China is to develop its largest offshore oil field, which could hold recoverable reserves of 500-800 million bbls. The Penglai 19-3 field is located in the Bohai Bay.

The Penglai 19-3 oil field was discovered in a joint exploration project between China National Offshore Oil Corp and Phillips Petroleum Co of the United States. It lies in block 11/05, 70 kilometres off the coast of Shandong province, in less than 95 feet of water. The reservoir is shallow, at a depth of between 900 and 1,400 meters, and covers an area of 50 square kilometres.

Over the field's 30-year lifespan, it is expected to produce some 500 million barrels of oil at a peak rate of 150,000 bpd.

Phillips acquired the right to explore Block 11/05 in 1994 when a petroleum contract was signed with China National Offshore Oil Corp (CNOOC). Phillips has a 100 percent interest in the 2.3 million-acre block. CNOOC has the right to participate with up to a 51 percent interest in any development in the block.

The Bartlesville-based oil company outlined a two-phase development plan to recover the estimated 500 million barrels of recoverable waxy crude. In Phase I the company will use one wellhead platform and a floating production, storage and offloading (FPSO) facility, with expected daily production rates of 35,000 to 40,000 barrels, scheduled to start in the fourth quarter of 2001. Phase II will include multiple wellhead platforms, central processing facilities and a pipeline or floating storage and offloading facility. First production from Phase II is targeted for the first quarter of 2004, building to a plateau rate of 100,000 to 150,000 barrels of oil per day. Due to the waxy nature of the 20 degrees API crude, the development will call for submersible pumps and possibly heated storage facilities to cope with icy conditions in winter.