press release

Chevron Press Release - Chevron Joint Venture Announces First Oil From New Field Offshore China

Map of China

SAN FRANCISCO, Feb. 3, 1999 -- Chevron and its partners in the CACT Operators Group (CACT), today celebrated first crude oil production from Huizhou (HZ) 32-5, a new field in Block 16/08 in the Pearl River Mouth Basin of the South China Sea.

Production was achieved within 18 months from project start up and is expected to ultimately achieve 27,000 barrels per day (bpd). This additional production will position the CACT consortium as the largest offshore oil producer in China, with expected production of more than 32.5 million barrels from five fields this year.

"This is yet another exciting example of the growth potential offshore China," said Richard Matzke, president of Chevron Overseas Petroleum Inc. and a director of Chevron Corp. "With the cooperation of our partners, we will continue to increase exploration and production in China. This is demonstrated by our recent decision to relocate our Asian business hub to Beijing."

The HZ/32-5 field, located in 371 feet (113 meters) of water, is the first project in the South China Sea to utilize production technology allowing subsea links, or "tie-backs," to an existing platform, HZ/26-1. In this process, three subsea wells of HZ/32-5 are tied back to HZ/26-1, approximately 2.2 miles (3.5 kilometers) northwest of HZ/32-5, through six-inch insulated production flowlines. The crude oil is then processed through the surface facilities on the HZ/26-1 platform. Production is remotely controlled from the platform using an electro-hydraulic control umbilical and a gas lift line to provide the wells pressure for artificial lift.

This tie-back technology helps reduce costs and accelerates first oil production because the wells are linked to an existing platform. The HZ/32-5 field was discovered in September 1996 and contains 40- to 41-degree API gravity crude.

The project mobilized equipment and contract services from Europe, U.S.A. Canada, Australia, Singapore, and China. Each of the members of the operators group contributed technical and project expertise to assure the successful execution of the project.

CACT is a joint venture of China National Offshore Oil Corp., Agip China B.V., Chevron Overseas Petroleum Inc., and Texaco China B.V. Agip, Chevron and Texaco formed the ACT Operators Group in 1983 to develop hydrocarbon resources offshore China. In 1996, China National Offshore Oil Corp. (CNOOC) joined the group and the name was changed to CACT Operators Group. Agip, Chevron and Texaco each hold a 16 1/3 percent interest while CNOOC holds the remaining 51 percent.

Updated: February 1999