Spex allots $85 million for new drillings this year

MANILA, Philippines - Shell Philippine Exploration B.V. (SPEX) plans to allot $85 million for drilling this year.

SPEX managing director Sebastian C. Quiniones Jr. said they expect to drill two wells in offshore Palawan.

Quiniones said drilling is scheduled to start by March or April this year in service contract (SC) 38. He said another well at the Silangan prospect or SC 60 will be drilled starting May or June.

According to the SPEX official, the Camago drilling forms part of the second phase of the Malampaya project. He said they would decide if they would pour in more investments in 2011 depending on the results of the drilling.

The SC 38 consortium is composed of Spex (45 percent); Chevron Malampaya LLC (45 percent) and PNOC Exploration Corp. (10 percent).

Earlier, Jose Jerome Pascuall III, SPEX finance manager, explained that the drilling of another well in SC 38 is part of a long-term plan to further develop Malampaya. “Once we are able to finalize the drilling and we know the outcome of the drilling – then we can say if it’s worth further investments,” he said.

The $4.5-billion Malampaya project, which has an estimated reserve of 3.7 trillion cubic feet and supplies 2,700 MW of power to three natural gas power plants, namely 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.

SPEX also operates SC 60 with a stake of 55 percent in the project. Other members of the consortium are South China and Kuwait Foreign Petroleum Co. with 30 percent stake.

SPEX is the operator of the Malampaya gas-to-power project while Kuwait Petroleum is a wholly owned subsidiary of the Kuwait Petroleum Corp., owned by the State of Kuwait.

To ensure that there is enough gas supply, Spex had earlier raised the possibility of exploring the old San Martin gas field.

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 area in northwest Palawan. The San Martin area is estimated to contain 232 billion cubic feet (BCF) of natural gas with 74 BCF recoverable reserves.