Liwan 3-1 Gas Field, South China Sea, China

The Liwan 3-1 gas field sits in licence block 29/26 in the South China Sea, 350km south-east of Hong Kong in the Pearl River Mouth Basin and in an average water depth of 1,300m.

In 2004, Husky Energy signed a production sharing contract with the China National Offshore Oil Corporation (CNOOC) for the 3,965km² block. Husky is the operator, although CNOOC has the right to participate in the development for up to a 51% working interest.

Husky has allocated a capital expenditure programme of $500m for all its projects offshore China and Indonesia.

While the company will not disclose the capital expenditure for Liwan, delineating and evaluating the discovery will be the major focus of the 2009 programme.

Liwan 3-1 field development

Development of the field began in the second quarter of 2006 when Husky drilled the Liwan 3-1-1 exploration well. This indicated a possible contingent resource of four to six trillion cubic feet of gas – China's largest-ever offshore natural gas discovery, says Husky.

As of late March 2009, this remains a contingent figure and Husky says it will not speculate on when this will be converted into a reserves figure.

The well is located on the eastern end of the Zhu II Depression, seeking objectives in the Upper Oligocene Zhuhai Formation and Lower Miocene Zhujiang Formation.

In January 2007, Husky Oil China Ltd, a wholly-owned subsidiary of Husky Energy, signed a three-year contract worth about $580m with Seadrill Offshore AS for the West Hercules deepwater semi-submersible drilling rig, with extension options. Built at the Daewoo shipyard in South Korea, it can run parallel drilling operations and is designed with a dynamic positioning system and can operate in waters up to 3,000m deep.

Appraisal drilling

The rig began drilling the first appraisal well, Liwan 3-1-2, in November 2008. The well's location was selected and drilled using 3D seismic data supplied by China Oilfield Services, and was drilled to a total vertical depth of 3,887m below sea level – making the deepest natural gas discovery offshore China so far – on a large structure with 55km² of mapped closure.

The well logged 36m of net gas pay over the main reservoir zone. In February 2009, Husky said the well flowed at an equipment-restricted rate of 53MMcf/d of gas, indicating that future deliverability could be more than 150MMcf/d.

This well is now complete and the West Hercules has now moved to another location in the field to drill a second appraisal well, Liwan 3-1-3, which is hoped to be completed by about May 2009. It will then move on to drill other exploration wells in the area.

The FEED work for Liwan's development is being prepared for tender and is expected to begin once results are obtained from Liwan 3-1-3.

Development of the field is said to be likely to be by subsea wells tied back about 100km to one or more shallow-water platforms. From there, the gas will be piped another 160km to shore for full processing.

First production is planned for 2012/13.