2011 drilling plan to help assure energy security — DOE

The Energy Department expects four to five wells will be drilled for oil and gas next year, and welcomes this as a positive step toward assuring the country’s energy security. Energy Undersecretary Ramon Oca told reporters Tuesday that Polyard Petroleum International Co. Ltd. (Central Luzon), NorAsian Energy Philippines Inc. (Visayan Basin), Nido Petroleum Philippines Pty. Ltd. (West Calamian, Palawan) and China International Mining and Petroleum Corp. (Cebu) are the companies that will do exploratory drilling next year. "I think it could be Polyard Petroleum in Central Luzon. Norasian might also drill next year. Nido Petroleum might also drill next year. There might be four to five wells next year," Oca said. Accelerating the exploration and development of oil, gas, and coal resources is the top thrust of the country’s 2009-2030 energy plan. The country has substantial hydrocarbon reserves, and under the Philippine Energy Plan energy security will be attained largely by increasing the production of oil and gas and hydrocarbon resources by 40 percent. Right now, more than half of our energy demand is supplied by Middle Eastern producers, the price of which is often affected by wars and other disruptive events. In 2005, the energy department estimated that the country had 456 million barrels of fuel oil consisting of 54 million barrels of condensates, 2,135 billion cubic feet of gas, and 25 million barrels of oil. Central Luzon basin Polyard Petroleum is the Macau-based firm that operates the Central Luzon Gas Project under service contract 70. The contract covers 6,840 sq km. in the Central Luzon Basin. Aside from Polyard Petroleum holding 89 percent, other members of the SC 70 consortium are East Sun Mining and Power Exploration Co. and Cenozoil Energy. Exploration activities have been conducted in Central Luzon Basin since 1950s and many wells were drilled from 1950 to 1960, but drilling activity tapered off. The past three years, however, have seen an increased interest in exploratory drilling, despite the considerable investment needed, with costs ranging from $1 million to hundreds of millions of dollars. In 2008, there were 33 active petroleum service contracts awarded to oil and gas exploration companies. "We still have to wait for the well prognosis because it depends on the depth. It depends on the target. [Costs] could come up to a million to a hundred million dollars per day. If you're shallower, that could cost you $10 to $20 million only, but as you go deeper, costs could still go up," he said. Polyard Petroleum said it is still determining the exact reserves in the area that could contain 1.7 billion cubic meters of gas. Exploratory drilling The energy official also said Nido will also start drilling in one of its service contracts next year, but did not identify the specific contract. Nido earlier said it targets drilling for the Gindara prospect in northwest Palawan in the first half of 2011. Nido holds 60 percent of SC 54 B, Kairiki Energy Ltd. holds the remaining 40 percent. NorAsian, meanwhile, operates service contract 51 in Cebu. Its partners in the contract area are Trans-Asia Oil and Energy Development Corp., Alcord Gold Resources Corp. and Petro-energy Resources Corporation. Recoverable reserves at SC 51 are estimated at 5 to 6 million barrels, but the oil in place is around 16 million barrels. Oca said the China International Mining Petroleum Co. Ltd., which operates SC 49 in southern Cebu is also expected to begin exploratory drilling next year. SC 49 covers an area of 265,000 hectares and is found partly onshore in Cebu island and partly offshore in Teton Strait and Cebu Strait. Safety measures Energy officials, however, have not disclosed the specific safety measures in place to ensure that drilling does not threaten the surrounding environment, some of which are biodiversity hotspots such as Palawan. In April, the explosion of a BP oil rig in the Gulf of Mexico caused the largest accidental marine oil spill in the history of the petroleum industry. The leak was capped three months later after releasing an estimated 53,000 barrels of oil into the sea per day and causing extensive damage to marine and wildlife habitats and the Gulf's fishing and tourism industries. The DOE had initiated a review of the country's drilling procedures attended by some of the companies that plan to start drilling next year. — Dani Molintas/VS, GMANews.TV