A crude oil production facility built on the 17/03 mining area in the South China Sea / Courtesy of SK Innovation
SK earthon commenced crude oil production in the South China Sea at the Lufeng 12-3 oilfield for which the company won mining rights in 2015, the subsidiary of SK Innovation said Monday.
This is the first time SK earthon has succeeded in producing crude oil through an oilfield it won the mining rights to. The achievement is expected to contribute to Korea’s energy security.
According to SK earthon, the offshore oilfield is part of the 17/03 mining area located in the northeastern South China Sea. The mining area, which is 300 kilometers from Shenzhen, is 15 times larger than Yeouido. Its daily production capacity is 29,500 barrels, more than 1 percent of Korea’s daily petroleum consumption.
After signing an agreement with China National Offshore Oil Corp. (CNOOC) in 2015 to win the mining rights, SK earthon became the first Korean private enterprise part of the agreement to develop an offshore oilfield on the South China Sea.
Following geological surveys and physical examinations, the Korean firm discovered crude oil there in 2018. Its crude oil production came after assessment of the oil field and construction of production facilities.
To reduce carbon emissions from the production facilities, SK earthon electrified equipment and reused heat from generator exhaust. In addition, the company is considering using liquefied natural gas (LNG)-powered vessels and renewable energy to further reduce carbon emissions.
With the crude oil production, SK earthon has been able to repay principal and interest to the government for money borrowed to participate in the project. Once the company finishes repayment, it will share profits from the crude oil production with the government for a while.
“As the first Korean private enterprise that began to exploit resources overseas in 1983, our 40 years of experience enabled us to produce crude oil independently,” SK earthon CEO Myeong Seong said. “Through continuous investments in crude oil exploitation and carbon capture storage (CCS), we will achieve growth and the goal of carbon neutrality.”
Since it spun off from SK Innovation in 2021, SK earthon has pursued growth through crude oil exploitation and eco-friendly businesses.
In eight countries, the company is managing 10 mining areas and participating in four LNG projects. Based on its experience in crude oil exploitation, the company has also participated in various CCS projects here and overseas.
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