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New era for China's oil industry

(China Daily)

08:56, May 10, 2012

The Haiyangshiyou 981 semi-submersible deepwater rig, developed and built by China State Shipbuilding Corp, goes into service in the South China Sea on Wednesday. The rig can drill to depths of about 10,000 meters. [China Daily]

The first deepwater drilling rig developed in China is scheduled to drill a well in a part of the sea known as 43/11 block this year at a water depth of 2,454 meters, making it the deepest well in the South China Sea.

The block is being explored by China National Offshore Oil Corp, BP Plc and Anadarko Petroleum Corp. It is on a short list of sites where CNOOC, the owner of the rig, is considering using semi-submersible deepwater rig this year to drill wells.

On Wednesday, the rig began drilling its first well in an area 320 km southeast of Hong Kong and at a water depth of 1,500 meters.

The 5.3-billion-yuan ($839.9 million) rig is to drill the well for 56 days before being towed to other drilling sites in the Baiyun Depression, which encompasses 20,000 square kilometers in the eastern part of the South China Sea, said Shi Hesheng, the chief geologist of CNOOC (CHINA) Ltd Shenzhen Branch.

The Baiyun Depression contains about 700 million metric tons of crude oil and 1.2 trillion cubic meters of gas, Shi said.

The company said the progress of work at each of the proposed wells will largely determine how the drilling rig is used. In general, the equipment can drill about five to six wells a year, according to Zhou Shouwei, former deputy general manager of CNOOC.

China, as the world's second-largest oil consumer, used 470 million tons of oil in 2011. It has accelerated its pace of exploring for oil and gas in deepwater areas in the South China Sea, which is estimated to contain up to 30 billion tons of oil and 16 trillion cubic meters of gas, or a third of the country's oil and gas resources.

Technological restrictions have hindered CNOOC from making rapid forays into deepwater drilling, which is riskier and costlier than exploring in shallow waters.

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