Burlington Resources Inc. has signed a historic Natural Gas Purchase and Sales Agreement with PetroChina Company Ltd. The agreement is a first step toward developing a market for substantial natural gas resources discovered on the Chuanzhong Block in the Sichuan Basin in central China, and is the first long-term agreement of its kind in that nation. The agreement covers a large natural gas field known to have several trillion cubic feet of potentially recoverable resources in tight sand reservoirs, with remaining potential awaiting evaluation.
The agreement was signed on April 18 in Beijing by Burlington Resources China Ltd., which serves as operator of the 1.8 million-acre block with 100 percent working interest, and by PetroChina, which is the largest national oil and gas company of the People's Republic of China. The agreement complements the existing Petroleum Contract between the parties.
"We are excited by the potential found thus far in the block, and by the cooperation displayed by PetroChina and the Chinese government," said Bobby S. Shackouls, Burlington's chairman, president and chief executive officer. "The field's characteristics are a perfect fit with our substantial expertise in conducting major basin-centered gas development programs and maximizing production from tight, gas-saturated reservoirs. With a population of 1.4 billion people and one of the world's fastest-growing economies, China represents an appealing market for natural gas."
Burlington acquired its interests in the block during 2001, and has since been engaged in evaluating the block's potential. The company anticipates filing a development plan for the block's first field, Bajiaochang, during the fourth quarter of 2002, with development to follow in 2003. Maximum production would not occur for several years, pending expansion of the area's existing pipeline infrastructure and development of gas markets.
China is a growing focus area in Burlington's international program. The company is also active in offshore oil development in the Pearl River Mouth Basin area of the South China Sea, 100 miles south of Hong Kong. A partnership that includes the China National Offshore Oil Corporation is conducting the Panyu Development Project on Block 15/34, which contains the Bootes and Ursa fields and an estimated 75 million barrels of recoverable reserves. Fabrication is under way on two offshore platforms as well as a floating production, storage and offloading facility. Burlington owns 24.5 percent working interest and expects net peak production of 17,500 barrels of oil per day to begin in late 2003.
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