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28 Development of a sustainable waste management concept for the town Khanty-MansiyskThe results of the German-Russian project

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58 Simon Durkin: Building a better company for people and the environmentChief Executive Officer of Salym Petroleum Development about the results of the companys 2011 performance and its plans for the next year

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Sorting of MSW during the waste analysis

in Khanty-Mansiysk, February 2011

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27

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Development of a sustainable waste management concept for the town Khanty-MansiyskOne year ago Industry and Ecology of the North published an interview with Dr. Julia Kaazke from Technical University of Berlin and Dr. Bertram Zwisele, the Director of ARGUS e.V. company. The German and Russian representatives jointly had begun to work out the project Development of a sustainable waste management concept for Khanty-Mansiysk, Russia. Toda the authors of the project Dr. Julia Kaazke, Dr. Bertram Zwisele, Prof. Dr. Dr. B.-M. Wilke from Technical University of Berlin and Prof. Dr. Elena Lapshina, Head of the Center of Environmental Dynamics and Climate Changes of the Yugra State University are summarising it.

There has been a migration boom in Khanty-Mansiysk since Khanty-Mansiysk Autonomous Okrug Yugra (KMAO-Yugra) started to play a main role in oil and gas extraction. As a result, a continuous rise in the waste amount has been recorded for several years. According to official

statements, the space prepared for waste disposal on the only landfill has already reached its current deposition capacity. Furthermore, no recycling technologies have been implemented so far to divert waste from being landfilled. These issues result in the improper

disposal of waste and may cause environmental problems and risks to human health. Therefore, a sustainable urban waste management concept needs to be developed. Since December 2010, the project Development of a sustainable waste management concept for Khanty-Mansiysk, Russia has been implemented in a co-operation agreement between Russian and German partners.

For the development of a sustainable waste management concept

relevant social, ecological, economic data, knowledge about national/regional waste legislation, and reliable data about waste amount and composition are necessary. This data was collected by representatives of local authorities from January to July 2011. Waste analyses were also implemented in February and June 2011 to determine the amount and composition of municipal solid waste (MSW).

54 different waste container locations in the town Khanty-Mansiysk were determined for waste sampling, and 5,300 kg of MSW were analysed in the waste analyses. The annual waste amount was calculated as 25,800 Mg/y, consisting of four main fractions: organic, paper/cardboard, plastics, glass (see Figure 1).

Additionally, telephone interviews with representatives of industry were carried out in May 2011 to identify the status of the recycling industry in KHMAO-Yugra

Example of waste container location for waste sampling in February 2011

2011 .

Figure 1. Calculated waste amount and waste composition of MSW in Khanty-Mansiysk in 2011.

Clean town

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and surrounding areas, as well the possibility of gaining profit from recycling waste. Results indicate there is only a very small market for metal and paper in KHMAO-Yugra.

All data gathered were summarised in the Status quo report, which is available in English and Russian and can be ordered from Mrs Elena Lapshina/Ugra State University in Khanty-Mansiysk.

Based on the data of the status quo report, three main potentials for different waste treatment options were identified:

1. Potential for recycling: 45% of MSW, or 11,900 Mg/y of 25,800 Mg/y, shows a potential for recycling (see Figure 2).

2. Potential for biological treatment: not only the organic

fraction (34%) but also paper (10%) and wood (1%) can be composted. In total, 45% of MSW, or 11,850 Mg/y of the 25,800 Mg/y, could potentially be treated biologically (see Figure 3).

3. Potential for incineration: 36%, or 9,300 Mg/y of 25,800 Mg/y MSW, demonstrates a burnable quality (see Figure 4). The calorific value of MSW in Khanty-Mansiysk was calculated at 7,000 kJ/kg. The waste volume to be disposed of to the landfill can be reduced from 25,800 Mg/y MSW to 8,500 Mg/y ash.

The different potentials were summarised in three scenarios: 1) mechanical-biological treatment (MBT)/ recycling; 2) biological treatment; 3) incineration, and presented during an excursion

to Berlin for representatives of Russian partners in October 2011. In addition, the waste technologies behind the scenarios were demonstrated. After various discussions, it was decided to enhance the scenarios MBT/recycling and incineration. The German expert team then compiled further information on the technical feasibility and the expected costs for the pre-selected scenarios as well as the pro and cons of both options.

In December 2011 local authority representatives who are responsible for the development of a waste management concept in Khanty-Mansiysk decided that the scenario MBT/recycling should be developed further to the waste management concept.

In conclusion, the final waste management concept is currently being completed and will aim at protecting human health and reducing environmental pollution. The project will be finalised in May 2012.

This project is funded by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety with means from the Advisory Assistance Programme for Environmental Protection in the Countries of Central and Eastern Europe, the Caucasus and Central Asia. It is technically supervised by the German Federal Environment Agency (Umweltbundesamt, UBA).

Figure 3. Potential for biological treatment of MSW in Khanty-Mansiysk.

Figure 2. Potential for recycling of MSW in Khanty-Mansiysk.

Figure 4. Potential for incineration of MSW in Khanty-Mansiysk.

Clean town

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Mr. Durkin, could you tell us about your career? Why did you decide to choose the oil industry?

I came to the oil industry straight from the university, at that time I thought it was an attractive place to work. For me the main at-traction of the company I joined Shell was the opportunity to travel overseas, so as a consequence I got a chance to work all over the word. It is an interesting fact but I have never worked in my home country, which is Great Britain.

I started in Netherlands for 3 years and then all my postings were 4 years as follows: Norway, Brunei, Syria, Netherlands, Malay-sia and China before I came to Mos-cow. All in all I had an interesting experience around the world, and I worked in all aspects of oil and gas business from project manage-

ment to contract procure-ment, from gas business to the oil business. Ive been a managing direc-tor for Shell E&P in Chi-na and now Im a CEO in SPD in Russia since Sep-tember 2009.

What impression is Russia making on you?

I think that the real surprise for me coming to Russia is the quality and the extent of art and cul-ture. For me its extraordi-nary. Even if I attend a lit-tle school concert in the village of Salym, you see the 10-12 year olds stand-ing there playing violins,

piano, singing in a manner that you would not experience anywhere else. So, that is a huge favorable im-pression on the cultural side. On the negative side is the horrible Mos-cow traffic!

Concerning oil and gas, I think you dont appreciate when outside of Russia the scale of both the country and its oil industry. Russia is the worlds biggest oil and gas business by far and also the biggest country by far and then you have to add the harsh conditions in which people have to operate. This morn-ing Ive just looked through our dai-ly report from Salym fields and the temperature there is 29 !

You mentioned Salym vil-lage. Local administration told us SPD was realizing a number of social projects in the region. In

particular, SPD assisted in reno-vation of the school, improving roads What are your social pro-ject in Salym village and Yugra re-gion on the whole?

It is our fundamental belief that any company like SPD has to be founded on sound economics as it is a business and we have to make money. However, we see it also like a three-legged stool and one of them is economic, but the other two legs are essential to keep balanced and these are safety/environment and our social responsibility. So from the moment that SPD started to work even before we were producing oil we were tried to focus on these three aspects. Thus we wanted to make sure that we delivered profit but in a way that protected the en-vironment and people who worked for us and in a way that was benefi-cial to the community in which we were operating. The biggest part of the community in which we are op-erating is formed by the two villag-es of Salym and Sentyabrsky. From the beginning we started to work with the villages to support them. And we have a focused program sup-ported by money but also support-ed by staff. Our aim is to provide not only financial support to the villages but actually to provide support in a way that we together with the villag-es manage how this money is used. This is to maximize its benefit to the people who live there and to focus on the key areas: healthcare, educa-tion, environmental safety, business development and indigenous people and preserving their culture. In each area we work consistently with the

BUILDING A BETTER COMPANY FOR PEOPLE AND THE ENVIRONMENT

On the New Years Eve our reporter met with Simon Durkin, Chief Executive Officer of Salym Petroleum Development (SPD), to discuss the impressive results of the companys 2011 performance and its plans for the next year.

Oil And Gas Valley

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community. I will give just a quick feeling on each of those.

On healthcare we are working with the Salym hospital in terms of renovating it, supplying equipment to the hospital, training the person-nel, and we actually do it in a man-ner that is not only beneficial to a hospital, but also to us. Our field medical team cooperates with the hospital and vice versa. And this co-operation works to raise the stand-ards overall in terms of medical care, so for example, we donated a mobile X-ray machine which is useful for the hospital because they can use it distantly in the communities but it is also useful for us. We renovat-ed the dental area in the Salym hos-pital completely. Were now work-ing on providing more ambulances to the hospital and on the improve-ment of the building itself, and san-itary premises.

On the education side our big-gest project was the construction of a kindergarten for 210 children in Salym village, which opened in August 2006. We also work on an annual basis with the three main schools one in Sentyabrsky and 2 in Salym in terms of equipment and every year we hold competitions for the pupils graduating from school. We organize essay and presentation competitions and annually award 5 scholarships for universities and we support those students financially all the way through the university. We also pay attention to safety at schools and in the streets by pro-viding safe bus stops areas which not only improve the visual look for the village but also improve safety.

On a regional level SPD signs a $ 3 mln social agreement with the government of Khanty-Mansi au-tonomous okrug (KHMAO) on an annual basis. Our cooperation with the KHMAO works very well and ef-ficiently. We put much effort not only into the Salym and Sentyabr-sky villages but also to such towns as Nefteyugansk, Khanty-Mansiysk and others. This cooperation agree-ment defines how we are working in the particular areas across the Okrug and the way we are going to do it. During my 2.5 years weve worked in cooperation effectively

to deliver those programs. The way we define the work programme is quite interesting we annually go to the villages and get the feedback from the local communities on what they want and where they think we should help and invest. Then we put all the information from the re-gions together, summarize and dis-cuss with the KHMAO Government in terms how we are going to accom-plish the programs planned. Then

we make a commitment to do it and we do it.

I know you are closely work-ing with the KHMAO Government on gas utilization issue and en-vironment protection. Could you please share with us latest news on that?

As you know, since the start of 2012 all oil companies should en-sure the associated petroleum gas utilization level at 95%. And SPD also obliged to do that because it is good for the environment and it is good for the community. For SPD, a relatively small company, this issue presented a major challenge and so we looked at a number of ways to utilize gas. Firstly, we started gen-erating our own electricity utilizing the associated gas, so we installed four 15-MW power turbines that utilizes about 1/3 of our associat-ed gas. We made that investment in 2008-2009 but then we need-ed to utilize the remaining associ-ated petroleum gas (APG). So to-gether with KHMAO Government we came up with quite a unique solu-tion. We combined with Russneft oil company and an independent com-pany called Monolit, that is a trad-ing company working with Liquefied Petroleum Gas (LPG), to build an LPG plant on Salym territory to uti-lize APG from Salym fields and from Russnefts Shapsha fields. Feeding the rich gas from the two sets of fields, the LPG plant extracts LPG which Monolit export to the mar-

ket and then sends back lean gas to SPD and Russneft that we then use in our power plants. This arrange-ment was pulled together in 2008. In 2008-2009 things went a little bit slower than planned because of the world financial crisis. But after Monolit had received EBRD spon-sorship for the project, the plant was built. SPD built the compres-sor station and pipelines to Mon-olits plant, and today we are flow-

ing gas into this plant and receiving lean gas for our power plant. Cur-rently we are utilizing about 95% of the gas from the field and Mon-olit is starting to process that gas and exporting LPG, supplying to us lean gas for SPD power plant. It is an interesting story that required 4 parties to play a key role to bring it all together: KHMAO Government in terms of facilitating it and helping the parties to come together, Russ-neft, SPD and Monolit that built and now operates the LPG plant.

This is truly unique solu-tion in region, and, in my mind, it is totally in line with SPD cul-ture of win-win partnership. Could you please tell what other corner-stones of SPD corporate culture are?

In SPD we have a strategic plan, we called our Roadmap. We renew it every year, but its struc-ture and key strategic elements re-mains the same. It summarises our key strategy: our purposes, what we want to achieve and what we do to achieve it. The corporate values of SPD are also embedded in the Road-map and these are the cornerstone for our company. These values are 1) honesty, integrity and respect, 2) deliver what we say 3) teamwork 4) commercial mindset 5) learning and improving.

As a company and as individ-uals we have responsibility to be honest, to manage our business

As a company and as individuals we have responsibility to be honest, to manage our business and ourselves with integrity and to respect the people that we work with

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and ourselves with integrity and to respect the people that we work with (in or outside the company). These are very important aspects because they not just encourage people to work in the company, but they actually help the company to be more efficient. Honesty in an or-ganization simply means that all the news, good or bad comes up natural-ly through the company so we can all understand each other and where we are without having to resort to endless reports and audits. Integ-rity is about the way we deal with the authorities and with our con-tractors and the way we deal with each other. We are a company that is very open and honest about the way we do business and we do busi-ness based on strict procedures and processes that ensures open on fair competition for our contractors and suppliers. And finally we work in a way that tries to respect each oth-er. Of course, every organization has to have a hierarchy , and Im CEO, but I hope that all my staff feel that I respect them personally and that I consider them as individuals not just functions working for me in an organization. So we are working together as a team. Were profita-ble company and we want to remain profitable, its actually important our employees want to have a job and our villages want to have ad-vantages, and the okrug wants its tax. Finally, we are an organization that promotes learning and im-provement. And as consequence of this we have staff who are motivat-ed, staff who learn and develop and continually improve themselves. When I came to SPD 2.5 years ago the first thing I did as CEO in this company was I went around and I listened. I asked people and lis-tened to what they thought about SPD. When I asked the staff this question there was one thing that everybody said to me: The importance of SPDs culture. With-out question everybody said: Ul-timately I work for this company, I enjoy working for this company, I work hard for this company be-cause the culture in this company is something I really value. So proba-bly this is the most important thing

that differentiates us as a compa-ny. The other thing that differenti-ates us as a company is the people we have. The good and professional people we have, and we have them because of the culture in which we operate. They work in that culture, they enjoy working in that culture, that culture helps them to be bet-ter and so they get better and we get more professional people and as a consequence were a better com-pany for them. I am very passionate about this subject.

2011 year is coming to an end and what the most important SPD achievements you can name. What are the plans for 2012?

2011 was a very good year for the company with a number of achievements. Let me start with the production. This will be a year of our record production. This year we pro-duced 8.4 mln tons and it is more than we had produced in 2010. It is a huge achievement that is based on a lot of work from a lot of people across the company, so this is cer-tainly something we can be proud of. Beside this we have some spe-cific technical achievements. The drilling efficiency has gone up yet again so were already the compa-ny that drills wells faster than in av-erage and our average drilling time for the normal well is about 8.5 days, and it is a fantastic record. In 2011 we also set a new coring record of over 70m cored in one coring run and at 100% recovery. Moreover, our facilities operated at over 97.5% of availability. The efficiency of oper-ation is increasing every year. These achievements enable SPD to run and maintain its business in efficient way. And this is one of our key areas.

The second key area is to grow the business as we are now beyond the peak of oil production. We are trying to find additional oil that is currently not in our plan. The key to this grow the business theme is a huge 3D seismic campaign we are shooting over Salym area. We safe-ly completed the Vadelyp and Upper Salym 3D Seismic campaign acquir-ing a total of 800 km2 and setting a Siberia record of drilling 35 178 shot holes by a single seismic crew in one

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season. We have already started the next round of seismic hoping to ac-quire another 530 km2 over West Sa-lym during this winter season. Data received from 3D seismic campaign helps us to perform drilling more ef-

ficient and to produce oil at margin-al areas of the field.

The third theme is called Changing the Game. We want to see SPD as a company that unlocks oil volumes using technology that nobody currently is unlocking in Si-beria. Im very pleased that also in 2011 we made a strategic decision (with the Supervisory Board) to go ahead on the next stage of chemical EOR (enhanced oil recovery) project. That still has a long way to go, but if the proposed EOR pilot project is successful, then Siberia potentially gets a new life. In order to be profit-able well need to find a tax solution because you cant produce that extra oil based on the current tax regime, its just not profitable for the opera-tor. That doesnt mean it is not prof-itable at all, we think that we may be able to produce the enhanced oil at a cost of some 30-40 dollars a barrel. This compares with a cur-rent world oil price of over 100 dol-lars a barrel; so there is clearly profit to be made both for the government and for the company, but today the tax regime doesnt allow us to go ahead. But we want to proceed and do the research, do the study work, do the field trials and at the same time engage with the government on how we can better split the prof-it to achieve a win-win.

Final thing of which Im proud of in 2011 is of course that by the end of the year we were utilizing more than 95% of our associated gas.

I know that much attention in the company is paid to safety. What steps can you specify on a way to safety guarantee for your employees, production and busi-ness on a whole?

Its very difficult to say that you can guarantee safety. Safety is a continuous journey, and you have setbacks and were not a com-pany that completely avoids them, but we are committed completely

to the safety of our employees and our contractors.

The safety journey starts with everybody understanding that you are really committed. Everybody understanding that human life is much more important than a bar-rel of oil and if theres a choice be-tween doing something safely or do-ing something quickly you choose to do it safely, or if theres a a choice between doing something safely or doing something cheaply you again choose to do it safely. If you look once again at our Roadmap you will see that Safety takes number one priority for us. Our goal is to devel-op the fields in a way that doesnt harm people and the environment.

The first starting point on safe-ty is that discussion with your staff and contractors who drill the wells, deliver oil, lay the pipelines, and op-erate the equipment: how you are doing it? Of course in a way you are safe and dont get hurt. So the first step is that message, its even more than a message it has to be right into peoples hearts and minds. Be-fore starting any work they think how to do it in a way that doesnt hurt anybody.

The second step before we do something we plan it in a manner that makes sure we can do it safe-ly, every day in our field, every work-er sits down and has a toolbox talk. I attend them sometimes, its a bit annoying because you travel from Moscow with this time difference and you have to be at such conver-sations at 7am, but you have to at-tend them every day.

When planning activities I reg-ular have high risk intervention meetings with my staff so if we planning to do something new or

connected with high risk (e.g. a major shut down of a facility or a building is very tall) we do a safe-ty risks assessment in the planning stage and ensure that we know how we will manage the safety risks right up front. So its all about messaging, planning and engagements with in-dividuals.

Therere some basic things you can do to protect people: to make sure they wear the right equipment, drive around in safe vehicles, and follow our 12 Life Saving Rules key safety rules. Before you start work-ing for SPD and come to our terri-

We want to see SPD as a company that unlocks oil volumes using technology that nobody

currently is unlocking in Siberia

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tory you are trained in these rules and have to sign a safety declaration that commits you to them. They cov-er basic things, e.g. if youre in car, you wear the seat belt.

Interestingly, even in the oil industry, most accidents are road accidents, so we also control the speed at 40 km/hour within the field. Every vehicle has an inside monitoring system which is linked to a satellite system, and so we al-ways know who is driving, at what speed. Moreover, every driver of every vehicle in our field has a de-fensive driving training course and

assessment. Another area of high risk is remote worksites and so we are currently running programme on remote site supervision which includes training all our contractor and in-company frontline supervi-sors on how to supervise work safe-ly. This is big program, that doesnt come easy its about training 300 to 400 frontline supervisors - both theoretical and practical training. These are just examples some key areas were we focus to keep people safe; there are lots of others.

Our aim is Goal Zero which means no fatality, no injuries; it

means that everybody goes home in one piece every day. We already have some very good Goal Zero examples, e.g. our central pro-cessing facility, SPDs most com-plex facility, has now exceeded 4 years without a Lost Time Injury. In December we had a meeting in Nefteyugansk with about 80 con-tractors where we congratulated a number of our contractors who had achieved 6, 7, and even 8 years without any injury in Salym fields. It all shows that Goal Zero can be achieved, which is something I strongly believe in.

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