Chevron steps up gas search off South China

Chevron's gas exploration acreage off China [24327 bytes]

Chevron Overseas Petroleum Inc. (COPI) has expanded exploration for gas off China's Hainan province.

COPI affiliate Chevron Overseas Petroleum Ltd. this month signed a production sharing contract with China National Offshore Oil Corp. (Cnooc) to explore for gas on 2,030 sq km Contract Area 63/15 in the South China Sea about 70 km south of the island province.

This bolsters Chevron's gas exploration portfolio in the area, where ARCO and partners are developing a world class gas field, Yacheng 13-1, and have laid pipelines to Hainan and mainland China to deliver Yacheng gas to market. Yacheng 13-1 started production near the first of this year (OGJ, Jan. 8, p. 26).

The new contract area, in which Chevron holds a 100% interest, adjoins one of two blocks Chevron owns south of Hainan.

The company acquired Contract Areas 62/23 and 50/20 early in 1995.

"We are eager to begin exploration in this new area, which we believe has the potential for significant gas accumulations," said Ross Deegan, managing director of COPI's China business unit and head of Chevron's Beijing office.

Under the new agreement, Chevron will begin a 623 sq km 3D seismic survey this summer on Contract Area 63/15. Seismic data gathered on 63/15 will be integrated with data covering Contract Areas 62/23 and 50/20. After processing and interpreting the data, Chevron plans to spud a wildcat in 1997.

In the event of a commercial discovery, Cnooc will back into an equity interest of the block, usually 51%.

Other South China Sea work

Last June, in conjunction with Cnooc and its other partners in the CACT Operators Group, Chevron brought the two newest Huizhou oil fields into production in the South China Sea.

This boosted CACT production in the Pearl River Mouth basin to the current record level of 120,000 b/d, making the group the biggest oil producer off China.

Chevron, Agip SpA, and Texaco Inc. formed ACT Operators Group in 1983 to develop hydrocarbon resources in the Pearl River Mouth basin.

ACT drilled its first well in 1984 and its first commercial discovery in 1985.

That discovery, Huizhou 21-1 oil field, went on stream in 1990. It was followed by oil field discoveries Huizhou 26-1 in 1991 and Huizhou 32-2 and 32-3 in 1995.

Effective Jan. 1, 1996, Cnooc joined ACT in operation of the offshore fields, and the new joint operating group changed its name to CACT Operators Group. Agip, Chevron, and Texaco each hold a 161/3% interest in the Huizhou oil fields, with Cnooc holding the remaining 51%.