industrial ministries do
development drilling. The Ministry of Geology is
responsible for assessing potential resources (for ex-
ample, the oil and gas potential of a geologic basin)
and for initially locating oil and gas fields.' The
subsequent detailed assessment of oilfield size and
potential and the drilling of development wells nor-
mally are handled by the oil ministry.
Some variations from this general pattern occur. For
example, the oil ministry focuses on exploration drill-
ing in established producing regions, while the Minis-
try of Geology handles nearly all of the exploration
drilling, including field delineation, in West Siberia
and other less-explored areas. Drilling procedures and
organization are discussed further in appendix A.~
All drilling, whether for exploration or development
and whether for oil, gas, or water, requires basically
the same equipment (with some variations due to
differences in environment, depth, and geology) and
labor skills. Drilling is measured in million meters per
year in the USSR. To the extent that labor and
equipment are mobile, drilling by any ministry can be
exploration-both oil and gas.
] In addition to oil and gas exploration, the geology ministry
performs shallower drilling for mineral deposits of all types. It has
also drilled several very deep wells (for example, an 11,000-meter
well on the Kola Peninsula) to study the earth's crust and upper
mantle. The Ministries of the Petroleum and Gas Industries are
commonly called the oil and gas ministries.
Geologic mapping Geology
Seismic surveying Geology
Exploration drilling Geology, oil, and gas
Converting reserves to production
Drilling new wells Oil and gas
Fluid-lift efforts Oil and gas
Note: Roughly 3 percent of Soviet oil output is handled by the gas
ministry, which controls all offshore oil and gas production and also
produces gas liquids from gasfields. The oil ministry accounts for
roughly 5 percent of Soviet gas output. 25X1
redirected; for example, gas ministry crews and equip-
ment could be used to drill for oil. The oil ministry,
which accounted for 43 percent of exploratory drilling
and 93 percent of development drilling in 1980, is the
primary focus of this study.
Since 1965, Soviet oil drilling has more than tripled,
with the largest gains occurring in the late 1970s
(figure 1). Between 1965 and 1980, all of the growth
occurred in development drilling, and exploration
drilling declined. Plans for 1981-85 call for even more
rapid growth in development drilling, plus a substan-
tial increase in exploration drilling.
The oil ministry's drilling target for 1985 is 30.5
million meters-up nearly 70 percent over 1980. Past
trends in oil production and drilling, together with the
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Figure 1
USSR: Oil Ministry Drilling, 1965-85
Exploration
0 1965 70 75 80 84a 85a
Figure 2'
USSR: Oil Production and Drilling, 1966-85
I I I I I I I I I I I I I
75 80 84"856
"Drilling figures are for the USSR Ministry of Petroleum
only; production is the USSR total.
h Planned.
plan projections, are shown in figure 2. Clearly, the
Soviets face sharply higher drilling requirements in
their pursuit of small production gains. Drilling will
have to increase still further after 1985.
Exploration wells are the final step in the exploration
process. The preliminary steps-regional and local
geologic and geophysical studies and shallow structur-
al and deep "parametric" drilling-determine that an
exploration well should be drilled in a specific loca-
tion.
The exploration drilling of the oil, gas, and geology
ministries (summarized in table 2) illustrates several
noteworthy trends:
? Exploration drilling stagnated in the 1970s-a peri-
od in which oil production and development drilling
rose dramatically. The large drop in drilling by the
oil ministry was offset by gains by the other two
ministries.
? The Soviets clearly intend to reverse this trend
According to a Soviet periodical, a 29-percent in-
crease in total exploration drilling is planned for
1981-85 and a 47-percent increase for 1986-90 [1].
Regional Trends
The amount of exploration. drilling varies widely
among regions Its most striking feature is
the heavy emphasis still being given to exploration in
the older producing areas where output is declining,
such as the Volga-Urals, North Caucasus, and Cen-
tral Asia. West Siberia was the principal growth
region of the 1976-80 period, but it accounted for only
12 percent of exploration drilling in 1971-75 and 17
percent in 1976-80. The Volga-Urals region, where oil
production peaked at 4.5 million b/d in 1975 and
declined to about 3.8 million b/d in 1980, still
received 31 percent of Soviet exploration drilling in
1971-75 and an estimated 28 percent in 1976-80.
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Exploration Drilling Procedures
Deep exploration wells are of two basic types-
prospecting (poiskovaya) and exploratory (razvedoch-
naya). Prospecting wells are comparable to "wildcat"
wells in the West-drilling in a structure for the first
time to search for oil or gas. Exploratory wells are
step-out wells drilled to determine the extent of a
previous discovery. The two types are usually report-
ed in Soviet data as a single category. In 1977,
however, a Soviet monograph stated that prospecting
drilling was 58.5 percent of total exploration drilling,
and exploratory drilling 34.7 percent. The remaining
6.8 percent of deep exploration drilling consisted of
'parametric" or test wells drilled to learn
about the general geology of a region [2].
Three factors largely determine the amount of explo-
ration drilling planned in any country. These are the
reserve-to-production ratio, finding rates, and aver-
age depths of new prospects. Planners know they must
have some minimum level of reserves if they are to
sustain a given production rate. In theory, a produc-
tion rate may be determined first; then the additions
to reserves required to support this level are deter-
mined. Then exploration drilling targets (in meters)
are set, on the basis of expected finding rates-that
is, the amount of reserves the oil. and gas experts
expect to discover per meter drilled in any given
region.
Soviet press articles since the late 1970s have scored
the earlier neglect of exploration in West Siberia [3].
Plans for the amount of new reserves to be discovered
in West Siberia were unfulfilled for the first time in
1976 and for the second time in 1977 [4]. Currently,
the Soviets are attempting to boost drilling rapidly.
After stagnating in the early and middle 1970s at
500,000 to 600,000 meters annually, exploration drill-
ing in West Siberia surpassed 1 million meters in
1980. Plans for 1981-85 originally called for explora-
tion drilling there to average nearly 2.5 million meters
per year, but in 1981-83 it averaged only about 1.4
million meters, according to a Soviet publication [5].
Plans for 1981-85 also call for substantial, but small-
er, growth in exploration drilling outside West Sibe-
ria. The Soviets plan increases of 20 percent in
Kazakhstan, 140 percent in East Siberia, 80 percent
in Komi, and 30 percent in the Volga-Urals region [6].
The relatively limited amount of exploration drilling
in West Siberia appears the more surprising in light of
the remarkable effectiveness of exploration there (ta-
ble 3). For each meter drilled, exploration drillers
found four times as much oil in West Siberia as in the
nation as a whole, and drilling costs per ton of reserves
were only 23 percent of the national level-but only
17 percent of total exploration drilling was done there
This neglect of exploration came at a time of acceler-
ating production. West Siberia accounted for all
growth in Soviet oil production in 1976-80, besides
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Table 2
USSR: Exploration Drilling, 1961-90
1981-85
1986-90
Total
24,661
26,226
26,123
26,700 b
34,400 b
50,700 b
Oil ministry
16,342
15,380
14,532
11,750 c
13,000 c
NA
Gas ministry
36
135
876
2,400 c
3,200 a
NA
Geology ministry
8,263
10,711
10,715
12,550 c
18,200 c
NA
a M. M. Brenner, Ekonomika geologorazvedochnykh rabot na neft'
i gaz v SSSR (Moscow, Nedra, 1979).
b Ekonomicheskaya gazeta, No. 5, January 1983, p. 1.
c Estimates based on plans and several Soviet press reports.
offsetting more than 1 million b/d of production
decline elsewhere. The Soviets clearly were aware of
the imbalance. Academician A. A. Trofimuk stated in
1980 that exploration drilling was 20 times as effec-
tive in West Siberia as elsewhere [7].
The limited exploration effort in West Siberia is an
inefficient allocation of drilling resources, judged by
Western standards, and can be attributed in large
measure to the following factors:
o West Siberia has a harsh environment and limited
infrastructure. The inability of the region's economy
to support a greatly expanded exploration effort has
hindered the drilling effort. Evidence of infrastruc-
tural constraints appears frequently in the Soviet
press, in complaints that roads, electric power, and
freight capacities are inadequate and living condi-
tions are poor [8].' (The infrastructure problem is
discussed more fully in appendix B.)
' The importance of infrastructure for operations is illustrated by
the Soviets' vow not to repeat "the mistake of Povkh"-referring to
a field (Povkhovsk) north of Nizhnevartovsk where drilling began
before the roads and other logistic support were established and, as
The relatively small West Siberian exploration drill-
ing effort apparently reflected optimism arising
from the great discoveries in the 1960s and early,
1970s. The size and quality of these finds.were such
that reserve plans were met even when drilling plans
were missed [10]. Efforts to increase exploration
drilling in the late 1970s fell short of plans.
Labor, materials, and plant and equipment are not
as mobile in the USSR as in the West and cannot
easily be transferred from an old production area to
a new one. Even though production costs are rising
in the Volga-Urals and Azerbaijan, the Soviets
would probably go to great lengths to prevent large
regional shifts in labor and capital assets, such as
would be caused by the collapse of the oil industry
there. But as oil regions mature, new well flows and
exploration finding rates generally fall. As a result,
drilling for both exploration and development must
increase, if only to moderate the decline in produc-
tion. This problem partially explains why Soviet
planners allocate high levels of exploration to older
regions.
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Table 3
USSR: Effectiveness of Exploration Drilling,
by Region, 1976-80
Volume of Exploration
Drilling (percent of
USSR total)
Oil Discovered per Discovery Cost per
Meter Drilled (percent of Ton of Reserves (percent of
USSR average) USSR average)
Source: A. P. Krylov, et. al., Modelirovaniye razvitiya i razmesh-
cheniya neftyanoy promyshlennosti (Moscow, Nedra, 1981), p. 16.
(Note: Krylov's table apparently refers to exploration drilling for oil
only-not for gas.)
three production problems: increasing depletion rates,
increasing well depths, and declining new-well flows.
The Soviets have been adding roughly 2 million b/d
of new oil production capacity annually in recent
years. About 95 percent of this is required to offset
declining production from existing wells [11]. In other
words, if they added no new wells, production would
decline by 1.5-2.0 million b/d in one year. They can
add some new capacity by reopening inactive wells,
installing larger pumps, and other techniques, but new
wells are the principal source of new capacity.?F-
Drilling in the 1970s and Plans for 1981-85
Table 4 summarizes the amount of drilling planned
for and actually done by the oil ministry. Generally,
overall drilling plans were met or almost met in the
early and middle 1970s. Exploration drilling gradual-
ly declined until 1979, before beginning to rise slowly,
while development drilling grew rapidly, especially
after 1979. The rise in development drilling reflects
' The amount of development drilling called for in a plan is based on
the amount of new production capacity the industry will require if it
is to achieve the planned growth in output. Planners must specify
the number of meters to be drilled, which they determine principal-
ly by estimating what the average flow rates and depths of new
wells will be; they also estimate how many additional wells must be
Development drilling increased by 76 percent between
1975 and 1980, and this increase was a major factor
in the 23-percent growth of oil production that oc-
curred in that period. Nevertheless, during 1976-80 as
a whole the oil ministry fell short (by over 3.3 million
meters) of its plan to drill a total of 75 million meters.
This shortfall was presumably one of the factors in the
planners' downward revision of their 1980 oil produc-
tion target from 12.4-12.8 million b/d to 12.1 million
b/d.
The mid-to-late 1970s saw sharp declines in the ratio
between net growth in total oil production and meter-
age drilled for development (figure 4), and the ratio
will continue to slide in the 1980s. The decline reflects
three factors:
? Most of the production from new wells simply
offsets production losses from depletion of older
wells. The share of new capacity required to offset
depletion has climbed from 66 percent in 1971-75 to
a planned 95 percent in 1981-85 [12].
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Table 4
USSR: Oil Ministry Exploration
and Development Drilling, 1970-85
Figure 4
USSR: Net Growth in Oil Production
per 1,000 Meters of Oil Ministry
Drilling, 1971-85
Growth (barrels per day)
Planned
Total
Actual
l
E
l
i
D
l
Tota
xp
orat
on
eve
opment
1970
NA
9.0
2.8
6.2
1971
9.8
9.2
2.9
6.3
1972
9.7 t
9.8
2.9
6.9
1973
10.2
10.6
2.9
7.7
1974
12.5
11.0
2.9
8.1
1975
12.0
11.6
2.7
8.9
9
1976
12.0
12.1
2.6
.5
1977
NA
12.8
2.4
10.4
1978
14.3
13.7
2.4
11.3
1979
16.9
15.1
2.2
12.9
1980
19.3
18.0
2.3
15.7
1981
22.8
21.6
2.4
19.2 0
1982
24.4
23.3
2.5
20.8
1983
26.7
25.8
2.7
23.1
1985 Plan
30.5 a
3.0 a
27.5 a
a The 1985 plan of 30.5 million meters was published at the end of
1982. The division between exploration and development drilling is
a CIA estimate based on cumulative 1981-85 exploration and
development drilling goals and the 1985 drilling plan for West
Siberia.
? The average flow rate of new wells is dropping
sharply, especially in West Siberia (figure 8). This
requires more new wells-hence more drilling
meterage-to provide a given amount of new
capacity.
? The average depth of new wells is increasing (table
5). This trend requires more drilling meterage to
complete a given number of wells.
The impact of drilling shortfalls on oil production is a
complicated question, however, because drilling is not
the only determining factor in production. In older
fields, for example, the use of larger or more efficient
pumps can partially compensate for the drilling of
fewer new wells. The area in which specific drilling
shortfalls occur is also significant. Shortfalls in West
1971 75
Siberia occur primarily in the fields that are hardest
to supply. In other regions, drilling probably will be
concentrated in more productive areas, and the short-
falls will be concentrated in marginal areas; this will
tend to minimize the impact of these drilling short-
falls on aggregate oil, production.
Regional Trends
Since the mid-1970s, Soviet development drilling has
increased primarily in West Siberia and has
stagnated or grown slowly in other regions. In the
Komi, Udmurt, and offshore areas, the amount of
drilling has grown but is still relatively small. (Drilling
in West Siberia is further discussed in appendix B and
offshore development in appendix D.)
The increase in West Siberia was paralleled by
absolute declines in drilling outside West Siberia in
1978 and 1979, reflecting the transfer of drilling
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Table 5
USSR: Average Depth of Oil Ministry
Development Wells, 1965-85
1966
1,655 a
1,841 b
1967
1,686 a
1,931 c
1968
1,691 d
2,060 c
1969
1,714 d
2,088 c
1971
1,786 d
1972
1,773 d
1973
1,775 d
2,236 b
1974
1,811 d
2,246 b
1975
1,832 d
2,2528
1976
1,887 d
NA
1977
NA
NA
1979
1980
2,078 f
2,4008
Planned, 1981-85
2,360 h
2,600 h
a Bureniye, No. 6, June 1973, pp. 5-11.
b N. A. Grigoryan and V. S. Grigoryan, Ekonomika bureniya
naklonnykh skvazhin (Moscow, Nedra, 1977), p. 86.
A. R. Orlov and I. D. Karyagin, Sovershenstvovaniye -
organizatsii proizvodstva burovykh robot v Zapadnoy Sibiri (Mos-
cow, Nedra, 1980), p. 31.
d Bureniye, No. 9, September 1977, p. 4.
e R. Sh. Mingareyev, et al., Tekhnicheskiy progress v neftyanoy
promysh'lennosti v desyatoy pyatiletke (Moscow, Nedra, 1981), p.
25.
f Neftyanik, No. 1, January 1981, p. 21.
s Neftyanoye khozyaystvo, No. 11, November 1982, p. 18.
h Based on 1981-85 plans, as cited in Ekonomicheskaya gazeta,
No. 5, January 1982, p. 2, and Neftyanoye khozyaystvo, No. 1,
January 1981, p. 4.
resources from European areas of the USSR to West
Siberia. The downward trend of development drilling
in other regions was reversed dramatically, with gains
of 20 percent in 1980 and 15 percent in 1981,
according to Soviet data, but the gains did not
continue after 1982. Despite the growing emphasis on
West Siberia, the oil ministry plans that in 1985 more
than 70 percent of its oil wells will be in other regions
(figure 6):
In current Soviet planning, the increased drilling
meterage scheduled for 1981-85 is to'come principally
from greater efficiency in the use of drilling manpow-
er and equipment. This expectation is implicit in the
plan, even though the record shows that meterage
increases in West Siberia through 1981 were achieved
primarily through the use of increased inputs of labor
and capital. During 1976-81, for example, West
Siberian drilling nearly quadrupled-principally be-
cause both the number of brigades and the number of
active drilling rigs more than quadrupled (table 6). F_
Labor 25X1
Drilling operations by the oil ministry involve more
than 200,000 workers. In mid-1981, according to a
Soviet oil-industry journal, there were 1,332 drilling
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Figure 6
USSR: Oil Ministry Production
Wells, by Region, 1965-85
10
0 1965 70
Planned.
Table 6
USSR: Active Rigs and Drilling Brigades
in West Siberia, 1971-81
-Total
Active Rigs
Drilling Brigades
Sib
W
Number
Annual
Number
Annual
P
eria
-
est
Percentage
Increase
ercentage
Increase
1972
37
19
30
3
1973
47
27
33
10
1974
55
17
39
18
1975
62
13
53
36
All other
regions
1976
81
31
73
38
1977
95
17
78
7
1978
124
31
112
44
1979
201
160
1980
252
188
1981
282
229
Note: These figures are computed from the annual averages for
commercial speed (meters drilled per rig per month) and for drilling
brigade productivity (meters drilled per brigade per year). These
measurements are discussed in the section on drilling productivity
and shown in table 10.
brigades, 380 rig-assembly brigades, and 195 well-
testing brigades in the USSR [13]. We estimate, from
data on meters drilled per brigade, that about 20
percent of the drilling brigades and associated groups
were in West Siberia. Another 40 percent were
exploration drillers, working principally in older re-
gions.
A brigade usually has 20 to 30 drillers, but the entire
drilling effort involves another 200 workers to support
each drilling bri ade.
A
1981 press report indicated that the number of work-
ers per brigade was virtually unchanged two years
later [14]. This figure suggests that the Soviets'
addition of 151 drilling brigades in West Siberia over
the period 1977-81 involved nearly 34,000 additional
Although the number of drillers normally operating a
Soviet drilling rig at one time-five workers-is
comparable to typical US operations, support workers
far exceed the normal number in the United States.
Soviet drilling administrations reportedly spend con-
siderable time repairing defective drill pipe and other
equipment received from Soviet plants
The number of workers per brigade apparently varies
by region. West Siberian
drilling organizations generally had 30 percent more
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about 100.)'
workers than those in well-established areas. Explora-
tion crews, which by their nature are more mobile
than development drilling crews, are presumably
smaller-perhaps only half the size of West Siberian
production drilling organizations. Factoring in these
differentials, and assuming that 229 of the 1,332 oil
ministry drilling brigades were in West Siberia and
that 535 were exploration brigades in both West
Siberia and elsewhere, we estimate that the oil minis-
try's national drilling effort involved about 210,000
people in 1981.5 The total number of drilling workers
represents about a 20-percent increase over 1970.1
The oil ministry's rapid gains in drilling (it more than
doubled between 1970 and 1981) were due in large
part to the shift in labor toward West Siberia, where
drilling productivity was higher than elsewhere.=
' A Soviet oil industry journal suggests the number may be slightly
higher. It states that in 1980 there were 115 workers per drilling rig
[15]. According to a Soviet technical journal, the oil ministry had at
that time "over 2,000 rigs" [16]; if we assume this to mean between
2,000 and 2,100, the figure implies 230,000 to 240,000 workers.C
6 The number of oil ministry drilling brigades increased by 216
(19.3 percent) between 1971 and 1981, according to published
Ton Secret
Our estimate of the Soviets' future drilling brigade
requirements involves two basic uncertainties: (1) the
number of new drilling brigades the oil ministry can
add annually, and (2) the geographic distribution of
these new brigades. Using the figures from our drill-
ing productivity projections (see section below) and the
1985 oil ministry drilling plans, we find that the
Soviets would have to add 90 to 235 brigades between
1983 and 1985. (Between 1981 and 1983 they added
Our estimate of the oil industry's labor requirements
for 1986-90 is based on our projection that the Soviets
could increase the number of brigades by 20 to 60 per
year. Such additions-when combined with the re-
gional differences in brigade size-yield the following
ranges in the number of drilling-associated workers in
1985 and 1990:
Thus, the drilling effort probably will require 20 to 50
percent more workers in 1990 than in 1981. Although
the industry probably will still have labor turnover.
problems, it probably can achieve such an increase
over a nine-year period. The upper end of this range-
60 brigades per year (20 percent more than the
1981-83 pace)-probably is the fastest pace that the
Soviets can sustain over a five-year period.
Several statements by Soviet officials and oil special-
ists have suggested there are limits to the number of
new brigades that can be added to'the drilling effort.
For example:
? In late 1982 Gosplan Chairman N. K. Baybakov 25X1
said that the drillers' task was "to ensure the
accomplishment of growing amounts of drilling
without increasing the number of brigades." [17]
' The oil ministry added a total of less than 200 drilling brigades in
1970-80. The 1981-85 Plan (using Soviet drilling productivity
targets) implied an increase of 166 brigades, or about 35 per year.
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? A 1982 Izvestiya article referred to drillers as
"specialists of the scarcest profession ... (they)
become highly qualified after five to six years of
work, and even then not all of them reach this
level." [18]
? In 1983 a deputy oil minister noted that drilling
requirements would rise in the later 1980s and said:
"It is unrealistic to count on forming hundreds of
new [drilling] brigades; we need to solve problems by
skills." [19]l 1
Morever, rising requirements. for drilling resources by
the gas and geology ministries will further constrain
the oil ministry's ability to increase the number of
drillers]
The gas ministry plans to drill 10.4 million meters in
1981-85. Most of this drilling will be in difficult
conditions-in the remote Urengoy and Yamburg
fields in West Siberia; in high-sulfur, corrosive gas
fields in the Caspian area and Central Asia; in very
deep'formations in the Caucasus and Ukraine; or
offshore. At the Urengoy field (the source of all
scheduled growth in Soviet gas production during
1981-85) the ministry has far fewer drillers than
planned. This apparent shortage of labor at its most
important field suggests that the gas ministry's priori-
ty in drilling allocations is lower than that of the oil
ministry. We expect this lower priority to continue
during the 1980s. Rapid increases in oil ministry
drilling are clearly essential for high oil production
levels, but drilling by the gas and geology ministries,
while important, is less of a determinant of produc-
tion.
Investment
Investment in the oil industry has risen rapidly in
recent years, largely because of increases in the
amount and costs of drilling. According to official
statistics, 8.7 billion rubles were invested in the oil
industry in 1982-31 percent more than in 1980 [20].
The current five-year plan calls for an investment 63
percent greater than that of 1976-80 [21 ]. This implies
that the oil industry was slated to receive an invest- .
ment of about 8.5 billion rubles annually during 1981-
85, but, given the rapid and above-plan increases in
1981 and 1982, actual investment probably will be
higher. Investment data reflect the priority accorded
to the oil industry-this sector received nearly 60
percent of the 1981-82 increase in total industrial
investment
Within oil industry investment, the share of drilling
outlays can be calculated roughly from reported
meterage and our fragmentary data on cost per meter
drilled. Table 8 presents these cost data and our
estimates of drilling costs for 1980, 1985, and 1990.
Each estimate is presented as a range, in which the
lower figure is based on an extrapolation of the overall
cost trend of the decade 1970-79 and the higher is
projected on the trend of accelerating costs encoun-
tered in 1977-79. According to a Soviet oil handbook,
ruble costs per meter are usually based on an estimat-
ed (smetnaya) cost. This is about 6 percent higher
than the sebestoimost' (the Soviet concept of produc-
tion cost), because the smetnaya cost includes antici-
pated profit. In any case, these ruble costs may
understate growth in cost if judged by Western
standards, because they exclude an adequate capital
charge
On the basis of these cost assumptions, we estimate
that investment in drilling by the oil ministry was 2.9-
3.0 billion rubles in 1980-or 45 percent of all oil
industry investment, as reported in official statistics.'
This calculation is consistent with recent statements
in the Soviet technical literature that investment in
drilling represents 40 to 50 percent of oil industry
investment [22].
We also project that the oil ministry's drilling costs
will be 5.1-5.4 billion rubles in 1985 and 8.6-10.3
billion in 1990. This calculation is based on the
midpoint of the cost estimates in table 8 and the
estimates of the ministry's exploratory and develop-
ment drilling for 1985 and 1990, as shown in table 13.
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Table 8
USSR: Drilling Costs, 1965-90 a
Exploration
Drilling
Development
Drilling
1966
160 b
1967
163 b
61 b
1968
186 b
1969
231 b
1970
239 b
85 b
1971
253 b
86 b
1972
259 b
94 b
1974
1975
1976
1985 (estimate)
505--5448
139-160 g
1990 (estimate)
598-661 g
157-193 g
e The sources presenting these cost data give no indication of the
price base used. Therefore, these estimates may include some
inflation, but probably no more than is imbedded in Soviet
investment numbers, which are expressed in 1973 rubles.
b Robert W. Campbell, Trends in the Soviet Oil and Gas Industry
(Baltimore, Johns Hopkins University, 1976), pp. 16-17.
e N. I. Buyalov, S. Ya. Kaganovich, Ekonomicheskaya effektiv-
nost' geologorazvedochnykh rabot na neft' i gaz (Moscow, Nedra,
1980), pp. 18-19.
d Neftyanik, No. 1, January 1981, p. 22.
e M. M. Brenner, Ekonomika, geologorazvedochnykh rabot na neft'
i gaz v SSSR (Moscow, Nedra, 1979), p. 167.
f The estimate of 1978 development costs is based on the assump-
tion that the ratio between exploration and development costs is the
same as in 1977.
e See text for the basis of our estimates.
These cost estimates suggest a rising investment
requirement for the Soviet oil industry.. The require-
ment may in fact be higher, because our estimates
may not fully capture new elements of costs that
perhaps could push upward the annual increases in
investment. Such elements include the following:
? An increased drilling effort accelerates the indus-
try's requirements for rigs, pipe, bits, and other
equipment-which may not be available in suffi-
cient quantity and quality because of deficiencies
and shortfalls in industries producing drill rigs and
equipment.
? If drilling investment is to be effective, it must be
accompanied by investment in the relevant ma-
chine-building sectors as well as in such infrastruc-
ture as roads, electric power, and housingF-- 25X1
Combining our cost estimates with the assumption
that drilling costs will continue to represent, on
average, 45 percent of total oil industry investment (a
percentage based on 1970-82 data), we can estimate
oil industry investment in 1985 and 1990. If the oil
ministry chooses drilling levels in line with the drilling
scenarios we consider most likely, oil industry invest-
ment will rise from 8.7 billion rubles (1973 "constant"
prices) in 1982 to about 12 billion rubles in 1985 and
19-23 billion rubles in 1990. Such a rapid increase in
oil investment will be difficult to bear at a time of
slow growth in total Soviet investment, combined with
increasing demands from other energy sectors and
from nonenergy programs, such as the food program.
Drilling Productivity
A common theme in Soviet technical discussions of
drilling has been the need to increase drilling produc-
tivity rather than continuing to rely primarily on
increased inputs of labor and capital. (Productivity in
drilling is measured in meters drilled by a given unit
in a given time.) Although Soviet drilling productivity.
is improving, it remains low by world standards. For
example, US drilling rigs are two to three times more
productive in terms of meters drilled per year than 25X1
Soviet rigs. (See table 9 for Soviet drilling productivi-
ty and appendix C for a discussion of Soviet drilling
technology.) Because the Soviets will find it harder to
muster large increases in manpower and equipment in
the 1980s than they did in the 1970s, their plans for
drilling growth in the 1980s rest in large measure on
plans for productivity gains.
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The Soviets measure drilling productivity in several
ways and frequently publish data for five separate
indexes:
? Commercial speed-meters drilled per active drill-
ing rig in one 30-day month.
? Mechanical speed-meters drilled per hour of bit
rotation.
? Meters per bit-the average number of meters
drilled by a single bit before it wears out.
? Meters per brigade-meters drilled by a single
drilling brigade in one year.
? Meters per worker-meters drilled per drilling
worker in one year.
Commercial speed, mechanical speed, and meters per
bit are functions of the level and quality of technol-
ogy and equipment, the depth of the reservoir, and the
characteristics of the rock being drilled. Measures of
the meters per brigade and per worker reflect organi-
zational and logistic problems as well. These factors
have a negative effect on productivity in the following
ways:
? Equipment and technology. Most Western analysts
consider Soviet drilling technology to be far below
Western standards [23]. Problems with drill pipe,.
blowout preventers, drilling fluid technology, and
drill bits hamper Soviet drilling operations.
? Depth. Drilling productivity declines sharply with
depth. At greater depths, the pressure and tempera-
ture are generally higher and the rock is harder, all
of which reduce bit life and penetration rates. The
degree to which productivity falls with depth de-
pends largely on the quality of equipment and the
rock conditions. As discussed in appendix C, the
Soviets' primary drilling tool is the turbodrill,
whose productivity tails off especially quickly with
increasing depth. Rotary drilling is less quickly
affected, but it too slows with depth. (The longer the
drill string, the more time is spent in raising and
lowering the drill pipe to change the bits worn out
by the greater temperature and pressure.) According
to Soviet statistics, the drop in commercial speed is
especially sharp beyond 3,000 meters (figure 7).
? Type of rock. The soft sandstone and siltstone
reservoir formations of West Siberia are far easier
to penetrate than the harder limestone and dolo-
mite formations of the Volga-Urals region. (Table 9
illustrates the wide regional differences in produc-
tivity.)
In the 1970s
On the whole, the productivity of oil ministry drilling
rose during 1970-81. Behind this trend, however, and
accounting-for most of the rise, was the increasing
importance of West Siberia in the overall picture. As
a contributing factor, the share of development drill-
ing was increasing and that of exploration drilling was
declining. Table 10 shows that, in terms of meters per
brigade, the ministry's development drilling produc-
tivity in West Siberia is three times the average for
the entire country.
West Siberian drillers met plans through the mid-.
1970s, but they could not keep up with the rapid
acceleration of targets in 1977-80. They missed the
1980 target by about 1.2 million meters (12.5 per-
cent).
In the late 1970s, a central problem of West Siberian
drilling was the decline in brigade productivity, as
shown in table 10. This decline is attributable to
several factors:
? The role of Samotlor, the largest Soviet oilfield, was
diminishing, and it was the Samotlor brigades that
set most of the West Siberian drilling records.
Overall brigade productivity is as much as 60
percent better in this supergiant field than in other
West Siberian fields, principally because of easier
drilling conditions and well-established infrastruc-
ture [24]. Samotlor's share of total drilling in Tyu-
men' declined from 55.6 percent in 1975 to 14.5
percent in 1981, and its contribution to Tyumen'
production fell from 58 to 46 percent,
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Figure 7
USSR: Drilling Efficiency and Well
Depth (exploration drilling)
decline of this field's share of drilling in West
Siberia appears to have been a principal cause of the
decline in West Siberian brigade productivity in
1976-79.
? The Soviets moved to small, isolated fields hundreds
of kilometers from established infrastructure. In
such fields, the logistic failures and supply shortages
are particularly severe, and the share of idle time is
increased.
? Reservoirs in many of the newer fields (such as
Kholmogorsk, Pokachev, Var'yegan, and Lyantor)
are 200 to 500 meters deeper than the principal
reservoirs at Samotlor [25]. Depth increases of this
kind present no technological problem, but they
increase the drilling time per well.
? The rapid increase in the number of West Siberian
drilling brigades-from 83 in 1978 to some 230 in
1981-slowed their individual productivity, as sup-
plies and experienced personnel were stretched thin.
0-1,500 1,501- 2,001- 2,501- 3,001- 3,501- 4,001- Greater
2,000 2,500 3,000 3,500 4,000 4,500 than
Table-9
USSR: Drilling Productivity
by Region in 1977
Of All Drilling Of Exploration
Drilling Only
USSR (overall average) 110.3 40
West Siberia 276.7 212
Bashkir ASSR 177 100
Tatar ASSR 210 384 a
Perm' 154 107
Mangyshlak 144
Udmurt 233
329
Kuybyshev 99 80
Ukrainian SSR 30 .24
Checheno-Ingushkaya ASSR 31
KomiASSR 86
a The high productivity of exploration drilling in the Tatar Republic
(a part of the Volga-Urals region) seems anomalous. It may be due
to the fact that recent Tatar exploration has emphasized shallower
deposits that are easier to drill.
Source: M. M. Brenner, Ekonomika geologorazvedochnykh rabot
na neft' i gaz v SSSR (Moscow, Nedra, 1977), pp. 165-166.
Press reports indicate that untrained personnel are
hampering the brigades' work, shortages of drill
pipe and casing are chronic, and equipment is being
operated beyond its normal service life and becom-
ing less efficient [26].
? Expeditionary crews from other areas, who on aver-
age are less productive than crews accustomed to
working in West Siberia, began to take an increas-
ing share of the area's total drilling load.
The late 1970s decline in West Siberian drilling
productivity began to turn around in 1980
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Table 10
USSR: Productivity Trends in
Oil Ministry Development Drilling,
1970-81
Meters per Commercial Mechanical Meters
Brigade a Speed b Speed c per Bit
1970
7,545
1,120
9.7
34.5
1971
8,285
1,137
9.8
36.6
1972
NA
NA
10.2
39.6
1973
NA
NA
11.0
44.8
1974
NA
1,447
11.7
49.5
1975
9,603
1,576
11.6
54.4
1976
9,205
1,494
11.5
60.3
1977
NA
NA
NA
1978
11,405
1,713
12.8
76.1
1979
12,291
1,677
NA
84.3
1980
13,951
1,697
NA
1981
15,743
1,791
NA
West Siberia Only
1970
34,369
2,956
32.7
111.5
1971
40,200
3,091
36.2
118.0
1972
46,200
3,115
38.9
158.0
1973
56,400
3,281
37.6
193.9
1974
58,600
3,493
36.2
198.2
1975
53,053
3,739
35.6
NA
1976
46,890
NA
35.2
NA
1977
48,547
3,339
35.5
206.3
1978
43,692
3,293
34.0
199.2
1979
42,435
2,815
34.2
199.5
1980
44,798
2,779
33.6
195.0
1981
48,037
3,246
32.5
188.9
a Meters per brigade meters drilled by a single drilling brigade in
one year.
b Commercial speed = meters drilled per active drilling rig in one
30-day month.
c Mechanical speed = meters drilled per hour of bit rotation.
NOTE: Information compiled from unclassified Soviet texts and
journals.
In the 1980s
The oil ministry's plans call for meterage per brigade
to rise by more than 50 percent between 1980 and
1985 (from about 14,000 to over 21,000 meters per
brigade nationwide) [27]. We calculate that if the
21,000-meter goal is met by 1985, only about half of
the 7,000-meter increase will have been accounted for
by an increase in drilling productivity. The rest will
come from two changes in drilling activity: the region-
al shift to West Siberia and the ministry's shift of
emphasis from exploration drilling to the more effi-
cient development drilling.
Drilling increases in the 1980s will come principally
from the oil ministry, although drilling by the gas and
geology ministries also will rise. How much the
Soviets will be able to do depends both on the outlook
for drilling productivity and on how fast they can
increase the number of brigades.
As noted above, drilling productivity varies widely
according to geologic conditions. In one year, for
example, 100 experienced brigades could do roughly 5
million meters of development drilling in West Siberia
but only 1.0-1.5 million in most other regions. In the
same period, the same brigades could do only 500,000
meters of exploration drilling (with some regional
variation). This is because drillers must proceed cau-
tiously in unknown formations, monitoring lithology
and pressure as they go; because exploration drilling
targets are often formations deeper than those cur-
rently in production; and because of communication
and supply difficulties related to the remoteness of
some operations from administrative and supply cen-
ters.
Although plans call for large increases in exploration
drilling during the 1980s, we estimate that the Soviets
will divert resources from exploration to development
drilling if they think the diversion will help hold
production stable. In addition, given the importance
of drilling to oil production, we estimate that the oil
ministry will be given priority over the gas ministry in
onshore development drilling.
West Siberian Development Drilling. West Siberia
will remain the main focus of drilling increases in the
1980s: We estimate that productivity in this region
could increase substantially, perhaps by 25 to 45
percent between 1981 and 1990.9 This estimate is
' In 1981, West Siberian drilling productivity was already 13.2
percent above the 1979 rate. Presumably some of the factors
enumerated above began to leave an impact before 1981. Neverthe-
less, we chose 1981 as a base year to allow for sources of
productivity gains not included in the calculations summarized in
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based on our evaluation of several factors, favorable
and unfavorable, relevant to the West Siberian effort.
Favorable factors include the following:
? Substantial gains probably will be made during the
1980s as the Soviets step up their effort to improve
the infrastructure in West Siberia. Workers from
Leningrad, Kiev, and other cities have been recruit-
ed to work, notably on roads and housing. Despite
some continuing shortcomings, West Siberian infra-
structure is being improved
The improvements may enable the Soviets
to reduce the percentage of inactive rigs in West
Siberia (see appendix B). If a shortage of drill pipe is
a key factor in this idleness, as annears likely
imports could ease the problem.
the size of drilling
pads in the West Siberian swamps is increasing.
These pads are artificial islands from which direc-
tional wells are drilled downward and outward,
generally in clusters of eight. Older pads have eight
to 16 wells, but pads with 16 to 48 are becoming
more common, and one oilfield has pads with 60 to
80 wells. Larger pads sharply decrease the time lost
in moving rigs, possibly eliminating one or two
interpad moves annually. Interpad moves can take
as long as a month, while moves within a pad can be
made in four days.
? After more than 20 years of drilling in West
Siberia, the Soviets are higher up on the learning
curve and better able to solve drilling problems.
Despite the potential for continued productivity gains,
a number of unfavorable factors will dampen the
extent of the productivity gain in West Siberia:
? Despite infrastructure improvements, labor turnover
in this harsh climate continues to be a problem. In
1983, according to a press report, the Nizhnevar-
tovsk production organization hired 300 new work-
ers, but 200 of its other workers left [28]. Such a
turnover slows expansion and lowers the average
experience level of the work force.
? Although they drill faster in West Siberia than in
other regions, experienced brigades from other areas
apparently require two to three years to come up to
speed in West Siberia [29]. New drillers, on the
other hand, may require five to six years of experi-
ence before they become proficient [30]. Because
new workers continue to constitute a large part of
the total work force, productivity will be hampered.
? Geological conditions, such as depth and rock hard-
ness, are somewhat worse in West Siberia's new
fields than in the older ones, according to Soviet
technical journals [31]. Although this trend began in
the late 1970s, these newer fields will play a much
larger role in the 1980s than they did in the 1970s.
? Factors beyond drillers' control-such as electric
power outages and severe weather-probably will
continue to be a problem. Nearly all West Siberian
this hinges on very ambitious plans for power
plant construction in West Siberia during the 1980s.
? Overall productivity gains in the oil ministry in the
1970s were due in part to the shift of many brigades
from the less productive exploration drilling to the
more productive development drilling. In 1975-79,
for example, the number of exploration drilling
brigades declined by more than 21 percent in conse-
quence of the increased emphasis being placed on
meeting high production goals [32]. The shift of
brigades from exploration to development provided
a potential increase of 2-5 million meters in develop-
ment drilling, depending on their geographical allo-
cation. Further productivity gains from this source
are unlikely if the Soviets are serious about their
plans to increase exploration in the 1980s
Table 11 combines our estimate of the quantitative
impact of these favorable and unfavorable factors.
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Table 11
Details of West Siberian Drilling Productivity:
Estimated Net Effect of Favorable and
Unfavorable Factors, 1981-90
Estimated Change
in Productivity
Decreased drilling rig downtime due to
improved supplies and infrastructure a
23 to 30 percent
Larger drilling pads b
7 to 15 percent
Improved drill bits and other equipment c
10 percent
Higher on the learning curve d
5 percent
Unfavorable factors
Worsening'of geologic conditions e
-5 percent
Power outages
weather problems f
-5 to -10 percent
,
Net effect
25 to 45 percent
a Assumes 90 to 95 percent of the assembled rig park is operating in
1990, rather than the 73 percent during 1980-81.
b Assumes brigades save one or two interpad moves annually.
e Soviet 1985 plans called for a doubling of meters drilled per bit
between 1980 and 1985. Given published complaints about bits and
problems in the new bit plant acquired from the United States, we
estimate that such a doubling may not occur until 1990. Bit
changing operations occupy about 10 percent of total drilling time,
according to a Soviet journal. Cutting these operations in half by
doubling bit life would improve productivity by 5 percent. Other
equipment improvements will also help, but probably by no more
than the 5 percent attributed to bit improvement.
d Difficult to quantify, but probably of same order of magnitude as
bit improvement.
e In the late 1970s in West Siberia, bit productivity remained
constant, despite bit improvements, because of worsening geologic
conditions, according to a Soviet oil journal. These conditions are
expected to continue to worsen, probably again roughly equal to the
improvement in bits.
f Difficult to quantify, but probably of same order of magnitude as
bit improvement; possibly worse if infrastructure fails to keep pace
with the move to many distant and isolated fields.
Combining them, we estimate that West Siberian
drilling brigade productivity will be 55,000 to 56,000
meters per brigade in 1985 and 60,000 to 70,000 in
1990 (table 12)
Development Drilling in Other Regions. The produc-
tivity of development drilling in regions other than
West Siberia depends on the average depth of new
drilling targets and the priority accorded these areas.
USSR: Projected Drilling Productivity
in the Oil Ministry in 1985 and 1990
Development
drilling
West Siberia 48,000
55,000 to 56,000
60,000 to
70,000
Other regions 13,400
13,200 to 14,100
13,000 to
15,000
Exploration 4,300 4,300 to 4,500 4,300 to 4,800
drilling
Note: see text for discussion of projection techniques. Calculations
are based on the average 1982-90 productivity growth rate.
A focus on deeper drilling, combined with an effort
funneling most new equipment to West Siberia, could
push productivity levels slightly below the 1981 level.
A focus on shallower drilling in the Volga-Urals
region and Kazakhstan's Buzachi Peninsula, com-
bined with some improvement in equipment, could
raise the other regions' productivity by about 10
percent. This is comparable to the estimated impact of
improved equipment in West Siberia shown in table
Table 12 shows the range of possibilities under these
two focuses. A 10-percent improvement would bring
estimated 1990 drilling brigade productivity to about
15,000 meters per brigade.
Exploration Drilling. Exploration drilling productivi-
ty in the 1980s also will depend heavily on drilling
conditions encountered and on the priority assigned to
the effort. It probably will be no worse in 1990 than in
1981, as much of the oil ministry's increased effort
probably will be in West Siberia, where exploration
drilling productivity is relatively high. Using basically
the same analysis as was used for non-West Siberian
development drilling, we estimate at best a 10-percent
improvement over 1981 productivity levels (table 12).
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Drilling by the Oil Ministry
In 1981-85
Oil ministry plans for. 1985 call for less than 19
million meters of development drilling in West Siberia
and some 8.5-9 million meters in other regions, and
for about 3 million meters of exploration drilling
(table 4). Nearly all of the increase will be in West
Siberia. These plans, taken together with the drilling
productivity (meters per brigade) trends projected
above, imply that in 1985 the USSR as a whole will
need 1,560 to 1,700 brigades-110 to 250 more than
the number on hand in early 1983.
We believe the oil ministry will be hard pressed to add
brigades faster in 1984-85 than it did in 1982-83,
when it added about 50 per year. Many of its gains in
recent years were made at the expense of the gas and
geology ministries. Although we expect oil ministry
development drilling to continue to have first claim on
drilling resources, the increasing requirements of the
other ministries cannot be ignored indefinitely. -
The oil ministry's regional allocation of drilling re-
sources will have a large impact on drilling levels.
Experienced drillers are generally more productive in
West Siberia than in their home regions, and, as
indicated above, the transfer of drillers to West
Siberia has brought substantial gains in the past six
Nonetheless, we estimate that three factors are com-
bining to diminish the benefits of additional transfers
to West Siberia: the difference between new well
flows in West Siberia and other regions is diminish-
ing, West Siberian production operations are growing
more complex, and managerial difficulties and infra-
structural requirements are increasing (see figure 8
and inset).
Figure 8
USSR: Oil Well Flows, 1970-85
West Siberia-
' averagea
Other regions-
average
0 1970 75 80 84b85b
a The apparent anomaly-that average West Siberian well flows fell in the
1975-77 period while new well flows were above average-is due to the fact
that declining flows from the more numerous old wells were swamping the
impact of higher flows from new wells.
b Planned.
them. Problems of low quality and delivery bottle-
necks probably will remain. Specifically:
? The estimated 1,560 to 1,700 drilling brigades will
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require 2,500 to 2,700 rigs in 1985 (an estimate
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based on the 1980 rig-to-brigade ratio of about
1:1.6). Planned increases in rig production probably
will cover these needs, and the ministry may also
continue to use rigs beyond their normal lifetime.
? Drill bit requirements of some 200,000 to 300,000
bits in 1985 probably will be met, with a new drill
bit plant in Kuybyshev added to existing production
capacity.
Equipment requirements will increase corresponding-
ly, but the oil ministry probably will be able to meet
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Diminishing Returns From
Drilling Resources Transferred
to West Siberia
Diminishing Difference in New Well Flows
Although new West Siberian well flows probably will
continue to be above the average for other regions,
this differential is narrowing (see figure 8). Produc-
tion efforts in West Siberia always have been costlier,
but the difference was quickly made up when new
well flows were about 1,000 b/d higher than else-
where (as was the case in 1975). Now, however, the
Soviets are working on less productive formations in
West Siberia; by 1980 the differential in new well
flows had declined to about 300 b/d, and by 1985
(according to preliminary information published on
the 1981-85 period) it will be less than 100 bld. At
some point, the differential will no longer offset the
higher costs of West Siberian production plus the
opportunity cost in the old regions in terms of idle
pipelines and production and processing capacity. F_
We estimate that the Soviets originally planned for
1981-85 to obtain over one-third of their new produc-
tion capacity from regions outside West Siberia.
Moreover, the effort required to create new capacity
increases as, an oil region matures, leading to more
difficult choices in allocating resources between re-
gions. Too great a transfer of resources out of older
regions could curtail their production sooner and
more severely than planned.
Growing Complexity of West Siberian Production
Operations
In 1983 the drillers in West Siberia outpaced the
workers who connect and manage the wells. It is
pointless to increase drilling faster than the new wells
can be assimilated. According to press reports
many of the producing wells in
Tyumen' were idle for various reasons in 1983 [33]
Three interrelated factors-rising water cuts,a rising
requirements for water injection, and the rising share
of wells using artificial-lift equipment-are compli-
cating the West Siberian effort, raising equipment
and manpower requirements, and apparently turning
oil ministry decisionmakers'focus away from drilling
and toward solving the problems that come after a
well is drilled. The ministry has recently taken steps
to rapidly expand the West Siberian production work
force-those who connect, operate, and repair the
wells. Nevertheless, the pressures caused by this
growing complexity will continue throughout the
1980s and beyond.
regions as the Komi ASSR.
Managerial Difficulties and Infrastructural
Constraints
Some of the West Siberian problems cited, earlier-
the use of untrained labor, the use of equipment
beyond normal limits, supply problems, and labor
turnover probably will worsen as the pace of drill-
ing accelerates. If these problems become severe, they
may slow the growth in the number of drilling
brigades. Furthermore, the infrastructure costs of
developing some of the more remote and less produc-
tive West Siberian oil deposits may push development
costs far beyond the cost of intensifying oilfield
development in the older areas, or in such other new
? Estimated requirements of drill pipe and casing of
6-7 million tons probably will continue to be a
problem, but imports could ease the situation (po-
tential suppliers are numerous). We estimate that
the Soviets will continue to seek substantial quanti-
ties of oil tubular goods in the world market.
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Table 13
USSR: Drilling by the Oil Ministry
in 1982, 1985, and 1990
NA
2.4
8.3
2.5
Drilling technology and equipment are discussed fur-
ther in appendix C
27.5
18.6
The Soviets would be extremely hard pressed to
exceed 50 million meters-which we consider to be an
upper bound reflecting the assumptions of optimistic
productivity gains and the addition of 60 brigades
annually. Some of the problems hampering the drill-
ing effort today, such as extended supply lines and
shortages of equipment and skilled labor, probably
will continue. Moreover, attempting to expand the
Taking these equipment factors into account, we
estimate the oil ministry will be able to drill 28-30
million meters in 1985 (see table 13). Given the
importance of West Siberia and the relatively modest
drilling targets for 1984 and 1985, we estimate that
the Soviets will come close to meeting their target of
18.6 million meters, or at worst fall no more than 5
percent short of plan. Most of the drilling shortfalls
will be outside West Siberia and in exploration.
In 1986-90
Given the emphatic statements of Soviet writers that
drilling increases must come almost entirely from
increased productivity and taking into account the
previously discussed constraints, we believe that in
1986-90 the oil ministry will add no more than 60
drilling brigades annually. We estimate that most of
these probably will go to the West Siberian effort.
This is our maximum estimate. As a minimum, we
estimate that (given the rising requirements for drill-
ing) the Soviets will continue to opt for some increase,
perhaps adding 20 drilling brigades per year. Combin-
ing these estimates for additional brigades with the
productivity estimates discussed above, we project
that the oil ministry probably will be able to drill
some 35-50 million meters in 1990, of which 32-46
million meters will be development drilling (table 13).
drilling force by 60 brigades annually will increase the
likelihood of bottlenecks and thus hamper productivi-
ty gains. A drilling-rig plant has recently been built
that probably can supply enough rigs through 1985, 25X1
but more plants will be needed for the later 1980s if
the Soviets are serious about substantially increasing
their exploration drilling [34]. Acquiring additional
foreign technology, such as turnkey drilling-
equipment plants, can help, but the negotiations for
construction of such plants require so much leadtime
that the impact would be relatively small in the 1980s.
Importing equipment, notably drill pipe and casing,
can also help, but cannot solve the Soviets' equipment
problem.
Impact on Oil Production
In 1985, even if oil ministry drilling falls at the low
end of our forecast (28.4 million meters), the impact of
the shortfall on oil production could be minimal if the
drilling is optimally located, if development drilling
continues to have priority, and if Soviet drilling plans
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accurately reflect requirements. Any shortfalls that
occur would probably be concentrated in exploration
drilling and in the least productive areas.
On the other hand, the Soviet drilling planners may
have underestimated drilling requirements. In an
article in the December 1982 oil industry journal, oil
minister N. A. Mal'tsev expressed the problem clear-
ly: "Taking into account the depletion of existing
capacity, a 1-million-ton (20,000 b/d) increase in oil
and gas condensate output required 265,000 meters of
drilling in 1970 and about 866,000 meters in 1980; by
1985 it will be necessary to drill 7 million meters"10
[35].
Mal'tsev may have understated the problem. In 1983,
6.2 million meters were drilled per 20,000 b/d of
growth, rather than the 3.8 million meters anticipated
in the plan. Only 27.5 million meters of development
drilling are planned for 1985, but the differential
between the 1984 and 1985 production plans suggests
that 42 million meters actually will be required, or 50
percent more than planned. If Mal'tsev's calculation
is correct, then Soviet drillers may be hard pressed to
bring in enough new wells to prevent declines in oil
production in 1984 and 1985.
The situation is likely to worsen in 1986-90. Two
Soviet press articles written since late 1982 have
implied that oilfield development drilling, slated to
total 118 million meters during 1981-85, would need
to double in 1986-90 to maintain current oil output
[36]. Our analysis supports this statement.
Such a doubling would imply oil ministry develop-
ment drilling of over 60 million meters by 1990-
about 15 million meters more than the high end of our
most likely range. We do not believe that the Soviets
can achieve that much drilling, primarily because of
the heavy strain it would place on investment. Consid-
ering the likely growth in resources allocated to
drilling, we estimate that in 1990 they will be able to
do at most about 45 million meters of development
drilling-and probably will do at least 35 million
meters. The actual amount will depend on new well
flow rates, especially in West Siberia. Our analysis of
West Siberian geological conditions indicates that
new well flow rates will decline from about 580 b/d in
1980 to 230 to 260 b/d in 1985 and to 145'to 220 b/d
in 1990." If well flow rates in 1990 fall toward the low
end of the estimated range (as we believe likely), a
given amount of drilling will add only-about two-
thirds as much new capacity as it would if well flows
were at the high end of the range. Our estimated
range for new well flow rates, together with our
projections of development drilling in 1990, are con-
sistent with an oil production level of 10-12 million
b/d.
Although the above analysis points to drilling as a
constraint on oil production in the 1980s, a production
forecast cannot be made on the basis of drilling' alone.
Discoveries in 1984 or 1985 of several large, high-flow
deposits, although highly unlikely, could reduce drill-
ing requirements in the late 1980s somewhat. Other'
production efforts, such as improvements in pumps,
gas-lift units, well-workover procedures, enhanced
recovery projects, and gas condensate recovery, are
not principally dependent upon drilling efforts. Any
improvement in these areas will reduce the burden on
drilling in maintaining production
" The estimated decline in new well flows reflects our judgment
that the Soviets will be drilling in less productive structures and
drilling infill wells in fields already producing. As drilling (and oil
extraction) increases in a given reservoir, the natural pressure (and
thus the rate of extraction) falls. As the pressure falls, wells must be
converted to pump, and secondary and tertiary methods of extract-
ing oil must be employed (that is, water injection, gas-lift opera-
tions, and so forth). This requires additional drilling of injector
wells and increases the total volume of fluid that must be lifted for
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Appendix A
Drilling Procedures and Organization
In the USSR, development drilling after an oilfield is
discovered proceeds in three general phases. First,
several confirmation wells are drilled to learn more
about the dimensions and geologic parameters of the
field and to obtain early production data
Second, based on the results from early production as
well as on information from exploration wells, a field
development plan is designed. As water injection often
begins soon after the start of production, development
plans also include water injection patterns. This plan
establishes the initial well spacing for the entire field.
Figure 9, the 1973 plan for the Samotlor field, is an
example of a field development plan. The well spacing
depends largely on the geological characteristics of
the field and the expected flow rates. Generally, fields
with lower flow rates require denser well spacing for
-full development
Third, as the initial development plan is completed
and more is learned about the field's characteristics,
infill drilling (which creates a denser network of wells)
is begun. This is generally done for one of two
reasons-either to produce oil that cannot be pro-
duced from existing wells (because of unforeseen
geological complexities or because the oil was by-
passed by injected water) or to produce oil at a faster
rate in the near term. The supergiant Romashkino
oilfield in the Tatar ASSR, for example, has been
redrilled three times [37]. Soviet oil specialists have
questioned the wisdom of extensive infill drilling to
boost near-term output. Academician A. P. Krylov
argued in 1980 that an excessive emphasis on infill
drilling at the expense of exploration drilling could
lead to a rapid decline in Soviet oil output [38].F--]
When Soviet writers refer to the "well construction
cycle," they include the entire drilling operation-the
transport and assembly of the rig, the drilling of the
well, and its completion and testing. Considerable
time is lost between the various stages, as each part of
the cycle is done by a different brigade. Since the
1970s there has been a movement toward "consolidat-
ed" drilling brigades, which handle the entire cycle.
The Soviets substantially shortened the average
length of the cycle in the late 1970s-from 129 days
in 1975 to 90 to 95 days in 1980-and they plan to re-
duce it to 75 to 80 days by 1985 [39]. In -1978 the
cycle required almost 100 days, as follows [40]:
Total well construction cycle
97.3
100
Rig assembly
10.4
11
Drilling
60.7
62
Well completion
26.2
27
In West Siberia, the same activities take less time-a
total of only 44 days was average for Glavtyumennef-
tegaz in 1981 [41]. Interpretation of this difference is
complicated by the widespread use of cluster drill- 25X1
ing-the drilling of several wells from a. single loca-
tion. Each well is drilled quickly, in perhaps two or
three weeks, but all eight to 16 wells in a cluster
generally are not completed and readied for produc-
tion until the last one has been drilled [42]. For an
individual well, the delay between the end of drilling
and its final completion can be substantial. In Nizh-
nevartovsk in 1975 the various delays amounted to
more than half the total cycle time (table 14)-and
the Nizhnevartovsk drilling administration has some
of the best drilling averages in West Siberia.
Normal Drilling Administration
and Organization
National onshore drilling efforts by the oil ministry
are coordinated and administered by the ministry's
administration for drilling operations. In addition,
drillers are supported by research institutes in Mos-
cow, Tyumen', and other cities. (The gas ministry
controls offshore drilling. 25X1
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Figure 9
Development Plan for Samotlor
Field (after Muravlenko, 1973)
Q? Exploratory wells.
? Development wells, drilled to objective A.
o A Development and injection wells, drilled to objective B.
? 0 Planned development and injection wells to BVIp.
Planned development and injection wells to BVg.
Planned development and injection wells to AV and
AV4-5 in live-row blocks and to objective A in
three-row blocks.
AVi oil reservoir.
AVM gas cap.
AV2-3 oil reservoir.
AV2- gas cap.
AV4_5 oil reservoir.
BVg oil reservoir.
BVIp oil reservoir.
Zone of facies change of BV 10.
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Table 14
West Siberia: Time Required in the
Well Construction Cycle, 1975
Total cycle
225.0
100
Rig assembly
54.6
24
Drilling
24.5
11
a The times include delays between individual steps. These delays
together make up over half of the total time requirements.
An alternative to the traditional drilling organization
is the expeditionary drilling brigade, whose members
retain their home residences but work in other re-
gions. These units, also known as contract, shock, or
watch brigades, are being widely used in West Sibe-
ria. The Soviets also use the method on a small scale
in other regions. Volgograd drillers are working in
Komi, and Groznyy and Krasnodar drillers are devel-
oping Georgian oilfields. Similar brigades also are
used in construction and, to a lesser extent, in oil-
production operations. US and Canadian companies
have used similar methods on a smaller scale for
development in Alaska and northern Canada (see
appendix B).
The basic production units in the oil industry are the
oil and gas production associations. Each of these has
six deputy general directors. The deputy general
director for drilling supervises the three drilling orga-
nizations-the drilling administration, the rig-
assembly office, and the cementing (well-completion)
office [43].
The drilling administration is the major center of
drilling activity. A drilling brigade usually comprises
24 men, generally working in four teams on a single
rig in shifts of up to 12 hours [44].
There are variations in the general pattern.
there were 21 men
per brigade. Furthermore, at least some of the West
Siberian drilling records were set by seven-team
brigades operating two rigs [45].
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Appendix B
Drilling.in West Siberia
West Siberian production is the key to Soviet oil
output in the 1980s. Oilfield development drilling in
the region is handled by Glavtyumenneftegaz (Tyu-
men' Chief Administration for Oil and Gas) and by
Tomskneftegaz (Tomsk Administration for Oil and
Gas). The geology ministry's Tyumen' agency, Glav-
tyumengeologiya (Tyumen' Chief Administration for
Geology), directs exploration drilling. The Soviet press
indicate that in this region the
oil ministry focuses almost exclusively on development
drilling. In the 1982 drilling plan of Glavtyumennef-
tegaz, for example, only 150,000 meters (1.2 percent)
were for exploration drilling.
Reversing the emphasis of the mid-1960s, the total
drilling effort in West Siberia has come to emphasize
development drilling at the expense of exploration.
This change is illustrated by the shift in shares shown
below (shares of total drilling, in percent) [46]:
1965
72
28
1970
26
74
1975
18
82
1980 (estimate)
10
90
Soviet plans call for a slight further increase in the
share of development drilling in 1981-85
The neglect of exploration is particularly striking in
the Middle Ob' region, the core of Western Siberian
oil production. The principal source of "new" oil is
prospecting wells. We identify these as active rigs that
are more than 1.5 km from other drilling activity, and
such rigs made
up only 5 percent of drilling activity in this core
region. The limited amount of exploration drilling
would be reasonable if the USSR had an abundance
of previously discovered reserves, but repeated pub-
lished complaints that exploration is insufficient,1
suggest that'this is not the case [47]. Indeed, a
prominent theme of the new 20-year energy program
currently being discussed is the need for greater
emphasis on exploration drilling [48].
About 95 percent of oil ministry drilling in West
Siberia is done in Tyumen' Oblast, the source of 97
percent of West Siberian oil output. The remaining 5
percent of drilling is in Tomsk Oblast, where some
700,000 to 800,000 meters are drilled annually and
200,000 to 250,000 b/d of oil are produced [49].
Within Tyumen' Oblast, drilling is controlled by five
regional administrations.
thirds Wost Siberian oil output in 1980, is receiving
a declining share of drilling, as West Siberian growth
is coming principally from fields further to the west,
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operated by the Surgut, Noyabr'sk, and Yugansk
associations. We expect the basic trends shown for
1980-82 to continue. (The 1983 plan suggests a small
increase from 1981-82 plans in the Nizhnevartovsk
area, however. According to earlier plans, Nizhnevar-
tovskneftegaz was scheduled to drill about 30 million
meters in 1981-85, or about 40 percent of West
Siberian drilling [50].)
The new Noyabr'sk association has a 1985 production
target of 500 000 b/d, up from about 40,000 b/d in
1980 [51]. rilling activity in
the Noyabr'sk fields is intense and that new fields in
the Surgut area, such as Lyantor, are the sites of some
of the greatest increase in drilling activity.
Drilling in the Nizhnevartovsk region will continue at
a relatively high level. Within the region, according to
press discussions, growth will
come from ields to the north, in the Var'yegan area,
rather than from Samotlor and its satellite fields.
Expeditionary Drilling Brigades
Thus far, drilling increases have been due to increases
in inputs-brigades and rigs. The principal source of
the increased effort has been expeditionary drillers
from other regions. Brigades from outside West Sibe-
ria are scheduled to drill 28 million meters out of the
76-80 million meters planned for the region in 1981-
85 [52]. The method appears to be eminently rational.
Because of the geological conditions in West Siberia,
visiting crews drill more meters in more productive
wells there than they would have drilled in their home
regions. In 1980, for example, expeditionary brigades
in West Siberia averaged nearly 40,000 meters per
brigade, whereas the drilling brigades in the Tartar
ASSR averaged only 22,775 meters [53].
The Tatar example illustrates the impact of the
expeditionary system. In 1980 Tatar brigades drilled
630,000 meters in Tyumen' [54]. We calculate-using
reported average West Siberian well depths of about
2,400 meters and new well flow rates of 519 b/d-
that the Tatar drillers added about 135,000 b/d of
production capacity. Working in the Tatar ASSR,
where well depths average 1,500 meters and new well
flows average 50 to 70 b/d [55], the same crews would
have drilled only 12,000 to 17,000 b/d of new produc-
tion capacity. The shift of less than 20 brigades
appears to have provided a net gain of about 120,000
b/d-nearly 1 percent of 1980 output
Drillers from the Tatar and Bashkir ASSRs, Kuyby-
shev and Saratov Oblasts, and Belorussian and Ukrai-
nian Republics are temporarily working in West
Siberia. The contribution of these expeditionary drill-
ers has risen rapidly, from 244,000 meters drilled in
1977 to over 4 million meters in 1981 [56]. In early
1984, 133 out of the 308 drilling brigades in Tyumen'
Oblast were expeditionary brigades [57].
There are several variants of the expeditionary meth-
od. In some cases the workers live in their home
districts (in the Tatar ASSR, for example), fly to
West Siberia to work, living in primitive workers'
settlements near-the oilfields for 10 to 14 days, and
then return home for about two weeks. In other cases,
workers live in?established West Siberian towns (such
as Surgut or Nizhnevartovsk), to which they return
between two-week stints in the field. In a third
variant, drillers from other areas come to West
Siberia for longer periods, residing in an established
West Siberian town between work periods; after a 30-
to-40-day tour, they return to their homes for extend-
ed leave.
The men who form an expeditionary, brigade general-
ly train with experienced West Siberian drillers for
four to six weeks before working independently. In
1981 the average drilling rate for expeditionary bri-
gades was only 83 percent of that for local West
Siberian crews [58]. According to Soviet press reports,
equipment supply difficulties and transportation prob-
lems are more troublesome for the expeditionary
brigades than for the resident West Siberian brigades
[59].
The Soviet technical press has debated the merits of
the expeditionary method. Most authors see it as a
necessary expedient [60]. To accomplish accelerated
drilling tasks, the number of West Siberian drilling
brigades had to grow rapidly-more rapidly than a
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permanent work force could grow. Infrastructure
development, particularly housing construction, lags
behind the drilling effort. In addition to the time and
resources required for infrastructure development, the
expense of maintaining a large permanent work force
in West Siberia would be enormous. According to
Soviet estimates, it costs 17,000 to 20,000 rubles
annually to maintain a worker in West Siberia and
only 500 to 600 rubles in the European USSR (these
savings exclude the costs of transporting workers to
and from West Siberia) [61].
Presumably the lack of infrastructure-especially
roads and transport capabilities-is hampering some-
what the expansion of drilling brigades. In 1980 the
Soviets discussed an unusual four-year program for
1980-83 to accelerate rapidly the construction of
roads, houses, and transport [62]. Its overall results
are not yet clear: it has made substantial progress but
is apparently falling behind expectations. The housing
construction goal discussed in 1982 is more modest
than that discussed in 1980 [63]. Furthermore, ac-
cording to articles in the press, the lack of roads
continues to hamper the development of new fields,
and housing shortages are still a problem [64]. Until
infrastructural problems are solved, drilling in West
Siberia will be handicapped, wherever the drillers
come from.
drilling problems at
several West Siberian le s continue to be severe, as
evidenced by the relatively high share of drilling rigs
that are inactive. The percentage of total assembled
rigs that were active in selected areas in 1980 and
1982 is shown in table 16
Table 16
Active Drilling Rigs in Selected
West Siberian Oilfields,
1980 and 1982
Severo Var'yegan
83 84
Var'yegan
100 40 to
55
Pokachev
60
Ur'yev
83 to
100
Mamontovo
73
The cause of the reduction in rig activity observed in
some areas is not clear. Most of the idle sites appeared
to have no drill pipe, and continuing complaints in the
press about the lack of quality drill pipe confirm the
shortages of this critical material [65]. Samotlor is a
case in point. It is a well-established field, in which
drilling problems cannot be attributed -to infrastruc-
ture constraints. Even so, at Samotlor between 23 and
28 percent of the rigs were inactive at six separate
sightings between 1978 and April 1982. This situation
suggests that shortages of drill pipe (and possibly of
manpower) are the principal problem. Imagery from
late 1983 indicates that the level of rig activity,
although still a problem, is improving.
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Appendix C
Drilling Equipment and Technology
The USSR produces most of its own drilling equip-
ment, but it relies on imports to fill specific needs,
such as drill pipe, high-pressure blowout preventers,
and offshore drilling equipment. Table 17 lists pro-
auction of drilling rigs, electric drills, and turbo-
drills-the only types of drilling equipment regularly
reported in Soviet production statistics. Table 18
shows the locations of the production plants.
Soviet drilling technology lags behind Western tech-
nology. US drilling rigs are about 2.5 times as
productive as Soviet rigs. Although much of this
productivity problem is caused by organizational and
logistic problems endemic in the system, many West-
ern observers say that drilling
technology is 10 or more years behind that employed
in the West [66]. Others disagree, pointing to Soviet
advances in the turbodrill and in arctic drilling [67].
In the USSR the turbodrill is used for over 80 percent
of total drilling-48 percent of exploration drilling
and 87 percent of development drilling [68]. Turbo-
drills use downhole turbines powered by drilling mud
to turn the bit, rather than rotating the entire drill
string, as is normally done in the West.12 The turbo-
drill has been effective in developing the shallow,
hard-rock formations in the Volga-Urals Basin and
for directional drilling from the cluster pads in West
Siberia. Its use enables drillers to sidestep many
problems that would arise with the use of Soviet drill
pipe and tool joints, which are of low quality and
could not withstand the stresses of rotary drilling
operations. Because turbodrilling eliminates torque
stress on the drill string, it reduces the amount of time
spent retrieving and replacing broken drill pipe.
" Drilling mud is a mixture of clay, water, and chemicals pumped
into the well for lubrication and to bring rock cuttings to the
Table 17
USSR: Production of Turbodrills,
Electrodrills, and Drilling Rigs,
Selected Years
1965 8,439 220 520
1970 6,562 115 480
1971 7,384 114 . 497
1972 7,694 86 512
1973 8,103 112 516
1974 9,328 104 483
1975 9,780 97 544
1976 9,354 108 511
1977 9,700 96 503
1978 9,016 81 505
1979 8,976 21 473
1980 9,270 NA 521
1981 9,459 NA 541
1982 9,291 NA 558
1985 800
(estimate)
The higher rate of bit rotation in turbodrilling short-
ens bit life drastically, however, and thus reduces the
rate of penetration in deep drilling. In addition, the
pressure of the drilling mud that operates the turbine
drops with depth. Because the use of the turbodrill
reduces the rate of penetration in deep drilling,
productivity is also reduced by the time lost in more
frequent changing of bits-a loss that increases dra-
matically with depth.
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Table 18
Principal Soviet Plants Producing
Drilling Equipment, 1984
Turbodrills Perm' (two plants), Baku
Drill bits Kuybyshev, Drogobych, Moscow,
Poltava, Sarapul, Saratov,
Verkhniye-Serginsk, Kiev
Drill pipe and casing Chelyabinsk, Dneprodzerzhinsk,
Nizhnedneprovsk, Rustavi,
Sumgait, Taganrog, Zhdanov
Sverdlovsk, Verkhnyaya Pyshma,
Volgograd
Offshore drilling rigs Baku, Astrakhan', Vyborg
Miscellaneous drilling Ashkhabad, Baku (several plants),
equipment Kharkhov, Kutaisi
Electric drills, which have a downhole electric motor,
were used in 1.6 percent of total Soviet drilling in
1980-down from 2.8 percent in 1970 [69]. The
technical difficulties in manufacturing a durable ca-
ble to provide electric power for drilling at depths of
2,000 to 3,000 meters are enormous. The Soviets
continue to experiment with electrodrills; however,
they produced only 21 in 1979, the last year of
reported production, suggesting a general disillusion-
ment with the method [70].
According to Soviet forecasts for 1981-90, rotary rigs
and low-speed, high-torque turbodrills eventually will
make up 70 to 80 percent of the drilling effort [71 ].
The Soviets have thus far focused on the need to
improve the operating characteristics of the turbodrill
and to manufacture better drill bits. In recent years.
they have been working on a program (begun in the
1960s) to reduce the turbine speed of the turbodrill
and increase the torque, or pressure of the bit on the
rock. Although technical journals have been discuss-
ing the low-speed turbodrill since the program be-
gan-indicating 20 years without a major break-
through-Soviet statements continue to emphasize
this drill as the key to improving drilling speed [72].
Top Secret
The depth to which wells must be drilled is increasing,
however, and we therefore expect the Soviets to turn
increasingly to rotary drilling. Indeed, their recent
interest in Western equipment for rotary drilling rigs
suggests such a shift. This would require a substantial
and expensive modernization of their production of
high-quality drill pipe.
The USSR produced drilling rigs of all types used in
oil and gas drilling at a rate of about 500 per year in
the 1970s; the rate rose to 558 rigs in 1982. The
average service life of a Soviet rig is six to 10 years (it
is 15 to 20 years for rigs built in the United States)."
Until recently, nearly all Soviet rigs were built at two
plants-the Barrikady plant in Volgograd and the
Uralmash plant in Sverdlovsk, with Uralmash produc-
ing some 80 percent of the total [73]. A new drilling-
rig plant was built in 1981 in Verkhnyaya Pyshma,
north of Sverdlovsk. the
apparent rig assembly area of the new plant is 70
percent larger than that at Uralmash.
If we assume that the 521 rigs produced in 1980
represented, nearly maximum use of capacity at the
two older plants, then the new plant could enable the
Soviets to increase rig production to about 800 rigs
annually. Such a supply should satisfy their require-
ments at least through 1985. Drilling needs beyond
1985 may require additional plant construction.
Drill Pipe
Soviet pipe is generally adequate for drilling shallow
wells (less than 2,000 meters) with the turbodrill,
which does not subject the drill string to torque. At
greater depths, the poor-quality steel. used in Soviet
drill pipe often fails under the torque required for
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rotary drilling, and its inadequacies can be trouble-
some even with turbodrilling. Problems relating to the
quantity and quality of drill pipe and casing produced
in domestic plants have been reported frequently by
the Soviet press. For example, it cited insufficient
quantities as factors in the underfulfillment of West
Siberian drilling targets in 1979 and 1980 [74]. The
Soviets currently import substantial quantities of drill
pipe, and we expect them to continue
Moscow has been negotiating for several years with
US and Japanese firms to purchase a turnkey plant
for drill pipe and casing, but to date no contract has
been signed. In the fall of 1981, the USSR sought
bids on a plant to manufacture drill collars and
kellys-parts that suffer particular stress-with pro-
duction capacity sufficient to support 2,000 to 3,000
rotary rigs. No progress has been reported on negotia-
tions for this plant
The Soviet Union's annual output of drill bits of all
types ,(for mining as well as for gas and oil drilling) is
reported to be about 1 million units [75]. The Soviets
have developed natural and synthetic diamond bits
and are experimenting with hard alloy and coated
bits. Although some improvements have been made in
domestic bit design and productivity, Soviet bits have
proved to be only about one-fourth to one-tenth as
efficient as comparable bits produced in the United
States.
In 1978 the Soviets`bought a $158 million turnkey
drill bit plant from Dresser Industries (a US firm) for
.installation at Kuybyshev. The plant, which began
operating in January 1982, is eventually to produce
100,000 high-quality tungsten-carbide-insert bits per
year. At the high speeds of Soviet turbodrills, these
new bits should operate for far longer periods than
conventional Soviet-made bits. This will reduce down-
time for bit replacement, thereby increasing rig pro-
ductivity and reducing somewhat the requirement for
We estimate that the new Kuybyshev plant's 100,000
high-quality bits could improve Soviet drilling by
reducing downtime." The plant has experienced enor-
mous startup problems, however. In May 1982, out-
put was only 1.2 percent of planned capacity, and the
over 70 percent capacity by July 1982 and at 80
percent by early 1983. The quality also was improving25X1
somewhat. The bits were reportedly performing about
the plant was producing at 25X1
" We estimate that improved bits can make a one-time 5-percent 25X1
improvement in drilling efficiency. In 1980 Soviet planners expect-
ed to raise the average meters drilled per bit from 77.2 to 198.5
between 1980 and 1985-a 160-percent improvement [76]. Given
current difficulties, we estimate that this goal may not be reached
until 1990. According to a recent Soviet publication, bit changes
occupy 10 percent of the total drilling cycle time [77]. A 160-
percent improvement in an operation entailing 10 percent of total 25X1
time would improve total efficiency by almost 6 percent. Because
bits are raised for reasons other than bit changes, we estimate that
the improvement to be reached by 1990 will be closer to 5 percent.
bits were of low quality.
half as well as the US-manufactured product,
new drilling rigs.
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Appendix.D
Offshore Drilling
Offshore oil production in the USSR is currently
concentrated in the Caspian Sea, where several fields
are being developed. Their oil output is estimated at
200,000 b/d-about two-thirds of the production in
the Azerbaijan SSR.
Exploratory drilling has been under way since 1975 in
the waters off .Sakhalin Island in a cooperative ven-
ture with Japanese firms (SODECO). During 1977-
82, 20 wells were drilled and two oilfields with
commercial potential were discovered. Oil production
will begin as soon as production platforms can be built
to withstand the pack ice conditions in winter (proba-
bly not before 1987).'1
Exploration and production are also under way in the
Black Sea and the Sea of Azov, but to date only gas
has been discovered. The Soviets are increasingly
interested in the Arctic offshore areas, particularly
the Barents Sea, despite their lack of engineering and
technical experience in these forbidding areas. They
have purchased drill ships from Finland and have
begun discussions with the Norwegians on a coopera-
tive venture in the Barents. The Soviet Union also is
working with East Germany and Poland in a joint
venture (Petrobaltic) to explore and develop oil re-
sources in the Baltic Sea in the territorial waters of
these three countries.
Overall, the USSR plans to increase its offshore
drilling in 1985 to 50 percent above the level attained
in 1980 [78]. Much of this emphasis was stimulated by
geologists' reports that about 70 percent of the Soviet
continental shelf is covered by potentially oil-bearing
sedimentary rock [79]. Development of this potential
is important if the Soviets are to maintain oil produc-
tion at relatively high levels beyond the late 1980s.
Western equipment and technology will be essential
for successful development of offshore areas. F__]
33
The Soviets' offshore drilling program is the oldest in
the world. Their effort began in the late 1940s in the
shallow waters of the Caspian Sea: As oilfields were 25X1
discovered, development wells were drilled on plat-
forms, which were connected to shore by trestles to
facilitate movement of equipment and supplies.F 25X1
Offshore oil production in the Azerbaijan SSR peaked
at a level of 258,000 b/d in 1970; when offshore
drilling totaled about 373,000 meters-215,000 me-
ters of development drilling and almost 158,000 me-
ters of exploratory holes [80]. By 1975 offshore fields 25X1
accounted for 228,000 b/d, or two-thirds of the
region's total oil production. The share has remained
constant since the mid-1970s, although total oil pro-
duction in Azerbaijan has been declining. In 1980 the
Soviets drilled 175,000 meters of development wells in
the Caspian Sea. The average depth of the explor-
atory wells reached 5,250 meters in that year, as the
new mobile offshore drilling rigs allowed the Soviets
to investigate deeper oil deposits [81 ].
In 1966 the USSR ordered its first jack-up mobile
drilling rig from the Netherlands.16 The unit was
shipped in 1967, was rigged out in Baku, and began
operations in the Caspian Sea in the fall of 1968. 25X1
Since that time the Soviets have built six jack-up
units-five for use in the Caspian Sea and one in the
Black Sea [82].
In the summer of 1976, the USSR signed a contract
with a US firm, Armco International, for a semisub-
mersible offshore drilling unit. The unit was built in
the shipyards of Rauma Repola, a Finnish company.
16 Jack-up drilling rigs are platforms with three or four legs, which
are lowered to the sea bottom to raise the platform above the water.
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It was completed in late 1977 and transported in
modules via inland waterways to Baku, where it was
assembled and rigged out. It finally began drilling
operations in the Caspian Sea in September 1981,
some five years after construction had begun.F_
In September 1978 the Soviets centralized offshore
exploration and development activities under a new
chief directorate (Gipromorneftegaz) in the Ministry
of the Gas Industry. Their purpose was to speed up
technological progress and to increase exploratory
drilling work in offshore areas. The Soviets expected
to buy offshore drilling equipment-jack-ups, semi-
submersibles, and drill ships-from foreign suppliers
for only a short time, until they could produce such
items domestically [83]. When Gipromorneftegaz was
set up, only one yard (at Astrakhan') was capable of
constructing mobile offshore jack-ups, and its output
could not meet the needs of the oil industry of the
Caspian Sea area alone [84].
The Soviets have made significant strides in offshore
drilling work but have fallen far short of their original
goals. They intended to have 10 jack-up units in
operation in the Caspian Sea and Black Sea by 1980,
but had only four. The acquisition of Western off-
shore equipment and technology was delayed by
prolonged discussions and negotiations.
Offshore Prospects for the 1980s
The USSR plans to concentrate offshore exploratory
drilling for the next few years in the Caspian Sea,
offshore Sakhalin, and in the Barents Sea. In 1980 the
Soviets signed a $110 million contract with a French
firm, ETPM, to construct fabrication yards at Astrak-
han' and Baku-for producing mobile offshore drilling
units [85]. The first Soviet-built semisubmersible
unit-Shelf 1-was completed in 1981 and was
placed in operation early in 1982 at an offshore field
in the Caspian Sea in water 85 meters deep [86]. Shelf
2 is also operative, and a third semisubmersible rig is
under construction. As of mid-1982 the USSR had
nine mobile offshore drilling rigs in operation-seven
jack-ups and two semisubmersibles. Two additional
semisubmersible units are under construction at Vy-
borg, and eight more are to be built at Astrakhan' and
Baku to support exploratory drilling work in the
Caspian Sea during the 1980s.
The director of Gipromorneftegaz, Yu. V. Zaytsev,
has said the offshore industry must create a supply
and equipment base and must make technical im-
provements in equipment for conducting exploration
and development drilling and for the transport of oil
and gas from sea to shore [87]. The industry should:
? Increase by 150 percent the number of mobile
offshore drilling rigs.
? Acquire equipment capable of drilling to 6,500
meters.
? Produce double-deck fixed platforms for multiple
(30 to 50) wells.
? Solve the problems of developing the-petroleum
resources of the continental shelf under ice and in
severe weather.
? Train the personnel needed for offshore operations.
cooperative ventures with Western firms.
In the long run, the Soviets' handling of offshore areas
will be an important determinant of the future of the
oil industry. Their drilling goals for the 1980s will be
difficult to achieve. The level of technical competence
and engineering expertise in offshore operations in. the
USSR lags far behind that in the West, and develop-
ment in arctic regions probably will progress more
slowly than the Soviets anticipate. Much will depend
on the amount of Western equipment they choose to
import and the extent to which they embark on
Barents Sea Prospects
During the summers of 1982 and 1983, two Soviet
drillships did exploratory drilling in the Barents Sea.
The results of this drilling effort are unknown-but in
1983 the USSR signed an agreement with a consor-
tium of seven Norwegian firms to provide a general
work plan for exploration and development of oil and
gas deposits in the Barents Sea. A $135,000 study has
been completed, detailing the technical assistance the
USSR will require to explore an area covering about
one-third of the central Barents Sea area.
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Thus far the Soviets are reported to have mapped
about 15 to 20 geologic structures, and they are
rumored to have discovered a gas pocket. This pocket
could be either the top of an oilfield or a gas
discovery. They probably will be much more interest-
ed in oil, having already discovered large undeveloped
gas reserves onshore.
The Soviets clearly view the development of any
Barents Sea hydrocarbons as a long-term project. Any
oil found there is not likely to be available-even with
significant Western help-until well into the 1990s.
a Barents Sea develop-
ment project will take 10 to 15 years. The pace of
development will depend on conditions the Soviets
encounter in new onshore areas, particularly in west
Siberia. The eventual cost of developing a large
discovery-the size of that at Prudhoe Bay on
Alaska's northern coast-could easily amount to
$25 billion, depending on its location.
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Appendix E
Drilling Investment as a Basis for
Forecasting Oil Industry Investment
In an effort to develop a more precise estimate of
Soviet oil industry investment, we used investment in
drilling as an indicator for total investment. Statisti-
cal analysis of the data on drilling meterage and
drilling costs can be correlated with oil industry
investment. Then, assuming no significant shift in the
structure of the investment, we can use our drilling
projections to forecast investment in the oil industry.
Using econometric techniques, we developed a multi-
percent of investment, we estimate overall oil industry
investment as follows (billion rubles):
Low drilling scenario
11.7
16.6
High drilling scenario
12.4
23.5
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Data on drilling costs are available for 1970-79 (see ple regression model that explained past trends well
table 8 in the text). We estimated future drilling costs and was statistically significant. When this model is
by extrapolating the 10-year 1970-79 trend as a lower projected forward, it yields forecasts within 2 percent
bound and extrapolating the accelerating costs of the of the first estimates (billion rubles):
three years 1977-79 as a higher bound. We expect
drilling costs to continue to increase, for several
reasons:
? The increasing depth and pressure of newer
deposits.
? The rising share of expensive offshore drilling in
total drilling.
? The rising share of drilling in small, isolated oil-
fields, where infrastructural shortcomings make
drilling less efficient.
We also expect, however, that drilling productivity
gains will to some extent moderate the impact of cost
increases, placing drilling costs near the center of our
estimate.
Soviet statements indicate that drilling outlays repre-
sent between 40 and 50 percent of oil industry
investment. Our comparison of 1970-82 estimated
drilling costs with Soviet oil industry investment
indicates that drilling outlays averaged 44.5 percent
of total investment. We expect all oil industry activi-
ties to increase rapidly during the 1980s-not only
drilling, but such others as fluid lift, infrastructure,
well repair, and enhanced oil recovery. We therefore
see no reason for the share of drilling in total invest-
ment to change significantly.
Combining our estimates of drilling and drilling costs
with the assumption that these costs represent 45
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These estimates are of course only the center of a
wider range, because drilling cost estimates vary
widely. Incorporating the full range of drilling cost
estimates from table 8 yields a range of ? 10 percent
around these midpoints.
Thus, for the low drilling scenario, 1990 investment
requirements will need to be double the 1982 level of
8.7 billion rubles. Under the high drilling scenario,
they will need to be nearly triple.
Several regression equations were used to estimate
investment requirements. The first simply presents
investment as a function of total drilling outlays:
I = 2.25((DD*DC)+(XD*XC))
(70.73)
(1) 25X1
where DD is development drilling, DC is development
drilling cost, XD is exploratory drilling, and XC is
exploratory drilling cost.
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This equation has good explanatory power (corrected
r 2 = 0.983) and confirms Soviet statements about
drilling outlays accounting for 40 to 50 percent of oil
industry investment. However, a low Durbin-Watson
statistic (0.40) indicates strong autocorrelation prob-
lems. (An intercept term was found to be statistically
insignificant in this equation and those that follow.)
where D is the dummy variable. The coefficient of the
dummy variable indicates that during 1977-81 there
was a temporary increase in the proportion of non-
drilling investment. The explanatory power increased
(corrected r Z = 0.996), all the variables are signifi-
cant, and autocorrelation is not a problem (Durbin-
Watson = 2.11). Experimenting with other combina-
tions of the dummy variable indicated that 1977-81
were the critical years, as we would expect
Oil industry development and exploration drilling
have followed different trends since 1970 (see figure 1
in text). Combining drilling costs as in equation 1 is
therefore an oversimplification. For breaking drilling
costs into their exploration and development compo-
nents, we used a second equation:
I = 2.42 (DD * DC) + 1.96 (XD * XC)
(20.08) (9.82)
(2)
Both coefficients are statistically significant; the ex-
planatory power is high (corrected r 2 = 0.985), but
autocorrelation is still a serious problem (Durbin-
Watson = 0.56).
The first equation overestimated investment in all
years except 1977-81. The second equation had the
same pattern, but overestimated in all years except
1976-80. This difference suggests that something
occurred in the later 1970s that is not captured in the
regression variables. We know from official Soviet
statistics in the USSR's annual statistical abstract,
Narodnoye Khozyaystvo, that growth of investment
in the oil industry accelerated in the years 1977-81
and slowed in 1982.
Assuming that during the 1977-81 period there was a
policy shift in investment, we can use a dummy
variable to represent such a change, setting the
variable equal to 1 in 1977-81 and to 0 in all other
years. The equation is then:
I = 2.28 (DD * DC) + 1.96 (XD * XC) +
(35.78) (20.07)
(4.68) x 108) D, (3)
(6.00)
Using the third equation to forecast investment, we
obtained the results presented in the text. These are
very similar to the results obtained by using the
simple guideline that drilling costs represent 45 per-
cent of total investment
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