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with Sergei Arutyunov, General Director, ANCHAR

31.05.2010 / Energyboardroom

Mr. Arutyunov, please explain your company and technology to our readers.

ANCHAR Ltd. is a specialized geophysical service company founded in 1994 by the encouragement of the Geological Agency of Russia, Gazprom, the Russian Academy of Sciences, and Ministry of Industry and Science, to implement a new technology of seismic Infrasonic Survey of oil and gas in geological exploration.

ANCHAR is acoustic low-frequency exploration of oil and gas, a Russian geophysical technology enabling clients to define the presence of hydrocarbons in the geological cross-section, based on the analysis of the microseismic earth noise.

ANCHAR Ltd. is the owner of two technologies of Micrososeismic Infrasonic Survey: Spontaneous ANCHAR (SA) and Induced ANCHAR (IA). Both technologies may be applied simultaneously. This increases the success of prognosis. ANCHAR’s Infrasonic technology for microseismic survey of oil and gas was devised in Russia. The first patents were taken in 1992, and the second in 1998. The first industrial applications of these two versions of the ANCHAR technology started in Russia in 1994.

Anchar technology was first patented in 1992 but it was not before 1994 that you established a company and started commercial operations. What did you want to achieve when the company was founded?

In traditional geophysical surveys, seismic exploration gives an impression of approximate areas where oil and gas could potentially be located, but there is no definite answer to whether or not there are reserves until the exploratory drilling stage. ANCHAR was created to seek out oil and gas with more certainty, which means eventually that E&P companies can drill wells with less risk, and choose from fewer potential fields.

Between 1990 and 1995, the team at ANCHAR were developing the theoretical foundations and mathematical models behind the technology, and choosing indicators that would show a correlation of results. In 1995, thanks to the support of Gazprom, ANCHAR was able to immediately implement its technology, and work to improve it on an experimental basis.

This experience taught the team a lot about integrating the scientific method into actual exploration. This was a time of change for ANCHAR – having spent five years working on a purely scientific project, the company had suddenly reached a point where it could become a commercial company. This happened gradually – as revenues came in, we could afford to purchase equipment that we had to rent at the beginning.

The 1990s were a tricky time in Russia for any business, let alone a young company like ANCHAR. Through patience and perseverance, the company grew, and we were very fortunate to have had the support of the Russian oil and gas industry. ANCHAR is very thankful for their level of trust and confidence in the company.

How has the business grown since this time, and which projects are you involved in?

In the last ten years, ANCHAR has increased the number of areas where its technology has been used by a factor of ten. Over 100,000km2 of prospecting territories have been investigated, hundreds of deposits have been predicted for their oil and gas content, and at least twenty deposits have been discovered and resurveyed. Of more than 90 wildcat and exploratory wells drilled after the ANCHAR prediction at dozens of areas and structures with occurrence depth of producing horizons being a 700 to 7000m, more than 80% proved the positive or negative prediction for oil and gas content made by ANCHAR.

However, in 2007, on the eve of the crisis, there was a reduction in geological exploration work in Russia, particularly work done through non-traditional methods. The last 3 years have been particularly tough for ANCHAR as a result.

Nevertheless, in parallel to the decline in the company’s home market, there was an increase in demand from abroad. Our technology has been used in Kasakstan, the USA, Bulgaria and Morocco. This international work would not have been achieved without the help of Direct Petroleum Exploration, Inc. ANCHAR’s American colleagues, who have helped the company in improving ANCHAR-ADDHR technology through joint cooperation. Taking the step to international markets was facilitated by the fact that there were companies, friends, specialists and partners supporting us.

A lot of seismic surveys of Russia’s onshore and offshore reserves were completed many years ago. Your technology allows improvement of seismic surveys. How much of ANCHAR’s work is focused on improving existing seismic surveys, and how much is conducting brand new surveys?

ANCHAR is equally focused on both. The scientific basis of the technology is rooted in the USSR, but it was only in the ‘new Russia’ that we began to apply it. Over the last two years, ANCHAR has been working with Gazprom in new exploration work in East Siberia. My hopes for the future of the company lie particularly in this region, around the area of the East Siberia – Pacific Ocean (ESPO) pipeline. There’s a lot of interest in establishing the extent of hydrocarbon reserves around the future oil pipeline. We hope that it will create a demand for our services. When the world recovers from the crisis and the Russian economy is revived, the volume of geological exploration will rise again.

We have heard from construction companies and service companies working with Gazprom that its partners have to prove their credibility every year. Is this the case with ANCHAR?

I think that such competition is perfectly normal when working with a company that demands such high levels of efficiency and cost-effectiveness. However, in terms of our relationship with Gazprom, we are hoping that ANCHAR is in a special position because our technology is unique and has no alternatives. ANCHAR has been trying to prove to Gazprom that using its technology can help to increase their exploration success rate.

ANCHAR technology is being implemented across the world for onshore exploration, but the company is also exploring the offshore implications of the technology. How has this relationship worked over the last few years, and what are the results and expectations for offshore in the future?

In order to work offshore, different technologies and equipment are needed. ANCHAR needs a partner that can provide this. ANCHAR worked with Kazmorgeofizika and Yuzhmorgeologia in order to develop the offshore potential of ANCHAR’s technology for a small project in the Kazakh sector of the Caspian Sea. The aim is to move the business to a point where the offshore sector can become a permanent expansion of the business, rather than simply a one-off project. In Latin America, we were proposed to carry out work on some minor offshore fields. Generally speaking, as far as offshore operations are concerned, we are full of optimism.

From your client list in Russia to your cooperation across the world, it seems that the ANCHAR technology is valuable for the industry. What has to happen between now, and the moment when the whole industry will be exploring for oil and gas using your technology?

Once the global economic situation is stabilized, and geological surveying returns to the level of development and interest that was seen before the crisis, ANCHAR forecasts that there will be much more interest in its technology in the years to come. There are direct survey technologies that work on sites where oil and gas reserves have been proved, and this is a current area of focus amongst geological service companies. However, the real niche in the market is in developing a technology that can improve the accuracy of speculative surveys. ANCHAR’s technology allows companies to do that, and our efficiency rate of 85% speaks for itself. Using ANCHAR technology, the chances of producing accurate surveys are much higher than without it.

Whilst we wait for the market to recover from the downturn, ANCHAR is looking to expand it sphere of activities. One such expansion involves infrasonic microseismic indicators that are very sensitive in the infrasonic range that the company has invented. After extensive testing, we are sure that these indicators can be used to monitor the condition of large engineering sites such as the dams of the major HPPs and TV towers tracing the stability of the fluctuations of the engineering systems.

Another proposal is concerned with underground gas reservoirs. When 100 units of gas are stored underground, only 70 to 80 units are ever recoverable. ANCHAR technology can be used to monitor these underground stores of gas, and deduce to where this non-recoverable gas is leaking.

Where would you like ANCHAR to be in 5 years, and how would you like to grow the business from where it is today?

As well as continuing to work with our major partners here in Russia, we would like to extend our business to attract both small and medium sized partners. The most exciting international markets for ANCHAR would be the Middle East and North Africa. The main priority for us is to get lots of work, offering our services wherever they are needed.



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