Primeline Energy Holdings Inc. has announced that China National Offshore Oil Corp. (CNOOC) has agreed to extend the exploration period under the petroleum contract for Block 33/07 to facilitate Primeline’s exploration drilling program in the East China Sea.
On 9 October 2015, CNOOC and Primeline signed an amendment agreement relating to the petroleum contract to extend phase one of the exploration period from three years to 3.5 years so that it now expires on 30 April 2016. The petroleum contract originally had a seven year exploration period split into three phases of three, two and two years. The amendment agreement extends the exploration period to 7.5 years with the first phase extended to 3.5 years, with the other phases remaining at two years each.
In the first exploration period, the minimum work program comprises 600sq km of 3D seismic and two exploration wells. Primeline fulfilled the seismic commitment in 2014 and is currently drilling exploration well LS23-1-1 and expects to reach target depth by the end of this month. The extension of the exploration period was agreed in order to provide sufficient time to complete the current exploration well and review the results and then complete a second exploration well before the end of the first exploration phase in compliance with the agreed work plan. At the end of each of the first and second exploration phases, Primeline has the right to either enter into the next phase or terminate the exploration contract. The minimum work program for each of the second and third phases is one exploration well.
As previously announced, the drilling of LS23-1-1 well commenced on 23 September and is now proceeding well. Primeline’s drilling contractor China Oilfield Services Ltd. has completed the drilling of 17.5in hole to 1326m RT, set the 13.375in casing and plans to start drilling the 12.25in section on 13 October. The well is targeting several reservoir zones in this section of the well before it reaches the designed target depth of 2688m.
Based on the results of this well, Primeline will finalize the drilling location of the second well in block 33/07, which will be either LS30-3-1 or LS23-2-1. Any resources discovered in this drilling campaign can use or share the LS36-1 gas field production infrastructure to speed up development and optimize future development costs and economics.