P1.8B to be spent exploring for oil in southwest Palawan in 2012

MANILA, Philippines—The joint venture operating Service Contract 63 off southwest Palawan plans to spend roughly P1.8 billion to drill an exploration well by the middle of 2012.

In a briefing on Tuesday, the PNOC Exploration Corp. chairman and chief executive officer Gemiliano Lopez Jr. said the amount would be shared equally by the partners in the SC 63 license.

The PNOC EC, the upstream oil and coal arm of state-run Philippine National Oil Co. (PNOC), currently holds a 50-percent interest and is the operator of the field, while the remaining 50 percent is held by Australian firm Nido Petroleum Ltd.

According to Lopez, PNOC EC’s board of directors had already approved the allocation of P900 million to fund its share in the drilling operations within a petroleum block, covering 10,560 sq.km.

Both PNOC EC and Nido Petroleum earlier agreed to enter the sub-phase of the exploration program with the Department of Energy, which called for the drilling of an offshore exploratory well.

The joint venture already identified the current window to drill the commitment well to be between June and October 2012. However, the final date for spudding a well would depend on the selection of a drill site, identified from a number of prospects by a joint geo-scientific group and rig availability, Lopez explained.

The initial phase of work would reportedly focus on fully resourcing the drilling and subsurface teams, implementing pre-planning activities including securing long lead items for up to two wells and completing the basis of design work for a number of possible well options.

It was not made clear as to which of the prospects within SC 63 (East Sabina) would be tapped by the joint venture. Two of the bigger prospects had been identified as the Aboabo discovery and the Kalapato site, which were estimated to hold 222 million barrels and 239 million barrels of oil, respectively.

SC 63 is located at the northeast end of the Tertiary-aged offshore fold and thrust belt, which was reported to be a “prolific hydrocarbon province.” The belt extends from Brunei through Sabah, Malaysia, and into the southern Palawan basin.