PetroChina Co. (PTR) has started its first offshore production in an oil block in Bohai Bay, part of efforts to develop the bay's offshore area which potentially has huge oil and gas reserves, said parent company China National Petroleum Corp. Friday.
On July 29, PetroChina launched a trial operation in shallow water in the Chenghai-1 block, said CNPC on its Web site.
The company designed to drill 37 wells in the block to produce 532,000 tons of crude a year, equivalent to 10,684 barrels a day, it said.
So far, the company has drilled 21 wells, of which eight have been completed. Of the eight, four have yielded high amounts of crude oil and gas, it said, without giving specific figures.
Although the block's designed production capacity is limited, PetroChina predicted the shallow water area had rich oil and gas reserves and would increase exploration, the company said.
The block is near to PetroChina's latest big oil discovery in the Nanpu block. In May, PetroChina said it had discovered 1.02 billion metric tons there, or 7.33 billion barrels of oil equivalent.
Reserves in the Bohai Bay could total 20 billion tons of oil, with half of them undiscovered, the Xinhua News Agency reported after PetroChina's big find, citing Zhai Guangming, an expert at the Chinese Academy of Engineering.
PetroChina is China's onshore largest oil and gas producer by output, but has limited offshore operations because the Chinese government only allows it to develop coastal shallow waters with a depth of no more than five meters.
Copyright (c) 2007 Dow Jones & Company, Inc.
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