CNOOC advancing on strategic offshore basins

Oil production targets set for three major areas

Wang Ming Wu
Contributing Editor
Beijing

China is setting high goals for its offshore fields [15,838 bytes].

An oil production target of 10 million tons of oil equivalent (toe) has been set by China National Offshore Oil Company (CNOOC) for each of three areas offshore the Peoples' Republic of China: Nanhai (South China Sea), Bohai (Bo Gulf), and all marine natural gas production (10 bcm, mainly from western Nanhai).

This goal is targeted for 2005. When reached, it will represent over 20% of China's total oil production. Current projections indicate that CNOOC has the material base to reach 20 million toe annual production by 2003.

The Bohai, Pearl River Mouth, and Beibu Gulf are the richest offshore basins and are in the early and middle stages of exploration. Sizeable numbers of large and medium-sized fields remain to be discovered. CNOOC is striving to find 1 billion tons of oil in place (oip) and plans to drill 40 test wells over the next 10 years.

Bohai

In the Liaoxi projection and depression, covering 5,600 sq km, there are two strategic directions. CNOOC is seeking reserves of 500-700 million tons from the Bohai and 1-1.3 billion tons in the five projections around the Bozhong depression.

The main objective in the Bohai is to seek giant and medium-sized oil fields. This will be done by focusing on uplifts that are surrounded by oil-bearing depressions and flanked by the main target zone, the Dongying Guantao Minghuazen formation. There are four oil and gas development systems in the Bohai: Liaohe, Jidong, Dagang and the Shengli.

Together, these productive zones cover 60,000 sq km, more than the 50,548 sq km area of the Bohai. Less than 10% of China's predicted reserves occur in Bohai. Of these, only about one-fourth is currently developed due to the low level of knowledge, interest and activity. Bohai could have reserve additions of 2 billion toe, a 30% increase over today's known reserves.

Two giant fields

In the last ten years, China's offshore industry has discovered two giant oil fields rated at 100 million tons: Suizhong 36-1 and Qinhuangdao 32-6. These fields are expected to reach 10 million tons production per year by 2003.

Suizhong 36-1, China's largest offshore field, was discovered in June 1986 and covers 43 sq km. It has proven reserves of 290.88 million tons of oip and an output of 1.4 million tons per year. By the year 2000, the field will produce 4.5 million ton per year.
Qinhuangdao 32-6 was discovered in June 1995. It covers 39.75 sq km and has proven reserves of 170.34 million tons oip. It is expected to come on stream in 2002 with an output of 3.5 million tons per year.

Wang Yan, CEO of CNOOC, officially announced in June 1997 that Bohai production would be increased to a target of 10 million tons per year. Three of China's major crane ships - Nantainlong, Dali, and Binhai 108 - converged on the Bohai last summer to begin work. Maritime work included Boxi, Jinzhou 20-2, and Jinzhou 9-3 fields. Drilling, as well as package hoisting and pipelaying, was completed. The Bohai 5 jackup, suited to fast quality drilling, drilled 33 production wells in Jinzhou 9-3 oil field The work was completed in September 1997.

Pearl River mouth

In the past 15 years nearly 500 million tons of reserves from nine oil fields came onstream in Nanhai. Four rounds of exploration occurred in the eastern waters of Nanhai. One field is preparing to come on stream and 13 fields have been discovered but not developed.

These fields have 100 million tons of oip and will be candidates for sustaining the 10 million ton annual production target. China Offshore Nanhai East (CONHE) is attempting to add 100-120 million tons of new reserves by 2000.

The Pearl River Mouth covers 13,000 sq km and has had over 200,000 line-km of seismic surveys gatheered. A total of 30,000 line-km is wholly owned by CONHE. A total of 103 test and appraisal wells have been drilled in 80 structures.

Nanhai East

Crude oil production from the eastern Nanhai jumped to 10 million tons in 1996 on a reserve base of 5 billion tons oip. This is according to the second appraisal of ocean oil and gas resources. Resources are concentrated in the Huizhou depression that covers close to 10,000 sq km, in the eastern basin. Controlled and proven reserves total 420 billion tons, about 93% of the area's total reserves.

The Huizhou depression is similar in geological evolution to Xijiang, Enping and Lufeng depressions. Nine of the 13 wells that produce at least 1,000 tons of oil per year are located in the Huizhou depression. The southern depression belt also has good potential and should not be underestimated.

Average production costs in the area are just over $2 per barrel. The Liuhua 11-1 oil field is a model for high-tech deepwater development but is a "difficult bone to gnaw," as explained by one experienced CNOOC explorationist.

CNOOC is taking a three-pronged approach to development. Using the stated concept of "looking at distant things while eating near ones," the company has arranged its work in three phases:

Producing from the Huizhou
Offshore bidding to open the Xijiang and Enping depressions
Opening up the southern depression belt and Chaoshan depression.

Licensing in 1996 in the Xijiang and Enping depression was successful. Five blocks were offered to four operators: Cairn Energy, Royal Dutch Shell, Santa Fe Energy, and Kerr McGee. CONHE has settled matters of fundamental importance concerning stable yields through consultation among all its foreign partners.

Nanhai West

Since 1983, over 200 wells have been drilled in the western waters of Nanhai. This 160,000 sq km area contains four basins: Beibu Gulf, Pearl River Mouth (west), Qundongnan, and the Yingge Sea. All four are rich in oil and gas resources and reserves are well employed. The region has a lower level of exploration, despite good results.

China Offshore Nanhai West (CONHW) has been linked with foreign companies almost from the beginning of exploration activity. From 1979 to now, it has cooperated with 34 oil companies from 10 nations. An annual output of over 10 million tons of oil and 3.4 billion cu meters of gas has been achieved.

Three basins comprise a giant gas province in the region: the Yingge Sea, Qundongnan and Zhusanwa depression. Thought to contain about one-third of China's gas resources, the area is being developed step by step.

CONHW is increasing oil production targets as well as working to increase gas production. Current oil production and development are concentrated in the Weixinan depression. With completion of the Wei 12-1 oil field by 2000, this area will yield 2 million tons of oil from discovered and undiscovered reserves. Estimated reserves in the depression are over 100 million tons, enough petroleum to guarantee stable yields for a long time.

CNOOC hopes the Wenchang 13-1 structure will hold many new reserves and permit building of additional production capacity. This depends on exploration success.

Another prospective area is the Wenchang 19-1 structure, which holds an estimated 100 million tons of oil. These structures are seen as a form of insurance for expanding production from the Weixinan depression.