CNOOC requests bids for South China Sea deepwater blocks

China National Offshore Oil Corp. (CNOOC) has requested bids from foreign companies for oil and gas exploration and development of 12 virgin deepwater blocks in the South China Sea.

By OGJ editors

HOUSTON, Sept. 24 -- China National Offshore Oil Corp. (CNOOC) has requested bids from foreign companies for oil and gas exploration and development of 12 virgin deepwater blocks in the South China Sea. The area, south and east of Hainan Island, covers 76,000 sq km in waters 300-2,000 m deep.

"Exploration in this area will help tap the unexploited potential in offshore China," said Ru Ke, CNOOC executive vice-president. "We welcome experienced companies with (a) strong track record in deepwater exploration to partner with us in the exploration work, and we believe it will bring encouraging results."

CNOOC, through its Hong Kong-based subsidiary CNOOC Ltd., will own all working interests resulting from the exploration and development activities. It currently owns interests in 45 crude oil and gas properties in major producing areas in Bohai Bay, the western and eastern South China Sea, and the East China Sea.

New discovery confirmed
CNOOC Ltd. reported Sept.12 that its natural gas wildcat well PY34-1-1 confirmed an earlier gas discovery in the PY34-1 area in the South China Sea. The well was tested to produce 13 MMcfd.

PY34-1-1, at the Pearl River Mouth basin in the eastern South China Sea, is about 30 km southwest of the gas-bearing PY30-1 structure.

"The success of this well and a series of other gas discoveries made in this area may be showing us a pattern of how gas reserves are deposited in this area," Ru Ke said. "We may be looking at 'cluster development' for gas if more meaningful gas accumulations are found."

The discovery follows on the heels of a late August natural gas discovery in the western South China Sea. That appraisal well, YCH13-4-2 on the YCH13-4 discovery, produced about 20 MMcfd on a 16-mm choke during drill stem tests.

CNOOC holds 100% interest in both discoveries.

Other exploration areas
More recently, CNOOC Ltd. on Sept. 24 announced two production-sharing contracts with Husky Oil China Ltd. on Blocks 23/15 and 23/20 in the Beibu Gulf basin of the South China Sea.

Under terms of the contract, Husky will drill and complete one wildcat well in each contract area in the first 3 years of the contract. Husky will finance 100% of the exploration expenditures, and CNOOC Ltd. will take a 51% participating interest in any commercial discoveries.

Blocks 23/15 and 23/20, which cover 1,327 sq km and 1,543 sq km, respectively, are 80 km from Weizhou oil field.

Husky Oil China is a unit of Husky Energy Inc., Calgary. The company recently produced first oil for CNOOC Ltd. from Wenchang field in the Pearl River Mouth basin about 140 km east of Hainan Island and 400 km southwest of Hong Kong. (OGJ Online, July 25, 2002). Husky holds 40% and CNOOC Ltd. 60% of those fields.

Production from Wenchang Blocks 13/1 and 13/2 surpassed 60,000 bo/d, Husky said, exceeding the 50,000 bo/d originally estimated for the blocks. Cash flow from 13/1 and 13/2 oil sales will support exploration on the surrounding 57,000 acres on Block 39/05, which Husky also will operate under a July 2001 agreement.

Husky plans to initiate a drilling program for Block 39/05 involving two or three wells by yearend or in first quarter 2003. Wenchang facilities could be used to develop fields in the 5,700 sq km Block 39/05 lease area.

Husky holds a 100% working interest in Block 39-05 during exploration, and CNOOC Ltd. has the right to participate in any development program with a 51% interest.

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