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China will soon start drilling from an advanced new oil platform designed to tap into deep-sea
petroleum resources in the South China Sea, according to reports in the country's official
media on Monday.
The development is major technological progress for China, which claims to have developed
the new platform indigenously through its state-owned corporation, China National Offshore
Oil Corporation (CNOOC) [NYSE: CEO, Hong Kong: 0883]. It also occurs in an area where China
has clashed recently with neighbors including the Philippines.
CNOOC is China's third largest oil and gas company after China National Petroleum Corporation
and Sinopec, and specializes in exploration and development of maritime hydrocarbon resources.
Most of the platforms to date are located in water shallower than 300 meters, considered
the deep-water mark by the industry; operations in waters deeper than 300 meters remain in
the start-up stage.
The new platform, dubbed "Haiyang Shiyou - 981" or "Oceanic Petroleum 981" was inaugurated
in May of 2011 in Shanghai, and has only recently been moved into place 320 kilometers (or 198
miles) southeast of Hong Kong, at the northern end of the South China Sea and within the
country's Exclusive Economic Zone. Operations at the rig are slated to begin on Wednesday.
CNOOC originally paid 6 billion yuan or $952 million for the rig, which was built by China
State Shipbuilding Corp. CSSC claims that the rig can drill to a depth up to 10,000-12,000
meters (32,800 to 39,360 feet). The new platform is now located in waters up to 1,500 meters
(4,920 feet), considered ultra-deep-water by the industry.
When the Deepwater Horizon -- originally built by Korea's Hyundai Heavy Industries for $560
million -- broke historic records in 2009 for the deepest depth ever drilled to date,
around 35,050 feet or 10,683 meters, it was operating in Gulf of Mexico waters 1,259 meters
deep, or 4,132 feet.
If the record of the BP rig was any indication, ultra-deep-water drilling must deal with unforeseen
difficulties that may become tremendously hard to contain, even for experienced Western
companies. CNOOC must now demonstrate its ability to operate at those higher standards
in light of the disaster in the Gulf of Mexico two years ago.
But for a resource-hungry China, looking to maritime reserves of hydrocarbons may be unavoidable.
Chinese and foreign experts agree that while the South China Sea only has a comparatively
tiny 7-8 billion barrels of oil in currently proven reserves, total reserves may be much
higher, though there is considerable debate and disagreement as to how much. Chinese experts
claim that the area may hold as much as between around 170 to 220 billion barrels of oil
in total, and estimated natural gas reserves in the South China
are over 560 trillion cubic feet. Foreign estimates are usually lower. 70 percent of
the oil and gas in the South China Sea is located in deep-water areas.
CNOOC produced less oil in first quarter 2012 than first quarter 2011, due to suspended
operations at its Penglai 19-3 field in Northern China's Bohai Gulf. Penglai was the location
of a controversial environmental incident in June 2011 involving oil and petroleum leakages,
which were ultimately described by the media as being six times larger in area than the
state of Singapore.
The Chinese government eventually implicated CNOOC and ConocoPhillips China Inc., a subsidiary
of ConocoPhillips [NYSE:COP], which held a 49 percent stake in the field, in the incident.
I would like to keep you inform & confirm the deep-water exploratory block
around 400Km offshore Hong Kong is about 1,300 metres of water depth!!
It is quite challenging for Cnooc & Eni to operate in such deepwater depth to drill,
to explore and produce!!
I speculate that the target in this region of Pearl River Mouth Basin will be as attractive
& productive as that of the Deepwater Gulf of Mexico(GOM) & Pre-Salt
of the Campos Basin, offshore Brasil!!
Just hang tight & wait for my good news in the near future when Eni "SAIPEM 10000" & Cnooc
"KANTAN 10000" will spud the first DEEPWATER offshore well in
South China Sea!!
I am proud that We CHINESE are very HARDWORKING & COUAGEOUS with INGENUITY!!!
May God Bless China & her Chinese Offshore Oil Industries!!
Courtesy of:
Dr.Ing.Stephen M. Yung, AIME Senior Staff Geophysicist,
YOIL(CHINA), HONG KONG, PRC.
CHINA:(86) 13680380281 Email: steveyung8@gmail.com
Email: yoilsmcyung@netvigator.com