Shell still on the lookout for fresh fuel resources

The Philippines may not match the fuel resources of Brunei or other Asean countries, but oil giant Shell is still seeking exploration opportunities in the Philippines, especially around the Malampaya gas field area, company officials said.

According to Graeme Smith, Shell vice president for exploration Asia and Australia, the company is “always looking” for so-called near-field (near existing oil/gas fields) exploration opportunities, as well as frontier or new areas.

There is a high success rate in near-field exploration, but the amount of oil and/or gas found is usually smaller because the main resource body has been drawn, Smith said.

“If you look at Shell’s exploration strategy, or any of the majors, what you will see is, we will set aside a little bit of exploration budget for what we call near field exploration,” Smith said. “We have prospects near Malampaya which we will drill if the production capacity in the field has space to spur the oil and gas.”

Shell, like any other major oil firm, is constantly looking for new areas from which to replace depleting resources in existence.

Shell’s oil exploration spending is fairly constant, Smith said.

“The historical data, which is all published, is between about $4 billion and about $8 billion, depending on the frontier areas we drill,” he said.

It has been reported that, this year alone, Shell expects to spend about $7 billion on exploration—a fifth of its total spending program. The company spent this much from 2007 to 2013, much higher than that of other oil firms, analysts said.

“There are fields nearby, smaller ones,” Shell director Sebastian Quiniones said. “To be able to extract that, there’s the license ex tension. We are in discussions with the government.”

Shell is also looking to explore areas under the Philippine Energy Contracting Round V (PECR 5), Quiniones added.

The Department of Energy (DOE) has come out with a heftier offering of new petroleum and coal exploration areas, including five blocks in the West Philippine Sea.

The auction, with coal areas to be awarded next month and oil areas next year, is expected to generate at least P7.23 billion in petroleum exploration investments and at least P150 million in coal exploration investments, according to DOE data.

On the auction block are 11 areas for petroleum exploration (mostly located in Luzon), and 15 areas for coal exploration (mostly in Mindanao): Area 1 in off Southeast Luzon; Areas 2 and 3 in the Masbate-Iloilo area; Areas 4 and 5 in Northeast Palawan; Area 6 in Southeast Palawan; Area 7 in West Palawan; and Areas 8, 9, 10, and 11 in West Luzon.

There are three potential areas for petroleum exploration in the Bangsamoro area, but the government excluded those temporarily and promises to put the areas back in concurrence with the Bangsamoro government once it is duly formed.

“The materialization of these indigenous energy service contracts, if proven productive, can limit the effects of the world fuel prices in our domestic economy. That is why we aim to increase the awarded contracts to benefit from the actual turnout of energy investments,” Energy Secretary Carlos Jericho L. Petilla said. “The government will make sure that these investments will serve its purpose of benefiting the country on its objectives to secure energy.”