MANILA, Philippines - Shell Philippines Exploration B.V. (SPEX) will invest $80 million for the drilling of another well under Service Contract (SC) 38 or the Malampaya deep water gas-to-power project in Northwest Palawan.
Shell country chairman Edgar Chua said the company would be pouring in additional investment as they see more potential reserves within the area.
“We are going to make additional investments. There would be a second phase,” he said.
The SC 38 consortium is composed of SPEX (45 percent); Chevron Malampaya LLC (45 percent) and PNOC Exploration Corp. (10 percent).
Jose Jerome Pascuall III, SPEX finance manager, explained that the drilling of another well in SC 38 is part of the consortium’s long-term plan.
“The plan is to drill another well, which is part of the overall plan for Malampaya, to further develop the contract area. Once we are able to finalize the drilling and we know the outcome of the drilling – then we can say its worth the further investments,” he said.
“There is an initial $80 million committed investment. We are investing to determine the volume of reserves,” Chua said.
If the second phase drilling proves positive results, they would invest more for drilling activities in the contract area, he added.
“After that, depending on the results, the joint venture would decide whether to commit a much more significant investment by the first quarter. And the assessment will be in the middle of next year. It’s within the same area,” he said.
Pascual said the plan will actually involve an intensified drilling operation at the Malampaya site.
“There will be a series of wells, it really depends on the appraisal well we will be drilling,” he said.
The $4.5-billion Malampaya project, which has an estimated reserve of 3.7 trillion cubic feet of natural gas and supplies 2,700 megawatts of power to three natural gas power plants Sta. Rita, San Lorenzo and Ilijan in Batangas. It provides about half of the requirements of the Luzon grid and 30 percent of the entire power needs of the country.
To ensure that there is enough gas supply, SPEX had also raised the possibility of exploring the old San Martin gas field for gas production opportunities.
The old San Martin field is also included for expansion under SC 38, which allows the consortium to explore for oil and gas in the Camago-Malaya in Northwest Palawan. The San Martin area is estimated to contain 232 billion cubic feet (BCF) of natural gas with 74 BCF in recoverable reserves.