Wenchang oil field starts up in South China Sea

July 25, 2002
CNOOC Ltd. and Husky Energy Ltd., Calgary, produced first oil from the Wenchang offshore project in the South China Sea, where the first tanker is to call in mid-August.

By OGJ editors

HOUSTON, July 25 -- CNOOC Ltd. and Husky Energy Ltd., Calgary, produced first oil from the Wenchang offshore project in the South China Sea, where the first tanker is to call in mid-August.

The crude, similar to Indonesian Minas blend at 35° gravity and 0.08% sulfur, is likely destined for Asian markets, CNOOC said.

Peak production of 50,000 b/d is to be attained in fourth quarter 2002 and last 3 years. Production net to Husky's 40% interest is estimated at 8,000 b/d for 2002.
CNOOC operates the two fields under a development contract signed with Husky in October 2000.

Cash flow from oil sales will support exploration on the surrounding 57,000 acres on Block 39/05, where Husky is operator under a 2001 agreement, and contribute to other growth strategies nearby, said Husky. It agreed to drill as many as 3 exploration wells in 7 years, including 1 well in the first 3 years. The first well is set for 2003.

Wenchang 13-1 and 13-2 fields in the western Pearl River Mouth basin are believed to hold 83 million bbl of proved and 9 million bbl of probable reserves. Nearby pools could be developed later if proved commercial.

The two fields are 7 km apart in 120 m of water about 140 km east of Hainan Island (see map, OGJ, Dec. 17, 2001, p. 62). Oil is produced into the Nanhai Endeavour turret-moored FPSO, storage capacity 850,000 bbl.

Husky estimated a $327 million total development cost including 21 wells and $2/bbl operating cost during peak production. It put field life at 10-12 years and production downtime at 35 days/year.