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The Liwan 3-1 and Liuhua 34-2 fields share a subsea production system, subsea pipeline transportation and onshore gas processing infrastructure. Husky has a 49 percent interest and operates the deepwater infrastructure, including the subsea wells, deepwater flowlines, control systems and manifolds, and the mono-ethylene glycol (MEG) unit on the shallow water platform.
Husky’s partner CNOOC Ltd. operates the shallow water facilities, including the platform, subsea pipeline to shore and the onshore Gaolan Gas Terminal. The terminal extracts condensates and liquids, and compresses and moves the gas to commercial markets in mainland China.
Gas production is covered by a long-term sales contract, while condensates and natural gas liquids (NGLs), such as propane and butane, are sold separately.
Construction is underway at Liuhua 29-1, the third deepwater field at Liwan. A gas sales agreement is in place, with first production expected in the second half of 2020. Husky has a 75 percent interest in this field.
Husky Completes Commissioning At Liuhua 29-1
CALGARY, Alberta, Sept. 29, 2020 (GLOBE NEWSWIRE) -- Husky Energy (TSX:HSE) today announced commissioning is complete at the third field at the Liwan Gas Project offshore China.
As a result of strong cooperation between Husky and its long-time partner CNOOC, the seven-well Liuhua 29-1 project was completed safely, ahead of schedule and $100 million below budget despite the COVID-19 pandemic and associated global economic volatility. First gas is expected to be delivered to end users starting in early November.
“The startup of Liuhua 29-1 just two years after the project was sanctioned is a significant milestone for Husky and CNOOC,” said CEO Rob Peabody. “This third field will provide Husky with additional stability in funds from operations.”
The 29-1 field is tied into the existing infrastructure at Liwan, which includes the Liwan 3-1 and Liuhua 34-2 fields within Block 29/26, approximately 300 kilometres southeast of the Hong Kong Special Administrative Region.
In total, the Liwan Gas Project is expected to deliver around $950 million in funds from operations in 2021, Husky working interest. The Liuhua 29-1 field alone is expected to generate $1.3 billion in funds from operations for Husky over the next decade.
The new production will also provide a clean-burning source of energy to the growing market in southern China, and moves Husky closer to its 25% greenhouse gas intensity reduction target.
Year to date in 2020, total production from the two producing fields at Liwan is approximately 390 million cubic feet per day (mmcf/day) of natural gas and 16,000 barrels per day (bbls/day) of associated liquids. Total production in 2021 is expected to be 450 mmcf/day and 17,500 bbls/day of liquids.
Husky has a productive and longstanding relationship with its partner CNOOC in the Asia Pacific region, with a considerable track record for executing large projects on time and within budget starting with the successful Wenchang offshore oil project in the South China Sea, which began production in 2002.
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