ExxonMobil opts out of Sulu Sea project
ExxonMobil Exploration and Production Philippines BV (EMEPP), the local arm of American oil major Exxon Mobil Corp., has withdrawn from the Sulu Sea exploration project, following its discovery that gas from the wells it had drilled in the contract area were of “noncommercial quantities.”
In a statement issued Thursday, the company said that it had completed the drilling of four wells in the Sandakan Basin, an area in the Sulu Sea covered by Service Contract 56. These wells were drilled over two years.
“While it encountered gas in three of the four wells drilled, noncommercial quantities of gas were found,” EMEPP said.
This prompted the company’s decision to pull out from the project and resign as SC 56’s operator. Its 50-percent stake in the service contract would be assigned to its partners, Mitra Energy Ltd. and BHP Billiton Petroleum Pty Ltd.
Mitra Energy and BHP Billiton both have a 25-percent stake in the service contract.
SC 56 was originally awarded by the Department of Energy to a group composed of BHP Billiton, Amerada Hess Ltd., Unocal Sulu Ltd. and Sandakan Oil II Llc under the first Philippine Energy Contracting Round.
Mitra took over the contract in January 2006, and ExxonMobil, through EMEPP, eventually entered in the same year.
For the seven-year exploration period, covered by a contract signed in 2005, the consortium committed to invest around $43.85 million into the project, covering the conduct of comprehensive geological and geophysical studies and the drilling of four exploration wells.
The contract covers 8,620 hectares in Sulu Sea, a location considered to have some of the most prospective areas for oil and gas exploration, based on previous drilling activities conducted there.
According to the Philippine Petroleum Resource Assessment Project, jointly conducted by the Department of Energy and the Norwegian Agency for Development Cooperation (Norad), the Sulu Sea is one of the most promising sites for petroleum exploration, with an estimated resource potential of 203 million barrels of fuel oil equivalent.
