In an effort to cutback on pollution and fight rising natural gas prices, China is stepping up efforts at deep-water natural gas extraction. China, which imports much of its energy will benefit highly from the Liwan-3 gas field in the South China Sea. The field, which is about 200 miles southeast of Hong Kong is far from disputed waters and is close to China’s fast-growing, energy-deficient south and eastern coastlines.
The Liwan field is a joint venture between Husky Energy (49%), which operates the project and state-owned Cnooc (51%). The project is helped immeasurably by Cnooc’s $15.1 billion purchase of Canadian Nexen Inc, which provided access to the technical skills required for the project as Nexen did work previously in the Gulf of Mexico in waters far deeper than at Liwan’s location. The joint venture also contracted with Italian firm Siapem for further assistance at Liwan. Liwan sits in typhoon waters and must therefore be resilient against such a threat. The rig, which is of Chinese design is built to withstand 30-foot waves and 100-mph winds.
When run at maximum output, the Liwan field will represent 4% of domestic Chinese natural gas output, which is quite a bit for a single project. And will help China toward meeting it’s goal of having natural gas equal 10% of its energy mix by 2020. It is estimated that the field could contain 190 trillion cubic feet of natural gas and 11 billion barrels of oil; welcome for a country that relies heavily on energy imports.