ConocoPhillips battles China oil spill

The oil spills from offshore wells operated by ConocoPhillips in China's Bohai Bay are posing political and technical challenges for the oil company far messier than the crude and drilling mud seeping from the seabed.

The company said Monday that it had suspended all drilling, water injection and production at the affected Penglai 19-3 oil field, one of China's biggest.

Operations are currently stopped at 180 producing wells and 51 injecting wells, for a total of 231 wells, said a statement by Houston, Texas-based ConocoPhillips, which operates the field in a venture with state-owned China National Offshore Oil Corp.

CNOOC, which owns 51 percent of the venture, said the suspension of production in Penglai 19-3 would reduce output by 40,000 barrels a day, in addition to the 22,000 barrels a day lost with the shutdown of the two wells where the spills occurred.

The spills began in early June and have unleashed a flood of criticism inside China over how ConocoPhillips has handled the cleanup. The Chinese government rejected the company's assertion that it had met an Aug. 31 deadline to completely clear up any damage and prevent further seeps.

Chinese maritime authorities facing pressure from fisheries and environmentalists to minimize further damage to the already heavily polluted Bohai appear to have lost patience with the prolonged effort to staunch the oil seeps.

"ConocoPhillips has not been able to address this problem for two months and the Chinese authorities are losing face. It's kind of an inevitable reaction to something that's been going on a while," said Thomas Grieder, analyst for Asia-Pacific energy at IHS Global Insight.

Regardless of the tensions provoked by the spills, China is relying ever more heavily on foreign partners for the technology it needs to tap difficult-to-exploit deepwater oil reserves, said Grieder.

According to ConocoPhillips, the spills released about 700 barrels of oil into Bohai Bay and 2,500 barrels of mineral oil-based drilling mud, which is used for lubrication, onto the seabed. All but a small fraction of that oil and mud has been recovered, and the small amounts still emerging are from earlier seeps that have been shifting under layers of sand on the seabed, it says.

But the Chinese oceanic agency contends that monitoring by satellite, underwater robots and other means shows the oil is still seeping. It criticized ConocoPhillips' containment measures as stopgap and said the company may have caused oil to seep through faults in the seabed by putting too much pressure on the oil reservoir.

Dong Xiucheng, a professor at the China University of Petroleum, described the accident as unusual. "It is hard technically to find the reason and the exact location of the spill and to try to stop it since it is on the seabed not in a pipeline. Both ConocoPhillips and CNOOC must have tried to do it, but it takes time," Dong said.

ConocoPhillips has pointed to safety concerns and other difficulties in capping and cleaning up the oil and mud in murky seas with minimal "Addressing the issue is rather complex," Grieder said. "They're trying to identify small cracks on the sea floor in a situation where you can't see much."