Update on Bohai Bay Oil Cleanup and Production Curtailment

abarrelfullabarrelfull wrote on 15 Jul 2011 05:14
Tags: china conoco upstream

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ConocoPhillips [NYSE:COP] wishes to provide additional information in regards to the oil spill incidents that occurred in Bohai Bay, People’s Republic of China on June 4th and June 17th 2011, and the ongoing clean up and containment program that is underway.

On June 4 seepage on the seabed was observed along a naturally occurring fault near the ConocoPhillips-operated Peng Lai B Platform. The majority of seepage has been stopped following prudent adjustment of certain production activities. A containment device was designed and constructed and put in place. There continues to be trace amounts of oil, estimated to be no more than a few liters per day, seeping intermittently and occasionally causing minor surface sheens. Booms are deployed around the immediate surface area and are containing and collecting any such oil.

In a second incident, oil and gas bubbles were observed on the surface June 17 near another platform (C Platform) during drilling operations. The platform is about two miles away from the seabed seep near Platform B. Expert teams were immediately mobilized to contain the release. A cementing procedure successfully stopped the release within 48 hours, and the well was stabilized, plugged and abandoned. Trace amounts of bubbles are occasionally observed from the sea floor, and these bubbles continue to be monitored. Absorbent boom is in place in appropriate locations. Final clean up operations are ongoing.

ConocoPhillips responded quickly to both events and mobilized extensive clean-up equipment, facilities and personnel, including substantial resources made available by our co-venturer China National Offshore Oil Corporation ("CNOOC"). Relevant authorities were promptly notified, along with CNOOC. Almost 3,000 meters of absorbent and inflatable booms were deployed to contain the oil sheen, and 33 vessels (workboats, fishing boats and tugs) supported clean-up activities. ConocoPhillips is appreciative of the support provided by CNOOC during the containment and cleanup effort and to the State Oceanic Administration (“SOA”) for their guidance during these unfortunate events.

ConocoPhillips' current estimates of the aggregate amount of fluid spilled from the two incidents is 1,500 barrels (240 cubic meters) of oil and oil-based drilling fluids. The company is working with independent experts to validate the total spill quantity. During these incidents, no oil sheen reached the shoreline, and there were no injuries to personnel.

On July 13th, the SOA instructed ConocoPhillips to suspend production from Platforms B and C, and this order was complied with immediately. This shut in will result in a temporary reduction of approximately 17,000 barrels of oil per day net after royalties to ConocoPhillips. According to the SOA order, this temporary shut in will be in effect until the risks of another spill are eliminated. While the detailed causes of these incidents are still under investigation, ConocoPhillips will continue to work diligently and safely to finalize clean up activities and will be implementing additional reservoir management and field operating procedures to eliminate risks of additional releases.

ConocoPhillips will work closely with SOA and CNOOC to minimize the impact to the environment. Working safely and in an environmentally prudent manner is always the top priority to ConocoPhillips.

ConocoPhillips is an integrated energy company with interests around the world. Headquartered in Houston, the company had approximately 29,600 employees, $160 billion of assets, and $226 billion of annualized revenues as of March 31, 2011. For more information, go to www.conocophillips.com.

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