Heading Deep for the First Time

On May 9, China National Offshore Oil Corp.’s (CNOOC) first deepwater drilling platform began operating in the South China Sea. The world-class vessel is stationed in the Liwan 6-1-1 field, about 320 kilometers southeast of Hong Kong, in waters about 1,500 meters deep.

The development of platform 981 and China’s strategy for exploiting deepwater oil and gas resources are inseparable. At a ceremony in Beijing marking the start of drilling, CNOOC Chairman Wang Yilin and Wang Ming, the head of the Ministry of Land and Resources, referred to the political significance of deepwater oil and gas resources. They also repeatedly stressed the importance of maintaining sovereignty in China’s territorial waters.

Several analysts said that high prices in recent years have turned oil companies enthusiastic toward investing in high-risk, deepwater resource exploration. This explains CNOOC’s decision to commit time and money to platform 981.

The platform is 117 meters high, 114 meters long and 89 meters wide. Its deck is the size of a soccer field, making it the largest piece of manmade exploration equipment a Chinese company has ever made.

The oil industry is particularly watching a pair of key factors as the platform’s drilling work gets under way: Its maximum operating depth is 3,000 meters of water, and its maximum drilling depth is 10,000 meters below the seabed.

Platform 981 represents a huge leap in technology for China’s oil industry, which until now has drilled in waters no deeper than 300 meters.

Su Jing, a CNOOC vice president for deepwater drilling, said no more than twenty vessels around the world are as technologically advanced as platform 981. In six areas, he said, it ranks first in the world. For example, it can support a world-leading 9,000-ton variable load.

Platform 981 also employs a unique underwater blowout prevention system, pointing to the fact that CNOOC appears to have learned from BP’s 2010 deepwater oil spill in the Gulf of Mexico. If platform 981 equipment on the ocean floor fails to receive radio or hydraulic signals, for example, an automatic device cuts the drilling pole and renders the well safe.

Su said that there are pros and cons to this spill-prevention method. The biggest advantage is that it is safe. Yet a malfunction would lead to significant financial loss.

The system was developed by an American company but has not been used globally due to oil company fears of potential losses.

In addition, to keep the operation safe in harsh weather conditions, platform 981 is the first ever able to withstand a once-in-200-years typhoon. It can hold up in winds blowing up to 61 meters per second, far exceeding international specifications for this class of vessel.

Wu Xiaoyuan, an expert at China State Shipbuilding Corp.’s Marine Engineering Department, said the platform is the first to use a positioning system that combines dynamic positioning and an anchor. In waters shallower than 1,500 meters deep, the anchoring system is used. When the depth exceeds 1,500 meters, a computer positioning system called DP3 is employed.

The anchor chain is also considered one of the best in the world. Caixin learned that during the platform’s testing, the anchor and platform held firm in winds of up to 50 meters per second.

Wu said another first for platform 981 is a system of sensors on its hull that relays data about various sea forces that it’s subject to.

A source tied to the construction of 981 said the basic design came from U.S.-based Friede Goldman United, and was upgraded by engineers at research institutes attached to CNOOC and China State Shipbuilding. Chinese modifications to the basic design increased the variable load and improved the computer positioning system.

The platform was built between April 2008 and December 2010 at Shanghai Waigaoqiao Shipyard, but idled before being moved into place in May. Domestic companies were responsible for about 40 percent of the platform’s production, sources told Caixin. Drilling equipment, the main engine and propellers were imported from overseas suppliers.

Su said the platform cost about 5.8 billion yuan and is designed to last thirty years. If oil prices stay at or above US$100 per barrel, he said, the project’s cost will be recovered in less than eight years.

Wang Xiaocong and Xu Chao are Caixin staff reporters.