Oilfield shut down as 'punishment'

PUBLISHED : Saturday, 03 September, 2011, 12:00am
UPDATED : Saturday, 03 September, 2011, 12:00am


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Mainland marine authorities have ordered the immediate suspension of all oil production at platforms in Penglai 19-3, China's biggest offshore oilfield.

The move is to punish its US operator, ConocoPhillips, for failing to meet an official deadline to seal leaks and clean up after a series of spills.

The State Oceanic Administration (SOA) released a statement on its website late yesterday saying it had ordered the company to stop all production operations in Bohai Bay, from pressurised water injection to exploratory drilling and oil production.

The authorities did not specify when production would be able to resume. They said they would consider it only after ConocoPhillips China revised its present development plan for the oilfield. ConocoPhillips did not respond to phone calls or e-mail inquiries yesterday.

Before the deadline, at midnight on Wednesday, the company issued a statement saying that it believed it had met the administration's requirements.

A manager of the oilfield was cited by Xinhua late yesterday as saying that clean-up efforts had been hampered by wind gusts on Sunday and Monday. He also said there was no timetable for a final clean-up due to many unknown variables.

Earlier company estimates said the oilfield produced 60,000 barrels of oil per day.

China National Offshore Oil Corporation (CNOOC), the majority owner of the oilfield, could also not be reached for comment.

Ma Jun, director of the Institute of Public and Environmental Affairs, said that the shutdown order was one of the most severe measures taken by mainland authorities against a foreign company for pollution.

It would have an exemplary effect on other companies doing business on the mainland.

'Some companies have a perception that polluting in China costs them little. They should learn from this lesson that it may not be the case any more,' he said.

'The SOA has managed to find an effective and reasonable way to give ConocoPhillips some real pressure. From this perspective, they've done a good job.'

Government inspectors spent the past two days surveying the surface and ocean floor near two platforms responsible for a series of leaks in June and found remaining pollutants in both locations, the administration's statement said.

A panel of government experts reached the conclusion that ConocoPhillips' had failed to meet the administration's deadline to seal the leaks and clean up the oil.

The experts also concluded that ConocoPhillips' oil production practices had serious problems that damaged the geophysical structure of Bohai Bay, a finding used by the authorities to support their order for a total shutdown.

The authorities said the company had been injecting water into oil production wells for years, causing cracks and collapses in naturally stable faults that led to the unstoppable oil leaks at Platform B.

They also accused ConocoPhillips of violating the requirements of an environmental assessment report concerning the operation of Platform C.

The authorities said that they had employed many hi-tech measures to monitor the situation and collect evidence, including satellites and underwater robots, and their conclusions were undeniable.

In Wednesday's statement, ConocoPhillips said it had completely and permanently sealed all leaks and had worked out a feasible plan which it had submitted to the authorities explaining the measures it would take to prevent similar accidents from happening in the future.

The government's decision came as a surprise to many people, including some administration officials.