West Palawan drilling to proceed next year

MANILA, Philippines — ACE Enexor Inc., the listed oil and gas exploration and production unit of the Ayala Group, said drilling would still proceed in Service Contract (SC) 55 offshore west Palawan next year even as the Department of Energy granted the force majeure request of the consortium.

In a virtual briefing with reporters, ACE Enexor chairman and CEO Eric Francia said the SC 55 consortium is still on track to drill an appraisal well next year.

“We’re still pushing ahead as planned, notwithstanding the force majeure. It doesn’t mean that we will delay the whole thing by one year,” he said.

Francia said the consortium’s operator Palawan55 Exploration and Production Corp. was forced to seek a force majeure at its SC 55 since the April 2021 deadline to submit the drilling program was too tight given the delays caused by the COVID-19 pandemic.

“The April deadline — the original deadline — was really hard to meet because of the pandemic which slowed us down. But we’re still targeting 2022 for the drilling of the appraisal well,” he said.

Palawan55 is 75 percent owned by ACE Enexor and 25 percent owned by AC Energy Corp.

With the force majeure, the DOE adjusted the timeline of the SC 55 appraisal period and extend the consortium’s work program schedule by another year.

In April last year, the DOE confirmed that the “Hawkeye-1 well did encounter a significant volume of movable natural gas and is deemed to be a non-associated gas discovery under Section 13.02 of SC 55. Non-associated gas discovery means the reservoir contains only natural gas and no oil.

On April 26, 2020, the DOE confirmed the entry of SC 55 into the appraisal period, premised on the drilling of at least one well within the first two years.

SC 55 was estimated to have some 2.2 trillion cubic feet of gas, according to the DOE.

Three months later, the SC 55 consortium submitted to the DOE its five-year work program and budget for the appraisal period of $1.7 million.

The work program consists of a firm commitment in the first two years and a contingent commitment covering the latter three years.

Palawan55 is currently in the detailed planning stage for the drilling of the obligatory well.