PNOC-EC not seen drilling during remaining Duterte term

MANILA, Philippines — PNOC Exploration Corp. (PNOC-EC) is unlikely to start drilling in its oil and gas prospects within the Duterte administration, even as government has been pushing to reignite the country’s upstream sector to harness indigenous resources, according to the state-run firm’s top official.

During the webinar organized by the Joint Foreign Chambers of the Philippines last Friday, PNOC-EC president and CEO Rozzano Briguez said the company needs to conduct studies before drilling, which may take at least 12 months.

“It’s really hard to do drilling by June next year. We are continuing our studies, we don’t have the framework, we still need approval to go forward, and before that, we need three to six months to finalize it. It’s 50-50. We don’t know if we can drill before June 2022,” he said in a text message to The STAR.

Briguez said he was referring to drilling in Service Contract (SC) 37 onshore Isabela and Quirino, which was awarded to the company in July 1990. PNOC-EC is undertaking the passive seismic tomography survey in the project.

“Drilling of the exploration well will depend on the result of the survey. We may have initial results before end of second quarter of 2021,” he said.

If the onshore gas field turns out to be a commercial discovery, PNOC-EC will put up a gas-to-power project – like what it did in the San Antonio Gas Field, the country’s first producing gas field. Both are located in the Cagayan Basin.

When the San Antonio gas field was operating from 1995 to 2008, the state-run firm re-assessed the Cagayan Basin, where the Rizal 2 well showed gas.

Meanwhile, it drilled Mangosteen in March 2015 and where several gas-charged zones were encountered, which was then considered a gas discovery and confirmed by the DOE in the same year.

Based on PNOC-EC’s website, the positive result of the Mangosteen-1 drilling moved the state-run firm to further its exploration activity in the area. The firm conducted a post-well evaluation and has been working on assessing the block through the acquisition of new geophysical data to support the next site of drilling in the basin.

“It may not be as promising as Malampaya, probably a minor Malampaya. But we are continuing with our duties and mission to be the upstream component of PNOC so we can look at the upstream sector,” Briguez said.

The Malampaya gas field under SC 38, where PNOC-EC has a 10 percent stake, is the state-run firm’s biggest project to-date. It is also the country’s most successful Petroleum Service Contract (PSC) out of three active projects.

As of end-2020, the project had remitted $11.9 billion in revenues to the government, exceeding the projected revenues of $10 billion for the entire project duration.

The Malampaya gas project supplies fuel to around 40 percent of gas-fired plants in Luzon with over 3,200 megawatts (MW) in capacity.

While the contract will end in 2024, supply from the Malampaya gas field is projected to be depleted by early 2022 or latest by 2027.

As government searches for the next Malampaya gas field, DOE undersecretary Felix William Fuentebella stressed the importance of the Philippine Conventional Energy Contracting Program (PCECP), which was launched in 2018, to facilitate the exploration and development of indigenous energy resources.

The PCECP aims to boost investment opportunities in oil and gas exploration activities and develop indigenous petroleum resources within undisputed Philippine sovereign territory.

“That’s why we also emphasized the importance of PCECP where the private sector can nominate. The DOE is (also) looking into the best way to invite investors, even touching on the 60-40 limitation with financial and technical assistance agreements (FTAAs),” Fuentebella said.

As PNOC-EC is the government’s arm for oil and gas development, the company continues to evaluate other exploration and production opportunities including those offered by the DOE and other energy companies.

Briguez said PNOC-EC has partnered with the University of the Philippines (UP) and the DOE to do extensive studies on new oil and gas resources in the country’s sedimentary basins to attract investments in the sector.