Oil production suspended at Peng Lai until oil spill threat eliminated

By Phaedra Friend Troy

The State Oceanic Administration of China has forced ConocoPhillips (NYSE:COP) and CNOOC (NYSE:CEO) to shut-in production from Platforms B and C on the Peng Lai 19-3 oil field in the Bohai Bay offshore China.

The offshore Chinese regulatory agency has required the production shut-down on the oil field “until the risk of oil spill is eliminated.”

Two separate oil spills were reported on the Peng Lai oil field in June 2011. Clean-up operations are ongoing, and investigations are under way into the cause of the oil releases. 

An oil seepage was observed on June 4 from a naturally occurring fault near Platform B. While the majority of the oil leak has been curtailed, a containment device was designed, constructed and installed as a precaution, should the seepage begin again.

On June 17, oil and gas bubbles began appearing on the water's surface near Platform C during drilling operations. A cementing procedure stopped the release within 48 hours, and the well was stabilized, plugged and abandoned.

Nonetheless, bubbles are occasionally being generated in the oil-based mud that remains on the seabed near Platform C. 

Currently investigating the cause of the oil spills, ConocoPhillips estimates that the oil spilled during the two incidents ranges from 1,500 barrels to 2,000 barrels of oil and oil-based drilling fluids.

Before the production shut-in on Peng Lai, the two platforms were estimated to be producing near 40,000 barrels of oil a day. 

ConocoPhillips operates Peng Lai 19-3 with 49 percent interest. CNOOC holds the remaining 51 percent interest in the oil field. 

Located on Block 11/05 in the Bohai Bay, the Peng Lai oil field was discovered in May 1999. The field was developed in multiple phases, using six wellhead platforms, a central processing platform and two FPSOs. 

Production started on the field from the first phase of development in December 2002, and the second phase of development started producing oil in June 2007. 

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