German firm predicts boom for horizontal oil drilling

Issue Number: 

Germany's Deutag Land Drilling GmbH said more contracts lie ahead after it reentered the Russian market after a nearly 60-year hiatus by signing a 30 million euro horizontal-drilling contract with Russia's sixth-largest oil company, Sibneft.

Under the contract, the Bad-Bentheim-based company, part of the Deutag Group, will drill up to 10 horizontal wells at the Romanovskoye field near Sibneft's company headquarters in Noyabrsk, Western Siberia.

The firm said the deal points to a massive untapped market, as Russian companies look to employ more technologically sophisticated ways to tap oil. "The near future will see a boom in demand for horizontal drilling in Russia," said Jurgen Rueggen, a spokesman for Deutag Land Drilling (DLD).

Sibneft says the contract is part of a wide-ranging plan to step up its use of horizontal drilling methods. The company said it signed a $60 million contract earlier this year with Pride Forasol, a division of Pride International, for horizontal drilling in 24 wells.

Currently, the No. 1 company using horizontal drilling in Russia is Surgut, the country's third-largest oil company, according to Vladislav Metnev, an oil and gas analyst with the Aton brokerage, who added that Surgut uses its own equipment for the procedure.

The Deutag Group first worked in the region in 1927, when it operated a coalmine in the Northern Urals town of Solikamsk with then Soviet authorities. After a long period of dormancy, the company returned to the C.I.S. in 1995, when it became involved in Caspian Sea drilling work. Then, earlier this year, Deutag U.K., the company's offshore drilling wing, signed a contract for tapping reserves off the Russian island of Sakhalin.