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An S&P Global Trucost analysis has shown that projects furthest North in Russia, including Yamal LNG, the Bovanenkovo gas field, and the Prirazlomnoye oil field are likely to have the biggest increase in heatwave days up to 2050.
“I think the key takeaway here is that the number of heatwave days per annum is expected to increase whilst the number of coldwave days decreases under a moderate climate-change scenario by 2050,” Rick Lord, manager, ESG analytics & client delivery at Trucost, said.
“The results suggest up to an additional 15 days of heatwave could be experienced per annum at the Bovanenkovo gas field under the moderate climate change scenario by 2050,” he added.
There are several risks associated with rising temperatures for energy companies operating in the region. They reduce the period that winter roads can be used to transport essential heavy equipment to projects in the Far North.
Earlier this year Vitaly Dokunikhin, head of drilling company Eriell told S&P Global Platts that the winter season for transporting equipment in Russia has already decreased from November-May, to December-April. Missing the window to ship heavy equipment can lead to months-long delays and associated cost increases.
Permafrost risks
Rising temperatures are also causing permafrost to thaw, which is leading to the release of greenhouse gases into the atmosphere, and threatens the structural integrity of infrastructure.
For new projects under development in permafrost regions, Russian companies are including measures to mitigate these risks. Gazprom Neft said its own precautions include ongoing geotechnical monitoring, choosing optimal locations for buildings and equipment, and equipping them with active and passive thermal stabilization systems, in a presentation on its second-quarter results published Aug. 20.
Most oil and gas projects in the region were launched in the last 10 years. The Trucost analysis included the Vankor oilfield launched in 2009 and the Bovanenkovo gas field and first Bovenankovo-Ukhta pipeline, launched in 2012. It also assessed the Prirazlomnoye and Novoportovskoye oilfields launched in 2013 and 2014 respectively. East Messoyakha and Pyakyakhinskoye were launched in 2016, while Yamal LNG, the Zapolyarye-Purpe oil pipeline and the second Bovanenkovo-Ukhta pipeline, were all launched in 2017.
Exploration work was carried out and initial infrastructure developed in the decades leading up to these launches, when estimates of thawing permafrost were significantly more conservative.
“Thawing permafrost is becoming a noticeable threat in the Arctic,” Pavel Devyatkin, a research associate at the Arctic Institute commented, during a webinar on Russia’s environmental security organized by the International Institute for Strategic Studies in July.
Earlier this summer, the issue hit headlines around the world, when Nornickel cited soil subsidence and thawing permafrost as the cause of a major leak of around 150,000 barrels of gasoil into waterways in Siberia.
Russian President Vladimir Putin declared a state of emergency over the incident and ordered amendments to boost environmental legislation.
Arctic opportunities
Russia continues to see the Arctic as a major development priority, however.
“There’s going to be a continuation of Russia’s Arctic strategy in the extractive sectors, but perhaps more attention to the issues of degrading permafrost,” Devyatkin said.
Earlier this year Russia granted new tax breaks for Arctic projects, and exploration work in the region continues, despite the huge shock of the coronavirus pandemic on demand forecasts and prices. The energy ministry estimates that Arctic oil and gas production will account for 26% of overall output by 2035, up from 11.8% in 2007.
For all the growing concern about the risks associated with climate change on the region, Russia sees opportunities from higher temperatures there. It is planning to capitalize on retreating ice to develop shipments via the Northern Sea Route which links Europe and Asia via Arctic seas.
