Third Accident in a Month for China Offshore Oil

July 14, 2011 1:08 am Last Updated: July 22, 2011 6:22 am

Production was halted at China National Offshore Oil Corporation’s (CNOOC) Bohai Bay drilling site due to a control problem on July 12; the company said that a leak occurred at 1:30 a.m., spreading crude oil over a small area.

The slick, located at the Suizhong 36-1 field, will be soaked up and chemically dispersed. The control issue has reportedly been repaired.

CNOOC has announced that the field, one of its main producers, will gradually reopen.

Emergency procedures were activated quickly after exhaust gas improperly released at the torch head pushed the upwelling crude into the sea. China’s State Oceanic Administration (SOA) sent a helicopter team to monitor the situation after the company alerted it to the spill.

This is the third incident since June for China’s largest offshore producer. A serious leak that began on June 4 at a well in the Penglai field, also in Bohai Bay, polluted over 300 sq. mi. The leak was not publicly announced for nearly three weeks, causing a public outcry at both CNOOC and the SOA.

Another platform nearby began to leak on June 17, and the continuing trickle and slow cleanup at both wells has prompted SOA to require that crude drilling and production be halted.

An explosion occurred at a refinery in Guangdong belonging to CNOOC on July 11. Panicked residents quickly fled the area to escape the flames and any other possible explosions. None occurred and no casualties have been reported. The refinery is 25 miles from a nuclear power plant.

China blames an American company, ConocoPhillips for the initial leak because its crew injected water into a well which increased pressure in the sea bed, causing a rupture. CNOOC owns 51 percent of the drilling project with ConocoPhillips.

ConocoPhillips was ordered to stop drilling at two of its Bohai Bay platforms because the SOA believes further spills could occur.

CNOOC’s stock price has been trending downward since April of this year and is now 15 percent off its peak. ConocoPhillips is also below its high but is ahead 8 percent for the year.

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