Otto, BHP Billiton to start phase 4 of Palawan proj

MANILA, Philippines - Otto Energy Ltd. and BHP Billiton, the operators of Service Contract 55 in Northwest Palawan, are readying to implement the fourth phase of their work program in the oilfield.

In a report, Otto said they are looking to drill an exploratory well in SC 55, which covers the Marantao prospect located near the Malampaya oil and gas field.

Otto said the fourth phase of the work program would require the joint venture company to drill an exploratory well by the second quarter of next year.

“Planning has commenced for the drilling of an offshore deepwater well at the Cinco prospect in second quarter 2012. Otto is working with farm-in partner BHP Billiton who is carrying Otto’s share of expenditure on the drilling of Cinco well,” Otto said.

The joint venture has issued a notice to the Department of Energy (DOE) to enter into sub-phase four commencing on Aug. 5, 2012.

According to Otto, its partner BHP Billiton’s Transocean Deepwater Expedition, a fifth generation rig, will be utilized for the drilling of this well.

“This area of Palawan has seen little historical offshore exploration drilling, and no deepwater offshore drilling has occurred to date,” the company said.

“This is an exciting new frontier that has significant scale and potential sitting between proven oil and gas fields to both the north and south.”

At present, Otto is working closely with BHP Billiton to finalize farm-in arrangements and prepare for the drilling phase of exploration activities.

“Once the farm-in documents are completed, Otto and BHP Billiton will request the Energy Department’s approval prior to the assignment of a 60 percent interest and operatorship to BHP Billiton,” it said.

Otto said that once the department approves the farm-in agreement, its share in SC 55 will go down to 33.18 percent.

Earlier, BHP Billiton entered into an agreement with Otto to pay some $150 million for a 60-percent stake in SC 55 and cover the cost for two deepwater wells.

BHP Billiton said SC 55 covers a 9,000-square kilometer area containing a “robust, diverse and extensive portfolio of exploration prospects” as recorded by its 2,400-sqm of 3D seismic study acquired in 2010.