Chevron Overseas Petroleum Co. has begun drilling the first well in its new East China Sea block about 250 miles southeast of Shanghai, officials said Wednesday.
The wildcat well, Wenzhou 15-1-1, is in the south-central portion of block 33/08, awarded to the unit of Chevron Corp. of San Francisco by China National Offshore Oil Corp. in October 1993.The site is in water about 285 feet deep. The company expects to reach its target drilling depth of approximately 6,500 feet by mid-March, Chinese officials said.
Chevron's site, 11 miles from the nearest well previously drilled, is being worked with the semi-submersible Nan Hai 5. The company plans to drill an additional well in block 33/08 later this year.
If commercial discovery of hydrocarbons is made, Chevron will jointly develop the well with China Offshore Dong Hai Oil Corp., a unit of the state- run company.
This is Chevron's fourth production-sharing contract with China National Offshore Oil, but the first in which it is exploring independently.
Chevron also is part of the biggest offshore producer so far, the ACT consortium, with Agip SpA of Italy and Texaco Inc. of White Plains, N.Y.
Two fields off southern China, Huizhou 32-2 and Huizhou 32-3, are being worked by ACT and China National Offshore Oil. They are expected to need US$300 million of investment over a three-year period to become operational later this year with eventual output forecast at up to 10.5 million barrels each.
Exxon Corp. is also working the East China Sea, on a 24,800-square-mile section of the continental shelf. In all, nine overseas firms won bids to search 18 blocks in the last offshore area opened up by China.
China National Offshore says 11 wells will be sunk in the East China Sea this year.
Companies have spent some US$4 billion probing China's waters since 1982 with little to show for it. Offshore production last year was 44 million barrels, a fraction of the country's total oil output of 972 million.