Kerr-McGee sanctions development in Bohai Bay, China

By OGJ editors

HOUSTON, May 20 -- Kerr-McGee Corp., Oklahoma City, has approved a development plan for its discoveries on Block 04/36 in Bohai Bay, China.

Pending regulatory and partner approvals, development will include exploitation of CFD 11-1, CFD 11-2, and CFD 2-1 fields, using a leased, centrally located, floating production, storage, and offloading (FPSO) vessel, along with fixed platforms that will serve as drillsites for dry wellheads.

The FPSO, which is expected to be fabricated in China, will be located in 75 ft of water, 50 miles from shore. It will have the capacity to process more than 60,000 b/d of oil and will have a 1 million bbl storage capacity.

Kerr-McGee estimates area reserves at more than 150 million bbl. With government and partner approval of the development program, initial production could begin by yearend 2004, with peak production projected to exceed 50,000 b/d by mid-2005.

Kerr-McGee operates Block 04/36 with an 81.82% foreign contractor's interest. Its partners are China National Offshore Oil Corp. (CNOOC), Beijing, and Sino-American Energy Corp., a wholly owned subsidiary of Houston-based Ultra Petroleum Corp.

"This marks the beginning of the development of a new core area for Kerr-McGee," said Luke R. Corbett, Kerr-McGee chairman and CEO. The company has five Bohai Bay discoveries to date and a number of additional identified prospects within its three operated licenses.

Its exploration program includes discoveries CFD 12-1 and CFD 12-1S on the adjacent 05/36 block, which Kerr McGee operates with a 50% foreign contractor's interest. The company continues to evaluate Block 05/36 and plans additional appraisal drilling this year along with several more exploratory prospects in Bohai Bay.