Unocal signs contracts for East China Sea gas exploration and development

Petroleum News

Unocal Corp.'s Unocal East China Sea subsidiary has signed five contracts to explore for and develop natural gas resources in the Xihu Trough of the East China Sea.

Unocal said Aug. 19 that Unocal East China Sea will hold a 20 percent working interest in the contracts. Other participants include China National Offshore Oil, China’s largest offshore oil and gas company, 30 percent; China Petroleum and Petrochemical, 30 percent; and Pecten Orient, an affiliate of Shell Oil and Shell Exploration (China), 20 percent.

Unocal said there have been multiple gas discoveries in the Xihu Trough. The project area covers nearly 5.4 million acres in approximately 300 feet of water.

The project includes appraisal and development of discovered fields, as well as further exploration potential. China National Offshore Oil will be the operator of all five contract areas and will establish Xihu Oil and Gas Operating. All participant companies will assign technical and management personnel to Xihu Oil and Gas.

Unocal said Phase 1 appraisal and exploration work for the project will focus on the 173,000-acre Chunxiao block, and will involve drilling appraisal and exploration wells to prove additional resources sufficient to warrant a first phase of commercial development.

Natural gas from the project would be delivered by pipeline 220 miles to the Zhejiang province and Shanghai area markets, while liquids would be transported by pipeline to the Pinghu offshore development 37 miles from the proposed Xihu central processing platform. Unocal said the Chinese government has encouraged project participants to bring production on stream as soon as possible, targeting mid-2005. Production is expected to reach 250 million cubic feet per day within two years.