John C.S. Lau, President & Chief Executive Officer of Husky Energy Inc., is pleased to announce that Husky Oil China Ltd., a wholly owned subsidiary of Husky Energy, has completed drilling and successful testing of the first appraisal well at the Liuhua 29-1 discovery on Block 29/26 in the South China Sea with encouraging results.
The West Hercules deepwater drilling rig drilled the Liuhua 29-1-2 well to a total vertical depth of 2,930 metres below sea level. The well was drilled and tested in a water depth of 765 metres on the Liuhua 29-1 field, which was discovered in January 2010 in the South China Sea.
“This first appraisal well tested natural gas at an equipment restricted rate of 55 million cubic feet per day with indications that the well’s future deliverability could be 60 – 70 million cubic feet per day,” said Mr. Lau. “The results from this well demonstrate the quality of the Liuhua reservoir. Further appraisal drilling planned for later this year will be required, to increase our understanding of the recoverable resource and provide us with the necessary reservoir characterization and data to prepare a plan of development for the field.”
The Liuhua 29-1 field is the Company’s third significant deepwater gas discovery in Block 29/26 in the South China Sea. The Liuhua 29-1 field is located about 43 kilometres northeast of the Liwan 3-1 field, the Company’s first major discovery in Block 29/26 and approximately 20 kilometres northeast of the Liuhua 34-2 field.
Husky expects plans of development for the Liwan 3-1 and Liuhua 34-2 fields to be submitted to regulatory authorities later in 2010. Furthermore, the plan of development of Liuhua 29-1 will be submitted when ready and will incorporate the results of the additional appraisal drilling that will be required.
The first two fields in Block 29/26 – namely Liwan 3-1 and Liuhua 34-2 fields will be developed in parallel, with first gas production targeted in 2013. Gas production from the Liuhua 29-1 field will subsequently share common gas processing and transportation infrastructure.
The West Hercules drilling rig is currently commencing the drilling of another exploration well – Liwan 5-2-1 in Block 29/26 prior to returning to Liuhua 29-1 to drill a second appraisal well, later in the year.
Husky has been exploring offshore China since 2002. Husky signed a Petroleum Contract for Block 29/26 in 2004, which following two separate land relinquishments is 2,230 square kilometres in area. In addition, Husky holds a 40 percent net working interest in a production block at the Wenchang oil field and 100 percent working interest in two other exploration blocks offshore China. Under the Petroleum Contract, CNOOC Limited has the right to participate in any field development projects for up to 51 percent working interest.