PGI set to start P600-M drilling program

Philippine Geothermal Inc. (PGI), a wholly-owned subsidiary of Unocal Corp. of US, will undertake a $12-million (P600 million) drilling program starting July in an effort to double the Makban (Makiling-Banahaw) geothermal plant’s capacity.

PGI vice president for resource technology Jens Pederson, in a press briefing yesterday, said the program will involve the drilling of "deeper wells" or with depth of up to 13,000 feet from the previous standard of 8,000 to 9,000 feet.

Pederson said the capacity of Makban will be enhanced to 402 megawatts (MW) per day from the current level of 250 MW. If the drilling will also be conducted in Tiwi, the capacity will be improved to 230 MW per day from present 100 MW. At present, they are planning to drill deeper wells only in Makban.

The drilling project will be financed partly by the National Power Corp. (55 percent) and PGI (45 percent). PGI is the operator of Napocor-owned plant in Makban geothermal fields. PGI also runs the Tiwi plant of Napocor in Albay.

As this developed, PGI said it has awarded the drilling contract to DESCO, a private Philippine drilling company last week. DESCO vested other drilling companies, Philippine National Oil Co.-Energy Development Corp. (PNOC-EDC) and Parker Drilling Corp.

PGI senior associate for commercial affairs Edgar P. Sevilla said PNOC-EDC actually submitted the lowest bid but the state-owned geothermal company did not pass the technical evaluation conducted by the Modus Pec, an international third evaluator.

Sevilla said aside from the financial criterion, they are considering other criteria such as technical, safety and loss control. "It is unfortunate that they (PNOC-EDC) did not win this project. This is a business decision," Sevilla said.

The state-owned firm, Sevilla said, did not meet the criteria for best rig that will be able to dig up deeper wells.

Pederson said they need to add more wells to optimize the value of their plants which are now not running efficiently. "These plants (Tiwi and Makban) will need rehabilitation. The three-well project, which will involve new technology to drill into the deep reservoir of the steam field, is the first of its kind in the Philippines and a breakthrough in enhancing the life of the country’s oldest geothermal resources," he said.

The PGI official said they are currently securing an environmental compliance certificate (ECC) with the Department of Environment and Natural Resources.

"We have applied for an ECC for all the wells including make-up wells like these (deeper wells). Public hearing is now ongoing," he said, noting that under the existing set-up with Napocor, drilling of deep wells are accepted.

He said they would start the drilling July and finish it in December this year. If the project proves successful, he said they would be drilling another three to five wells in the area 2003. Funding for another drilling project in 2003 which is estimated at $3.5 million each well will still be firmed up with Napocor.

Pederson admitted, though, that they have been encountering some problems with the local community. "The wells are situated in the densely populated area. Somehow, our ability to dig more wells there are hampered," he said.

But Pederson said the project would create employment opportunities for 120 people, 70 percent of which shall be sourced from the local community.

The PGI executive said the drilling program would complement the partial rehabilitation of the Tiwi-Makban plants which will be completed by January 2004.

"PGI is supporting this rehabilitation using new technology in upgrading its steam field development program to improve surface and reservoir management of the geothermal resource in both areas," he said.