Husky bullish on gas exploration potential in South China Sea
Oil and gas firm says development in deepwater regions of the sea is still at early stage, with only 25 wells drilled and one major discovery so far
The deepwater regions of the northern South China Sea have big gas exploration potential and are only in an early stage of development, a senior manager of Husky Energy, which discovered the mainland's first major deep-sea natural gas field, said yesterday.
Analysts say drilling has been limited by the availability of drilling rigs and high operating costs.
Robert Hinkel, Husky's chief operating officer for the Asia-Pacific, said only about 25 wells had been drilled in the northern South China Sea, with one major discovery already made, whereas 180 wells were drilled before the first commercial discovery in deepwater areas of the North Sea.
"It is very early days for a huge area," Hinkel said, adding that Husky and its partner, CNOOC, the mainland's dominant offshore oil and gas producer, had done well to have drilled 11 wells and made three discoveries, compared with an average 10 per cent success rate internationally.
Each well costs the firms US$25 million to US$100 million, with later ones costing just a quarter of the first one.
Husky, the Canadian oil and gas unit majority owned by Li Ka-shing and conglomerate Hutchison Whampoa, said on Monday its Liwan natural gas project, discovered about 300 kilometres southeast of Hong Kong in 2006, had just started commercial production.
The first of its three fields is expected to produce 2.58 billion cubic metres of gas a year initially, rising to 3.1 billion in the second half of this year when the second field starts up. A third field is projected to come on stream by 2016 or 2017, raising the total output capacity of the project to between 4.13 billion and 5.16 billion cubic metres.