More oil seen from Galoc field in Palawan by 2010

MANILA, Philippines - Otto energy Ltd. of Australia expects to extend exploration activities at the Galoc oil field in Palawan when it starts drilling the second well two years from now, from which it hopes to extract more oil. Speaking to Otto Energy stockholders late last month, Chief Executive Officer Alexander Parks said the second well would have a life of seven to eight years, longer than the first well’s three to five years. "We are very encouraged to engage in the second phase of the project [and] have further drilling in the area by early 2010. We expect that the second phase of the project will have a life of about seven to eight years," he said. Galoc comes as a relief for Philippines, which is trying to cut its yearly import bill of $6 billion and had reeled from soaring fuel and food costs that have pushed inflation to record levels. Galoc’s production is equivalent to about 6% of the country’s 300,000 barrel daily requirement. Otto Energy holds an 18.3% indirect interest in the Galoc field, while fellow Australian Nido Petroleum Ltd. owns 22.28%. Otto Energy owns 31% of Galoc Production Co., the operator of the project. The rest belongs to Vitol GPC Investments SA. Mr. Parks said they expect $4 million in monthly revenues from the oil field, which they will use to pay off a $19-million debt until the first quarter of next year. Otto Energy will also use the money to fund exploration ventures here and other countries in Southeast Asia. Otto Energy earlier said it was looking for partners in several oil sites in Palawan and the Visayas and might finalize the deal within the year or in the first quarter of 2009. Otto Energy is exploring 20,000 square kilometers of oil and gas sites. Mr. Parks said the company was in talks with partners that would allow them to continue drilling next year and beyond. Galoc produces a steady supply of 14,000 barrels of oil daily. The first oil cargo from the field — 300,000 barrels of crude oil — were sold to Petron Corp. in October. The Galoc reservoir is some 2,200 meters below the sea floor and lies some 60 kilometers off the island of Palawan. It was discovered in 1981. Otto Energy is selling part of its interest in three oil sites in the Visayan Basin and Palawan province. The company wants to retain a working interest of a quarter or half in each of the three oil and gas sites. The Visayan Basin site is projected to contain 1.2 billion barrels of oil and four trillion cubic feet of gas. The first Palawan site is said to contain 36 to 37 million oil barrels at $50 per barrel, while the second contains 13 to 67 barrels at $10 to $90 per barrel. Otto Energy expects to start drilling at the Calauit and Visayan Basin sites by 2009. Drilling at the other site in Palawal is due in 2010. — Ava Kashima K. Austria, BusinessWorld