Oklahoma-based Kerr-McGee China Petroleum, Ltd., a wholly owned affiliate of Kerr-McGee Corp, said it has begun producing crude oil from four wells at its CFD 11-1 and CFD 11-2 fields in block 04/36 in China’s Bohai Bay. The company expects to have a total of 10 wells on line by the end of July and estimates that production from the 10 wells will range from 15,000 to 20,000 barrels of oil per day (b/d).

Kerr-McGee said it will bring additional wells on production over the next two years, with peak production in the range of 40,000 to 45,000 b/d expected by mid-2005.

Kerr-McGee is operator with 40% interest. Partners in the development are CNOOC Limited with a 51% stake, and Sino American Energy Corp., a subsidiary of Ultra Petroleum with a 9% stake.

“First production from Bohai Bay, which is a new core area for Kerr-McGee with estimated resources of approximately 150 million barrels of oil, was achieved ahead of schedule thanks to outstanding efforts by our employees and contractors,” said Dave Hager, Kerr-McGee senior vice president responsible for oil and gas exploration and development.

CFD 11-1 and CFD 11-2 are being developed using the Hai Yang Shi You 112 – Kerr-McGee Global Producer VIII floating production, storage and offloading facility (FPSO). The 909-foot FPSO is anchored in 75 feet of water to a single-point mooring tower that allows the vessel to weather vane in any direction. It has daily production capacity of 80,000 barrels of oil and 350,000 barrels of gross liquids and storage capacity for one million barrels of oil for offloading to shuttle tankers.

The first phase of the development includes one 48-slot wellhead gathering platform and one 24-slot wellhead platform.

“Consistent with our hub-and-spoke strategy of developing core areas in proven petroleum basins, this infrastructure will allow for the cost-effective development of additional discoveries,” said Mr Hager. “With five more discoveries to date, additional identified prospects and interests in approximately 1.7 million gross undeveloped acres, we plan to leverage our expertise to build on our success in Bohai Bay.”

Development planning is ongoing for other discoveries on the 04/36 block, including the CFD 11-3, CFD 11-5 and CFD 11-6 fields, each operated by Kerr- McGee with a 40% interest.

Development planning also is under way for two discoveries on the adjacent 05/36 block, the CFD 12-1 and CFD 12-1S fields, which are operated by Kerr-McGee with a 25% interest.