John C.S. Lau, President & Chief Executive Officer of Husky Energy Inc., is pleased to announce that Husky Oil China Ltd., a wholly owned subsidiary of Husky Energy, has completed drilling and testing of the first appraisal well at the Liwan 3-1 field on Block 29/26, South China Sea.
The West Hercules deepwater drilling rig commenced drilling the first appraisal well in November 2008. The well was drilled and tested in a water depth of 1,345 meters in the Pearl River Mouth Basin on the gas discovery made in 2006 in the Liwan field in the South China Sea. Block 29/26 is located approximately 350 kilometers south east of Hong Kong. The Liwan appraisal well was drilled to a total vertical depth of 3,887 meters below sea level.
"We are very encouraged by the results from the first delineation of the Liwan field. These results confirm the Liwan field as a major offshore gas discovery in China," said Mr. Lau. "The information provides key data input for the Front-end engineering design (FEED), which will commence soon. The Liwan Development Project demonstrates our long-term strategy to grow our business in China while contributing to the country's energy needs."
The objective of the well was to characterize the main Liwan reservoir and assist in proving the estimated gas in place. Extensive geological, core and reservoir engineering data were collected. Evaluation and analyses will be conducted to clarify the extent of the discovery and determine the flow capacity of the reservoir. The well flowed at an equipment restricted rate of 53 million cubic feet per day indicating future deliverability could be in excess of 150 million cubic feet per day thus providing further evidence of Liwan 3-1 as a major gas discovery.
The Liwan 3-1-2 appraisal well location was selected and drilled from 3-D seismic data interpretation. The well was drilled on a large structure with 55 square kilometers of mapped closure. The well, which was logged, encountered 36 meters of net gas pay over the main reservoir zone. The 3-D seismic interpretation prior to drilling the well indicated a direct hydrocarbon response at the Liwan 3-1-2 location which the Company's analysis indicated was present over a majority of the 55 square kilometer closure.
Husky has chartered the West Hercules deepwater drilling rig for three years with extension options. Upon completion of this current well, the rig will drill a second appraisal well before moving on to drill additional exploration wells in the area. The FEED work for the Liwan Development Project is being prepared for tender and is expected to begin once results are obtained from the next appraisal well.
Husky has been exploring offshore China since 2002. Husky is the Operator and signed the production sharing agreement with China National Offshore Oil Corporation (CNOOC) for Block 29/26 in August 2004. The original Block which is 3,965 square kilometers in area is one of six exploration blocks held by Husky in the South China Sea. Husky also holds one exploration block in the East China Sea. CNOOC has the right to participate in the development for up to 51 per cent working interest.
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