Bohai Phase II Project in China to Begin Producing in 2Q

HOUSTON (Dow Jones Newswires), Apr. 24, 2009

Several platforms of ConocoPhillips's (COP) Bohai Phase II project in China are already operational and will start oil and gas production in "a couple of months," said a top executive

ConocoPhillips Chief Operating Officer John Carrig said in a conference call Thursday that various platforms are in place and wells are being drilled. He added that a floating offshore oil production vessel with facilities for producing, treating and sorting oil from several producing wells is in the process of being hooked up and getting ready to start production.

The Houston company operates the Peng Lai 19-3 field in Block 11/05 in China's Bohai Bay. Phase I of the Peng Lai project began production in December 2002, and the field is currently producing approximately 20,000 barrels of oil per day.

Phase II of the project, which was scheduled to start production early 2009, includes the installation of five additional drilling and production platforms, drilling more than 200 wells and the construction of one of the world's largest floating production, storage and offloading vessels. Production of the Peng Lai project should increase to 50,000 barrels of oil per day in 2010 and 70,000 barrels of oil per day in 2011.

The project is key for ConocoPhillips' plans to increase its 2009 production, which the company said this week could be slightly higher than last year.

ConocoPhillips -- the third largest U.S. oil company by market value after Exxon Mobil (XOM) and Chevron Corp. (CVX) -- holds 49% interest in the project and China National Offshore Oil Corp. the remaining interest.

ConocoPhillips also confirmed that its massive liquified natural gas project Qatargas 3 in Qatar is scheduled to start production in 2010.

ConocoPhillips owns 30% of the project and Qatar Petroleum the remaining 70%. The project is expected to produce 7.8 million tons a year of liquefied natural gas.  

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