China National Petroleum Corporation (CNPC) found hydrocarbons on the Zhongjannan exploration project, off the Paracel or Xisha Islands, in the South China, the firm announced.
Drilling, using the 2011-delivered, deepwater, HYSY-981 semisubmersible drilling rig operated by China Oilfield Services Limited (COSL), completed yesterday (15 July).
CNPC started drilling the first of two exploratory wells on the Zhongjiannan Project on 2 May, and finished drilling the first well on 27 May and the second on 28 May.
CNPC said oil and gas shows were found, but gave no more information, adding that a comprehensive assessment will be carried out on the geological and analytical data collected.
The rig will now be relocated to operations on the LingShui Blocks the off Hainan Islands, says COSL. The 981 was the first sixth-generation deepwater semisubmersible drilling platform independently designed by and built in China.
CNPC says it started seismic activities in the Zhongjiannan area in 2004, but its work there has been contested by neighboring Vietnam.
In June 2012, CNOOC notified the tendering out of nine blocks, mainly in the Nam Con Con/Wa’an and Phy Khang/Zhongjiannan basins offshore Vietnam. The block locations overlapped with acreage already delineated and in some cases awarded by Petrovietnam, according to Professor Keyuan Zou, and Dr Shicun Wu, in their May 2014 book, "Non-Traditional Security Issues in the South China Sea." The book says CNOOC’s block offering was aimed at challenging the status quo in these areas, and also legitimizing its own exploration activities in the basins.
Vietnamese authorities in Hanoi had said the 981 rig was in the country’s 200-nautical-mile exclusive economic zone and on its continental shelf. However, Beijing has said it was operating within its waters around the Paracel islands, which China occupy. Deployment of the rig on 2 May had set off anti-Chinese riots in Vietnam.
According to Reuters, China claims 90% of the South China Sea. Vietnam, the Philippines, Malaysia, Brunei, and Taiwan also claim parts of the waters. The area is largely unexplored.
In November 2012, the Chinese National Offshore Oil Company (CNOOC) estimated the South China Sea holds around 125 billion bo and 500Tcf of natural gas in undiscovered resources, although independent studies have not confirmed this figure, says the EIA.
China’s deepwater offshore exploration came under the spotlight at the recent fourth China Offshore Engineering Symposium (COES2014), with the South China Sea debated.
Concerns raised included China’s technological capability to explore and produce in the South China Sea’s deep waters.
The EIA says: “While national oil companies (NOCs) have been successful in extracting hydrocarbons near the shorelines of the South China Sea, the majority of the area presents daunting challenges to development. In addition to the geopolitical disputes, the contested areas of the sea face geological and technological concerns.
“EIA estimates the South China Sea to be more viable as a source of natural gas than as a source of oil, so producers would have to construct expensive subsea pipelines to carry the gas to processing facilities. Submarine valleys and strong currents present formidable geologic problems to effective deepwater gas infrastructure. The region is also prone to typhoons and tropical storms, precluding cheaper rigid drilling and production platforms. Industry sources point to innovations in deepwater drilling pioneered throughout the Gulf of Mexico as models for developing the South China Sea, including tension leg tethering of production installations and managed pressure drilling to operate in the high-pressure deepwater environment. NOCs have partnered with international companies to provide technology and equipment for deep sea exploration and drilling operations.”
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