Philippines — Dubbing it as "the period of upturn in upstream petroleum investments" in the country, the Department of Energy (DoE) has announced that 10 to 12 wells have been committed by service contractor-firms in their drilling programs this year.
In a statement to the media, Energy Undersecretary Jay Layug disclosed that they have cornered "10-12 firm commitments to drill exploration wells and three workover wells from our service contractors."
This includes the following:
- Blade Petroleum for the Cadlao block in Northwest Palawan;
- Galoc Production Company (GPC) in Service Contract 14C, also in Northwest Palawan;
- Philippine National Oil Company-Exploration Corporation (PNOC-EC) in Cagayan basin;
- Gas2Grid in SC 44 and China International Mining Petroleum Company Limited (CIMP) at SC 49 in Visayas basin;
- Frigstad Energy at SC 50 in NW Palawan;
- Pitkin Petroleum at SC53 in Mindoro-Cuyo prospect; and
- BHP Billiton at its two blocks in Southwest Palawan.
Layug emphasized these drilling programs are part of the work commitments submitted by the service contractors to the energy department. "These are existing work programs under their respective service contracts," the energy official said.
Exploration wells are drilled to discover oil or gas and if these can be developed at commercial quantity; while workover wells may be pursued to improve flowrates, at proven finds or existing production fields.
Service contractors are required to submit a seven-year work program with the DOE; and that could entail drilling of several wells to determine if the oil or gas finds would merit declaration of commerciality.
While the department has not given exact figure on the investment costs, it was indicated that the rule of thumb for offshore deep well drilling could range from $80 million to $100 million; while those onshore may command an investment of $30 million to $50 million per well.
"We have seen an upturn in Philippine upstream petroleum industry this year as a result of current high-oil price market condition and the efforts of the DoE to revitalize the industry," Layug has noted.
For the oil and gas investors, the equilibrium price they have been hinging their investments on has been at $80 per barrel. Obviously though, current price trends have already surpassed that immensely.
Layug specified that the energy department's intent of re-igniting interests in upstream petroleum ventures is in line with the Aquino administration's thrust "to focus on resource development as a long-term plan of action in the hopes of finding indigenous oil and gas resources to reduce our dependence on imported petroleum and mitigate effects of oil price volatility."
The department will be offering 15 new petroleum service areas in biddings scheduled until July 2012.
