Phillips Announces Success Offshore China

Phillips China Inc., a unit of Phillips Petroleum Company, has successfully appraised the Peng Lai (PL) 25-6 oil discovery, located three miles east of the PL 19-3 oil field discovered by Phillips in 1999.

The appraisal well, the PL 25-6-2, is located in 75 feet of water about one mile south of the field's discovery well, the PL 25-6-1.

The PL 25-6-2 reached a total depth of 5,853 feet on Dec. 22, 2000, encountering a gross hydrocarbon column of 1,634 feet, with 354 feet of net pay in the Guantao formation. The presence of a thick oil column was confirmed through the collection of extensive formation pressure data, 11 fluid samples and one drill-stem test (DST). The DST, conducted over a gross interval of 79 feet with 43 feet of net pay, flowed 21-degree API oil at a stabilized rate of 425 barrels per day (bpd) through a 24/64-inch choke. The test was conducted with a flowing well head pressure of 180 pounds per square inch under natural flowing conditions.

The PL 25-6-1 discovery well, drilled in May 2000, encountered a gross hydrocarbon column of 1,493 feet, with 377 feet of net pay in the same formation. Phillips did not conduct a DST on the discovery well, however the company did collect extensive formation pressure data and fluid samples.

"With this successful appraisal, we can move forward to evaluate developing this satellite field in conjunction with Phase II of the planned PL 19-3 development," said Dodd DeCamp, senior vice president of worldwide exploration. "Our plans call for production from the first phase of our PL 19-3 development program to begin in the first half of 2002 at an estimated gross rate of 35,000 to 40,000 bpd, with 17,000 to 20,000 bpd net to Phillips. We plan to begin producing an expected 50,000-65,000 net bpd from Phase II in 2005, to which we may add production from the PL 25-6 field.

"We have been very pleased with the results from Bohai Bay and will continue to develop it as one of our legacy assets in order to provide for the long-term strength of the company's production," he added.

Phillips plans additional exploration wells in Bohai Bay in 2001, and is continuing commercialization studies of other discoveries and discussions with the China National Offshore Oil Corp. (CNOOC).

Phillips acquired the right to explore Block 11/05 in 1994 when it signed a petroleum contract with CNOOC. Phillips has a 100 percent undivided working interest in the 2.3 million-acre block. CNOOC has the right to acquire up to a 51 percent interest in any development in the block, and has elected to do so in the PL 19-3 Phase I development.