Aloguinsan oil exploration: Viability testing starts next week

CEBU, Philippines - The Gas2Grid Limited has mobilized its crew and equipment this week to prepare Rig-2 for “oil production test operations aiming to confirm the commerciality of the Malolos Oil Field.”

It made the announcement in an April 11 update posted on its website.

“Early next week, the well clean-out will commence and the swabbing unit will arrive…to swab liquids for a period of about 2 weeks from the well,” Gas2Grid said.

Swabbing is done by extracting liquid from the well bore with the use of a rope and cup assembly.

The samples would then be brought to a laboratory for analysis to determine if the oil is viable for commercial use.

“This extended oil production test will be followed by a shut-in period to assess the reservoir pressure build-up,” it added.

Rig-2 is part of the Gas2Grid’s Malolos-1 Oil Field in Barangay Olango, Aloguinsan.

According to Gas2Grid, the two oil-bearing sandstones are located at depths of 7,280 to 7,308 feet and 7,152 to 7,207 feet, respectively.

Oil was produced during a short term test last June indicative of production rates of between “100 to 200 barrels of oil per day” from the upper sandstone section. Oil from the lower sandstone also flowed to just below surface.

Gas2Grid’s extended oil production testing program aims to gather sufficient technical information to confirm commercial viability of the Malolos-1 Oil Field to justify the Department of Energy’s act of awarding a 25-year production period to the company.

Gas2Grid earlier said proving commercial production at the oil field would have a very significant impact on the value of the company and would benefit the Philippine economy.

“Oil produced from the extended oil production test will be sold in Cebu as a fuel source, providing working capital,” it said.

The company earlier reported a “contingent resource” of oil in the two well bores it made in Aloguinsan with a “low estimate” (1C) of 6.8 million barrels and a “high estimate” (3C) of 68.1 million barrels, with a “best estimate” (2C) of 20.4 million barrels of “total oil initially in place”.

This contingent resource is in addition to the “unrisked prospective resources” released to the Australian Stock Exchange on Jan. 29, 2014.

Gas2Grid said the large size of the contingent and prospective resources justifies further exploration covered in the Service Contract 44 the government gave the company.

The Department of Energy earlier approved the application of the Australia-based company to commence field operations.— /RHM (FREEMAN)