Enron Awarded New Onshore PSC in China

Aug. 25, 1997
Development stands to advance in one of China's oldest producing areas. China National Petroleum Corp. awarded a production-sharing contract (PSC) to Enron Oil & Gas China Ltd., a unit of Enron Oil & Gas (EOG) Co., Houston. The PSC covers appraisal and potential development of oil and gas reserves underlying Chuanzhong Block in central Sichuan province (see map). Enron holds a 100% interest and will operate the fields on the block, including Jinhua, Gong, and Yingshan oil fields and

Development stands to advance in one of China's oldest producing areas.

China National Petroleum Corp. awarded a production-sharing contract (PSC) to Enron Oil & Gas China Ltd., a unit of Enron Oil & Gas (EOG) Co., Houston.

The PSC covers appraisal and potential development of oil and gas reserves underlying Chuanzhong Block in central Sichuan province (see map).

Enron holds a 100% interest and will operate the fields on the block, including Jinhua, Gong, and Yingshan oil fields and Bajiaochang gas field.

In 1992, EOG's involvement in China began when it acquired development rights for potential coalbed methane recovery projects in Shaanxi province. It sold its interest and operating rights to ARCO China earlier this year in an effort to concentrate on more traditional oil and gas production projects.

What's involved

The 30-year PSC covers 1.8 million acres and provides for several phases of activity starting with 2 years of initial study and evaluation, which are already under way.

EOG will fund the initial phase, including workover of three existing wells and the drilling of three additional wells. Depending on results of the evaluation, subsequent oil development would proceed immediately and gas development would proceed as soon as a market is developed.

"We expect the potential application of EOG's proven tight gas sand expertise to be beneficial here due to the nature of the formations in the four producing fields," said Forrest E. Hoglund, EOG chairman and CEO.

Hoglund said an existing Chinese government pipeline in the area has 210 MMcfd design capacity and is believed to have 70 MMcfd of available capacity with an immediate existing market of 40-50 MMcfd "that could be developed quickly."

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