DOE set to pursue oil search in Malampaya

The Department of Energy (DOE) will continue to pursue oil rim exploration in Malampaya despite criticisms the site may not be commercially viable.

"It is the position of the DOE, barring any other position of participants in the project, to get that oil out, which could be around 20 to 28 million barrels at $50 per barrel – worth $2 billion to the country. We will get it out and use it for the benefit of Filipinos," Energy Undersecretary Peter Abaya said.

Abaya said while there are interested investors, "on the policy side it’s our position that we will get it out no matter what – there’s some who say that it isn’t commercially viable – that’s why they don’t want to drill it out."

Abaya said they will soon pursue the oil extraction on the field.

"It has to be soon, as it will be much more difficult to take out oil as the pressure of natural gas drops."

Studies show that there is a time-dependent window for development of the oil leg, which needs to be done before gas production will have brought pressures to a level that will lower ultimate recovery of the oil. Any development should be done so that oil production will start, at the very latest, by 2006.

According to Abaya, there are still investors willing to take their chances in developing the oil rim.

The Malampaya oil rim is a 56-meter thick oil zone that occurs right below the 600-meter thick gas cap being produced by the SPEX-led Service Contract (SC) 38 consortium since Oct. 2001 as part of the Malampaya deep water gas-to-power project.

The oil rim was initially discovered with the drilling of the Malampaya-1 well in 1991 but was considered at the onset as a separate development from the much larger natural gas reserves comprising the bulk of the Malampaya petroleum resources.

To determine the potential in producing Malampaya oil, an extended well test (EWT) was conducted on the Malampaya-10 (MA-10) well from Dec. 2001 to April 2002.

A one-kilometer horizontal section was successfully drilled through the limestone reservoir at a depth of 3,375 meters below sea level. A maximum oil production rate of 25,100 barrels per day was achieved and a total of 1.88 million barrels were produced and sold. The MA-10 EWT was an engineering feat in itself, being a world record for a well test of the four-month duration from a floating platform in deep water (800 meters).

Based on the EWT results, a five-year field development plan, involving the use of a floating production, storage and offloading (FPSO) vessel, was designed to produce a little over 24 million barrels of oil.

Although the Malampaya oil reserves are small by world standards (about 24 million barrels), it is still the largest known accumulation in the Philippines and is, therefore, a reason for much expectation from many sectors.