EDC closes drilling unit to align operations

MANILA, Philippines - Energy Development Corp. (EDC), the renewable energy development arm of the Lopez Group, will close its drilling operations units to align operations with other global drilling companies, the firm told the Philippine Stock Exchange yesterday.

“The management of EDC has approved the closure of the company’s Well Construction Group effective close of business on Feb. 28, 2011. Upon closing of its drilling operations unit, the Company will be securing the services of globally-competitive drilling service providers, a practice which the company believes is consistent with global best practices of oil, gas and geothermal companies,” said EDC president and COO Richard Tantoco.

Early in the year, EDC acquired a P1-billion drilling rig to allow it to reduce the number of days it takes to drill a geothermal well.

“We are closing the Well Construction Group to align ourselves with global best practices. We shall continue to own its fleet of drilling rigs to insulate it from global price volatility and availability issues,” he said.

He said with the closure of the drilling group, they would be tapping the services of various outsourcing firms. “We will outsource services and tools as we deem appropriate.”

Tantoco did not disclose how many EDC personnel would be affected by the closure of the drilling department but stressed that they have already informed the appropriate agency on this matter.

 “The company will be serving notice on the Department of Labor and Employment pursuant to the requirements of the Labor Code on closure and cessation of operations under Article 283,” it said.

As of end-September 2010, EDC operates 12 geothermal steamfields in the five geothermal renewable energy service contract areas where it is principally involved in.

EDC also provides drilling equipment and rig personnel to Lihir Gold Ltd. (LGL) in Papua New Guinea.

It was not clear, however, if the international drilling services and operations of the company would be affected by the closure.

The company now operates a total of 13 geothermal power plants with an aggregate capacity of 1,198.8 megawatts.

EDC is the largest onshore drilling contractor in the Philippines, exporting its drilling services since 1997.