Rusnano Sistema SICAR to Invest in GEOSPLIT, a Developer of an Innovative System for the Monitoring of Oil-producing Well Inflow Profiles

25 December 2017

Rusnano Sistema SICAR, a fund created jointly by PJSFC Sistema and RUSNANO, announces it is investing $1.5 mln in GEOSPLIT, a Russian company that specializes in development of technologies for marker monitoring of horizontal well inflow profiles. The company’s unique technology uses special markers-reporters® from quantum dots. The fundamental difference of the new technology from conventional test wells consists of the possibility of monitoring well intervals over a long period without downhole operations, reducing expenditures and increasing production safety.

GEOSPLIT plans to use the funds from this transaction to development of technology, the expansion of the product portfolio and the launch of the export program.

In recent years, oil and gas production from horizontal wells, stimulated by means of multistage hydrofracturing (MHF), is increasing across the globe. With the total growth of horizontal well drilling volumes, increase of horizontal wellbore length and number of MHF stages, oil production increase often does not meet the design level, and one of the most important tasks during field development is obtaining complete information about inflows of producing well intervals.

Markers-reporters® of quantum dots (linear size 2-6 nm) are applied on the proppant material used to fix cracks created during hydraulic fracturing (HF). During each HF stage, some amount of proppant with a certain code of markers is injected in the formation. After well development, the markers are washed away by the fluid inflow from the formation within one year. In the course of sampling from the wellhead and subsequent laboratory analysis, special equipment determines the concentration of each kind of marker, allowing for estimation of performance and distribution of formation fluid phases across all well intervals.

GEOSPLIT’s business model is that of a service provider, offering a full package of services in a sample analysis after MHF over the course of one year. The package includes: production and supply of marked proppant to the field, supervision during MHF, sampling, delivery and analysis of formation fluid samples and interpretation of results and recommendations to the customer to increase the efficiency of technical solutions for well completion and field development. The non-resource-intensive and relatively inexpensive GEOSPLIT method allows for the large-scale use of the technology and to obtain statistical data for MHF design optimization, determination of formation compartment depletion, the optimization of the number of MHF stages and number of ports, length of horizontal sections, etc.

“At present only an insignificant part of the horizontal well stock in Russia is being studied. Experts note the potential growth on the market of well marker surveys up to 35% of the total market volume by 2026. GEOSPLIT may occupy a dominant position in the market due to its technological advantages over Russian competitors, and due to cost advantages versus foreign competitors”, said Sergey Vakhterov, managing director of RUSNANO MC.

Sergey Dergach, CEO of Sistema Consult, a company acting as an investment adviser to Rusnano Sistema Sicar, said: “The volume of the tracer technology market has great potential: the average annual growth rate for this market is forecast to be in the range of 33% in 2017-2026. That said, the share of tracer methods on the MHF diagnostics market, according to experts, could reach 6% by 2026 from its current level of 1%.  We have a high regard for the professionalism of the GeoSplit team, and they offer one of the most technologically and economically attractive solutions on the Russian market. The GeoSplit product is now being tested by many Russian oil companies; after testing it may well become the standard for tracer diagnostics of MHF in Russia”.

“The GEOSPLIT technology is an efficient complement to the conventional methods for the study of horizontal wells after MHF, and in some cases may replace them completely. The large-scale use of marker monitoring takes well operation control to a whole new level, as well as reduces the expenses of extracting companies on downhole operations. Therefore, the economic benefit from the use of the technology is estimated at many millions of rubles for each well. So far, we have carried out surveys in 20 horizontal wells, and in 2018 we plan to increase work volumes in Russia at least twofold and to start an export program. Thanks to the investment transaction with Rusnano Sistema SICAR Foundation, we will be able to develop the technology faster in order to make it more valuable for Russian and foreign customers”, said GEOSPLIT Chief Executive Officer Alexander Katashov.

The investment adviser to GEOSPLIT in the transaction was Skolkovo Ventures, supervising the whole venture investment block within the Skolkovo Foundation.

Reference

RUSNANO Joint-Stock Company was founded in March 2011 through reorganization of state corporation Russian Corporation of Nanotechnologies. JSC RUSNANO contributes to implementation of the state policy on the development of the nanotechnology industry by investing directly and through investment funds of nanotechnology in financially effective high-technology projects providing the development of new production facilities in the Russian Federation. Its primary investment focus is in electronics, optoelectronics and telecommunications, healthcare and biotechnology, metallurgy and metalwork, energy, mechanical engineering and instrument making, construction and industrial materials, chemicals and petrochemicals. 100 percent of RUSNANO’s shares are state owned. Thanks to RUSNANO’s investments, there are currently 96 factories and R&D Centers opened in 37 regions in Russia. JSC RUSNANO has profit for the last 4 years.

Management of assets of RUSNANO JSC is carried out by Limited Liability Company established in December 2013, RUSNANO Management Company. Anatoly Chubais is the Chairman of its Executive Board.

Work to establish nanotechnology infrastructure and carry out educational programs is fulfilled by RUSNANO’s Fund for Infrastructure and Educational Programs, which was also established during the reorganization of the Russian Corporation of Nanotechnologies.