Major New Deep-Water Drilling Project

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MK-CH871_CHINAG_G_20131114223759In 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.

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2 Responses to Major New Deep-Water Drilling Project

  1. The Chinese have long been the best drillers in the history of the world. According to one of the books I came across when I was researching they drilled a well that was 2,000 feet deep in the 1500s and Americans celebrated drilling a hole 75 feet in 1800 Pennsylvania.

  2. If the project will actually provide 4% of the nation’s natural gas output, this is a very major project. Deep-water drilling, as we have learned in the US, has very major risks associated with it. I am not sure how experienced the Chinese are with drilling for natural gas, but hopefully they have taken proper safety measures and trained their employees effectively to avoid any sort of explosion or spill, like what happened with a major pipeline in China just a few weeks ago.