MANILA, Philippines--Shell Philippines Exploration is spending about $85 million to drill two new exploration wells within its petroleum service contracts in offshore Palawan.
According to SPEX managing director Sebastian C. Quiniones Jr., one of the exploration wells would be drilled by March or April within the Camago prospect, which is covered by Service Contract 38.
Another well will be drilled by May or June within the Silangan prospect in SC 60.
Quiniones explained that the Camago drilling would be part of the second phase of development of the Malampaya project. Following the drillings, SPEX expects to arrive at a final investment decision by 2011, he added.
The Malampaya consortium is composed of Shell Philippines and Chevron Malampaya LLC, each with a 45-percent stake, and PNOC-Exploration Corp., with a 10-percent stake.
The $4.5-billion Malampaya deep water gas-to-power project supplies natural gas to the 1,200-MW Ilijan plant of Korea Electric Power Corp. (Kepco); 1,000-MW Sta. Rita and 500-MW San Lorenzo plants, all in Batangas.
The gas field is 2,788 feet deep in the waters off Palawan, with the natural gas being pumped out to a processing plant and is transported by tankers to Batangas to fuel the three power facilities.
For SC 60, SPEX holds a 55-percent stake, Kuwait Foreign Petroleum Co. has a 30-percent interest, and South China Resources, 15 percent.
Under the contract, the SC 60 consortium members have committed to invest at least $24 million over a seven-year period within the area. It will use the amount to conduct seismic and exploration work in the area with an option to drill during the same timeframe.
In the event of a commercial discovery of petroleum, the contract also included a 25-year production term.
The service contract area, which covers a relatively unexplored area spanning a million hectares, was touted by the Department of Energy as one of the promising sites for petroleum exploration as identified by the Philippine Petroleum Resource Assessment Project Study conducted by the DOE and the Norwegian Agency for Development Cooperation.
