Our story in China
ConocoPhillips is one of the world’s largest independent exploration and production companies, based on proven reserves and production of liquids and natural gas. We explore for, produce, transport and market crude oil, natural gas, and natural gas liquids on a worldwide basis. Headquartered in Houston, Texas, we have operations in 27 countries as of March 31, 2014. Benefiting from the combined experience and success of our predecessor companies dating back more than a century, ConocoPhillips has a strong presence and capability in key technology-driven resource opportunities globally. Among these are conventional and unconventional reservoirs, oil sands and heavy-oil deposits, liquefied natural gas, and deepwater and arctic operations.
In China, ConocoPhillips has been a committed partner of the country for more than 30 years and is one of the largest foreign investors in China’s upstream oil and gas sector. As of March 31, 2014, we had approximately 570 employees involved in oil and gas exploration and production operations through cooperation with Chinese and international partners. We are also working closely with leading Chinese partners on projects outside of China. Through these activities, ConocoPhillips China has supported China’s development goals, by providing clean energy supplies, and helping the country move toward greater diversification of the country’s energy resources.
ConocoPhillips is firmly committed to China and is dedicated to building on the strong work that has been done over more than three decades. Our relationship with China began over 30 years ago when we became the first international operator to assist in making an offshore discovery in the South China Sea.. Since then, we have been involved in the development of the Xijiang oilfields in the South China Sea as well as the discovery of the Penglai oilfields in Bohai Bay in the late 1990s. By drawing on our experiences around the world, we have been providing energy to power China’s economic growth and exploring for new energy sources to help China transition into a clean energy economy. We are also supporting sustainable development in the communities in which we operate, and conducting our business in a way that promotes economic growth, a healthy environment and vibrant communities.
We have been dedicated to building lasting legacies of excellence to ensure that China has the energy it needs for its development today and into the future. While our world-class expertise in oil and gas exploration and development has been instrumental in helping China take advantage of its vast natural resources, we understand that the true measure of our success lies in the longevity ourwork. We work closely with our Chinese partners to ensure make sure that when ConocoPhillips hands over operatorship, we leave a sustainable, well-run operation.
The Xijiang Oilfield
We are proud to have been involved in some of the most significant discoveries in the history of energy exploration in China. Our China story began in 1981 when the Chinese government awarded a block in the South China Sea Pearl River Mouth Basin to Phillips Petroleum Co. (a predecessor to ConocoPhillips) to assist with oil exploration in the country. In 1981 Phillips, subsequently became the first foreign operator to assist in making an offshore discovery in China. Over 30 years later, the Pearl River Mouth Basin remains one of China’s most important oil and gas reserves. The success of Xijiang was due to the constructive cooperation between ConocoPhillips China and our co-venturer China National Offshore Oil Company (CNOOC). ConocoPhillips contributed its expertise and experience to enable the team to overcome a number of technical challenges. This helped secure consistently high production levels that exceeded all expectations. For five consecutive years, Xijiang was the top oil producer among China's offshore oilfields. Beyond its exceptional production levels, Xijiang was recognized by the Chinese authorities, senior management teams of the co-venturer companies, and the offshore oil industry alike for its establishment and implementation of strict health, safety and environment (HSE) standards. Excellence in both production and HSE standards created a working environment that attracted strong talent and promoted employee growth. Based on a win-win principle, ConocoPhillips China has forged solid partnerships with contractors in order to ensure safe, efficient and high-quality operations.
The Penglai Oilfield
In 1999, the Penglai-19-3 field was discovered through the joint efforts of ConocoPhillips China and CNOOC. Located in Block 11/05 of China’s Bohai Bay, the Penglai oilfield remains the largest field of its kind discovered in China. ConocoPhillips’ operatorship of the field, with our partner CNOOC, has made it one of the most productive oil assets developed in the country.
The Xijiang Oilfields - The Beginning of China Offshore Success
In 1981, Phillips Petroleum Company was awarded an offshore block in the South China Sea approximately 130 kilometers southeast of Hong Kong. At the time, China’s national oil companies had not developed the technology needed to exploit complex offshore reserves in typhoon impacted areas, and the Chinese government recognized that leading energy companies like Phillips could play an important role in helping China realize its energy goals. Two years after being awarded its first Xijiang block, Phillips became the first foreign operator to assist China in making an offshore discovery at Xijiang 24-3. The discovery heralded the beginning of an unprecedented period of productivity in the area, which continues to this day.
Leading the world in horizontal drilling
Following years of cooperation with CNOOC, Xijiang went into production in 1994. By 2002, the field was producing an annual output of 30 million barrels. The unique technical challenges at Xijiang demanded the application of world-leading technology, which included Phillips’ expertise in extended reach drilling. Well A23 at Xijiang 24-3 required 26,246 feet of horizontal displacement and had a target of just 164 feet in diameter, making it at the time one of the most complex wells ever drilled by ConocoPhillips anywhere in the world.
In May 2003, the company celebrated the achievement of having completed 500 liftings (32.8 million tons) of crude oil without a single safety or environmental incident. The company was nominated as the only "Environmental Friendly Enterprise" in China’s offshore oil industry in 2004 by the Ministry of Land and Resources. The State Oceanic Administration also presented our Xijiang operations with an Excellent Performance Unit of Oceanic Environmental Protection Award.
Our history in Xijiang
1981 – Phillips was awarded offshore block (Xijiang) in the South China Sea’s Pearl River Mouth Basin.
1983 – Phillips became first foreign operator to assist in making offshore discovery in the People’s Republic of China.
1992– Phillips signed agreements with the Chinese government and Shell Pecten to develop the Xijiang 24-3 and 30-2 fields. November 1994– Production began at Xijiang 24-3.
July 1997 – World-class extended reach well drilling techniques were successfully applied at Xijiang 24-1 – setting a world record for horizontal displacement of 8,063 meters.
2002 – Phillips announced plans to increase annual output at Xijiang to 150 million barrels within four years, up from a previous annual output of 30 million barrels annually.
July 2004 – The Xijiang production team achieved a record of 90,745 barrels of oil per day.
December 3, 2004 – ConocoPhillips celebrated the 10-year anniversary of its Xijiang operations, having produced twice the amount estimated in the project’s overall development plan.
June 2008 – Cumulative production at the Xijiang oilfields reached a milestone of 366 million barrels.
January 2010 – ConocoPhillips’ ownership rights in the Xijiang 24-3 and 24-1 fields came to an end.
November 2010 – ConocoPhillips’ ownership rights in the Xijiang 30-2 field came to an end.
The Penglai Oilfield - An Offshore Treasure
In 1999, the Penglai-19-3 field was discovered through the joint efforts of ConocoPhillips China and CNOOC. Located off of China’s northeast coast in one of the busiest trading seaways in the world, the discovery of Penglai Oilfield turned out to be important to the Chinese economy. Working in tandem with our co-venturer CNOOC, in 1999 we had determined the commercial viability of the field and had begun implementing our development plans. Commercial drilling at the site began just three years later. Between then and the transfer of operatorship to CNOOC in 2014, our operations at Penglai went through two phases of development. The second of which, included six more platforms and one of the world’s largest floating production vessels. The field continues to hold significant growth potential for the future, with additional platforms currently in various stages of planning and design.
On July 1st, 2014, our term of operatorship at Penglai came to an end. While ConocoPhillips maintains its existing commercial interest in the venture, l CNOOC will take over as operator. We are leaving CNOOC with a well-run, sustainable operation that will continue to power China’s development for years to come.
Many of our long-term employees will be transferring their employment to CNOOC to continue their contributions to this great oilfield. It is reassuring that their talents will continue to be applied to securing energy supplies for the Chinese economy.
Bringing our HSE commitment to Penglai
ConocoPhillips has a proud history of putting Health, Safety, and the Environment at the heart of our work. At Penglai, we conducted extensive audits of our operations to identify areas where our work could be safer, more efficient and more sustainable.
Early on in the design process, ConocoPhillips and CNOOC made the decision to establish the Penglai 19-3 field as the first offshore oilfield in China with a plan that called for "zero discharge." The plan required the field, as part of its waterflood operations, to treat all the water that is produced along with the oil from the reservoir and, in conjunction with treated seawater, re-inject all this water back into the reservoir. Waterflooding is a well-established process, whereby water is pumped into the reservoir to push the oil toward the producing wells and efficiently sweep more oil from the reservoir. Such a practice eliminates the environmental impact that the entrained oil, present in all produced water, might have on Bohai, making our Penglai operations a leader in water conservation and environmental stewardship.
Peng Bo—one of the world’s largest FPSO vessels
Peng Bo, also known as Hai Yang Shi You 117, is among the world’s largest floating, production, storage and offloading (FPSO) vessels. The hull measures 323m in length, 63m in width and 32.5m in side depth, with a designed processing capacity is 190,000 barrels of oil per day with a liquid storage capacity of two million barrels. .
Our history in Bohai
1999 – The Penglai-19-3 field was discovered through the joint efforts of ConocoPhillips China and CNOOC; located in Block 11/05 of China’s Bohai Sea, Penglai 19-3 was identified by the Chinese government as one of the country’s most important development projects across any industry sector. Six successful appraisal wells soon follow.
2000 –Located roughly 5 kilometers east of Penglai 19-3, the Penglai 25-6 field was discovered.
April 2002 –Phase I development of the field begins.
December 2002 – Phase I of Penglai 19-3 entered into production.
January 2005 – ConocoPhillips receives government approval for Phase II of its Penglai 19-3 operations.Phase II of the Penglai development included the installation of five additional drilling and production platforms and the construction of a floating production storage and offloading (FPSO) vessel.
July 2007 – First oil of Phase II was produced from WHP-C.
May 2009 – China’s largest FPSO, Bo Hai Peng Bo FPSO (also known as Hai Yang Shi You 117) commences production and was used to accommodate production from the Penglai 19-3 field, as well as the nearby Penglai 19-9 and Penglai 25-6 fields. June 2011– Two incidents occurred in June 2011, which resulting in temporary restrictions on production.
2012 – Enhanced monitoring operations were applied for the field under government direction.
February 2013 –ConocoPhillips received approval from the Chinese government to resume normal production operations in the Penglai 19-3 Field.
July 1st, 2014 – ConocoPhillips handed over operatorship of the Penglai project to CNOOC.
Helping China Achieve its Clean Energy Goals
With China now the world’s largest consumer of energy, the Chinese government recognizes in order to meet its environmental commitments, clean energy must form an increasing part of the country’s energy mix. As a pioneer in liquefied natural gas (LNG), ConocoPhillips is engaged with our Chinese partners to play our part in helping China meet its clean energy goals. In April 2011, we were joined by Sinopec and Origin Energy to form a world-class LNG project in Australia, called Australia Pacific LNG (APLNG). As part of the agreement, Sinopec took a 15 percent equity interest in APLNG, and agreed to buy 4.3 million tonnes per year of LNG from the first production train for 20 years. Building rapidly on the success of this partnership, Sinopec increased its purchase of LNG from APLNG by an additional 3.3 million tonnes per year from a second production train and increased its equity interest in APLNG to 25 percent. Via these LNG sales contracts, APLNG will now be providing 7.6 million tons of LNG annually to the energy markets of coastal China. Deliveries will begin in 2015.
The 7.6 million tons per year of LNG that the APLNG project will provide to the Chinese energy market will reduce greenhouse gas emissions by approximately 30 million tons per year when compared to a similar energy output fueled by coal.
Building Trust and Becoming a good Neighbor for China
At ConocoPhillips China, we aim to meet our commitment to sustainable development by integrating sustainable development concepts into our business. We are committed to supporting programs that enhance the environment and bring long-term benefits to China and the local communities in which we operate. We also aim to extend these activities to other regions in China as part of our efforts to support the country’s development goals.
Education and youth development programs represent the foundation of ConocoPhillips’ philanthropic support. We direct more than half of our annual contribution to young people. We believe that connecting with young people on important issues affecting their communities is crucial to bringing about meaningful change. We are also committed to supporting organizations that connect citizens and families in need with basic human or social services to ensure their safety, health and wellbeing. As we expand our operations in other parts of China, we hope we can continue to engage with local governments and local people, so we can be good neighbors to those whose communities we are impacting.
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