CNOOC charts course for deep water in South China Sea

State-owned China National Offshore Oil Corp. (CNOOC) is looking to ramp up exploration in the South China Sea, with the goal of finding a single deepwater field that could equal its entire domestic output in 2013.

CNOOC aims to find a deepwater oil and gas field in the South China Sea with production capacity of 40-50 million tons of oil equivalent (mtoe), said former company Vice President Zhou Shouwei at an industry event in Shanghai last month. CNOOC has pumped 50 mtoe from Chinese waters every year since 2010.

Zhou emphasised the huge potential of the South China Sea – three quarters of which is classified as deep water – by noting the most exciting offshore oil and gas discoveries are being made in the ocean depths. The South China Sea will drive China’s future gas output growth, said Zhou, now a chief technical adviser to CNOOC.

Large quantities of oil and gas are believed to lie beneath the South China Sea, although estimates are highly variable. Exploration has been largely confined to waters off the coasts of China, Vietnam, Malaysia, Brunei and the Philippines – which all claim the sea to some extent – with little research into deeper areas because of regional tensions and a challenging operating environment.

CNOOC has recently started to explore deeper regions of the sea, with some early success. The company underlined its growing capabilities in deepwater exploration in September, when it said it had independently discovered its first deepwater gas field.

Lining up Lingshui

CNOOC is mulling three development plans for the field, known as Lingshui 17-2, according to Yang Shubo, general manager of project construction at CNOOC.

A combination of underwater production facilities and FLNG has been proposed, said Yang at the China International Offshore Oil & Gas Technology Conference in Beijing last week. CNOOC is collaborating with French company Technip on designing FLNG vessels that could be deployed in the South China Sea (see Technip preps for imminent FLNG design pitch to CNOOC, 4 December 2014)

CNOOC has been studying FLNG since 2008 and believes it will be important for commercialising remote, ultra-deepwater fields in the South China Sea, said Xie Bin, vice director of the Deepwater Engineering Technology Key Laboratory at the CNOOC Research Institute. However, research and development will need to prove the technology can withstand extreme weather, such as typhoons, Xie added.

A second plan is to build an underwater production system, link it to a fixed platform in shallow waters, and then tie it into an existing pipeline 87 km away that sends gas from the Yacheng 13-1 field to Hong Kong. The capacity of the 780 km pipeline is being freed up, as the Yacheng field is expected to be depleted early in the next decade.

The third proposal is to build a deepwater floating platform instead of a fixed installation and use an undersea pipeline to link it to the existing Yacheng-Hong Kong pipeline.

The second option is based on a model applied at the Liwan 3-1 project, so it is familiar to CNOOC, said Xie, adding the company tends to go with the plan that is most viable economically.

Yang said the South China Sea holds 57.1 billion tons of oil equivalent in oil and gas resources, with nearly two-thirds – 37.2 bt – in “traditional Chinese territory”.

China’s Ministry of Land and Resources estimated in 2012 that the sea contained 23-30 bt of oil and 16 trillion cubic metres of gas, with about 70% lying in 154 million hectares of deepwater acreage.

Yang also declined to confirm mounting speculation that CNOOC has made another major discovery in the western waters of the South China Sea, telling Interfax: “You will know when it’s time.”

CNOOC is building up a deepwater fleet to serve its ambitions for the South China Sea. It has seven deepwater vessels, the best known of which is the semi-submersible Haiyang Shiyou 981 rig – which was at the centre of a standoff between China and Vietnam this summer.

The company recently added a second deepwater platform and used it to drill its first deepwater exploration well in the South China Sea in November.

The Nanhai 9 rig drilled the Lingshui 25-1-1 well to a depth of 3,930 metres in the Qiongdongnan Basin, which is south of Hainan province. It had already drilled six exploration wells in the South China Sea before Lingshui 25-1-1.