Kerr-McGee Gets Green Light for Bohai Bay Development Plans

Kerr-McGee has received approval from the China National Offshore Oil Corporation for the development of the CFD 11-3 and CFD 11-5 fields on block 04/36 in Bohai Bay, China.

"These developments extend the success of our hub-and-spoke strategy, and bring additional volumes and value to our existing infrastructure in this new core area," said Dave Hager, Kerr-McGee's senior vice president responsible for oil and gas exploration and production. "From our eight discoveries to date in Bohai Bay, two fields already are on production, and development planning is under way for three other fields. We also are actively pursuing appraisal of our most recent discovery at CFD 14-5."

Development of the CFD 11-3 and CFD 11-5 fields, which cover three Guantao reservoir zones, will utilize four horizontal wells and a single unmanned well-head platform, tied back approximately 3 miles (5 km) to the CFD 11-1 gathering platform. The fluids from CFD 11-3 and CFD 11-5 will be processed on the Hai Yang Shi You 112 -- Kerr-McGee Global Producer VIII floating production, storage and offloading (FPSO) vessel. First production from the development is expected in the second half of 2005. CNOOC's approval of the project opens the door for final government approval.

"This approval confirms the partnership's ability to bring fields on line quickly in Bohai Bay," said Hager. "The CFD 11-3 and CFD 11-5 fields are further examples of the close cooperation we have with CNOOC."

Kerr-McGee operates CFD 11-3 and CFD 11-5 with a 40.09% working interest. Ultra Petroleum holds an 8.91% working interest and CNOOC holds the remaining 51% working interest.

Production from Kerr-McGee-operated CFD 11-1 and CFD 11-2 fields currently ranges from 40,000 to 45,000 barrels of oil per day with 33 wells on line. Three additional fields are moving toward development and are expected to be tied back to the FPSO. The fields are CFD 11-6 on block 04/36, which Kerr- McGee operates with an 82% predevelopment foreign contractor's interest, and CFD 12-1 and CFD 12-1S fields on block 05/36, which Kerr-McGee operates with a 50% predevelopment foreign contractor's interest. The company anticipates development approval of these fields this year.

In addition, Kerr-McGee continues appraisal work at its CFD 14-5 discovery on block 09/18. Kerr-McGee operates CFD 14-5 with a 100% predevelopment foreign contractor's interest.