Oil Drilling in Contested Waters

Posted by PortVision

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On March 5, 2015, Offshore Energy Today reported that ExxonMobil would begin to drill for oil off the shore of Guyana. The Deep Water Champion drillship, positioned at the Stabroek Block, starts a project worth $200 million. Although ExxonMobil is coordinating this ten-year project with the Republic of Guyana, Venezuela is objecting since Venezuela claims the area; Guyana administers it. The Stabroek Block (also known as the Liza Area) covers 26,806 square kilometers. Drilling will take place at a depth of 1,750 meters.

The project will involve the drillship, helicopter support, four support vessels running between the drill area and two shore bases in Georgetown (Guyana) and Trinidad. Waste treatment will be done in Houston at the John Fernandes Site.

This is just the latest in a series of moves by oil companies to drill in contested waters. Last August, the Wall Street Journal reported on global trends in deep-water drilling due to the depletion of easily extracted reserves. Energy companies are attempting to strike a balance between the need for exploration and working with countries with vague political boundaries.

China's massive demand for energy is driving its quest for new discoveries. The giant China National Offshore Oil Corporation (CNOOC) has ordered ships and drilling rigs, including a massive 30,000-ton deep water drilling rig (HYSY982) that they plan to operate in the South China Sea by 2016. It is as large as China's HYSY 981, deployed in waters off Vietnam in May last year, but moved in July 2014 (one month earlier than planned) when Vietnam contested China's right to drill in the area off Hanoi. Protests included riots in the cities and deployment of 29 ships by Vietnam in an attempt to disrupt the operations. The disputed area is in the Paracel Islands chain and claimed by both China and Vietnam. Accompanied by dozens of tugs, support ships, fishing boats and coast-guard vessels, the rig was moved to a location near China's southern island of Hainan. The actions by China were viewed world-wide as China flexing its military muscle.         

According to the Wall Street Journal, the US Energy Information Administration estimates that the South China Sea has reserves of as much as 11 billion barrels of oil and 190 trillion cubic feet of natural gas. China claims almost the entire South China Sea invoking historical precedents. Various parts of the sea are claimed by other governments, including Brunei, Taiwan, Malaysia, and the Phillippines as well as Vietnam and the People's Republic of China. In addition to the estimated reserves, the sea includes critical shipping channels. Contested waters also include the Spratly islands, the Natuna Islands, and the Gulf of Tonkin.

China is also engaged in disputes with Japan involving its right to drill in the East China Sea. Vietnam and the Philippines are moving forward with gas exploration projects of their own in the disputed areas. China has established a “9-dash line” to delineate its claims. It encompasses virtually the entire area; ASEAN (Association of Southeast Asian Nations) countries contest this boundary.

The South China Sea is one of the busiest global shipping routes. The Council on Foreign Relations states that, in addition to the oil reserves, fisheries, trade routes and military bases, this 1.4 million square miles of the Pacific Ocean stretching from the Singapore and Malacca Straits to the Strait of Taiwan is home to hundreds of islands. The Council says that 50 percent of all global oil tanker shipments pass through the South China Sea – three times more tanker traffic than the Suez Canal and five time more than the Panama Canal. More than half of the world's top ten shipping ports are located in and around the sea.

PortVision is regularly used by government agencies and related stakeholders to view vessel traffic patterns in contested waters and evaluate vessel movements over time to support policy analysis, compliance, litigation, and even law enforcement.  For more information, visit www.portvision.com.

 

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Posted on Apr 28, 2015 9:00:00 AM

Topics: Blog