China: PengLai Oil Spill Under Control, CNOOC Says

CNOOC Limited announced today that the oil spills occurred in PengLai (“PL”) 19-3 oil field have already been basically under control. The State Oceanic Administration of People’s Republic of China (“SOA”) made relevant announcement on July 5.

PL19-3 field, located in Bohai Bay, is an oil field under Production Sharing Contract with ConocoPhillips China Inc (“COPC”). COPC is the Operator and responsible for the daily operations.

According to the report of COPC, a seepage of oil from the seabed was found near the Platform B in early June. It is the first of its kind occurred in China and the cause is still subject to further study and analysis. It was also observed in mid June that one well being drilled in Platform C occurred a small-scale influx, resulting in another oil spill.

After the incidents occurred, COPC immediately activated response procedures, closed part of the water injection wells, and suspended drilling operations of the field. COPC also deployed necessary equipment and personnel for oil recovery and area clean-up. As the partner, the Company has actively assisted COPC with its activities to minimize the impact.

According to the statement of SOA, the above incidents have certain impact on the marine environment surrounding PL19-3 oilfield, resulting in about 840 square kilometers of seawater worse than Grade IV.

Through those measures taken by the Operator such as reducing pressure in Platform B and implementing a cementing procedure in Platform C, the above incidents were well controlled on June 19 and 21 respectively. As of July 4, there is no obvious oil slick on the sea surface. Only very small amount of oil sheen can be observed occasionally near Platform B and C.

The relevant regulatory agencies have notified COPC to promptly clean up and support investigation of the responsibilities for the oil spill. SOA will continue to urge COPC to closely monitor the status of the leaking point, and will also supervise COPC taking effective measures to minimize the impact on marine environment.

As the non-operator, the Company will continue urge and assist COPC to fulfill SOA’s requirements.

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Source: CNOOC, July 6, 2011;