SPEX starts drilling for oil

After the successful commissioning its natural gas facility, Shell Philippines Exploration B.V. (SPEX), the upstream oil development subsidiary of the Royal Dutch/Shell Group, has started drilling for oil in Malampaya near the area where its gas project is located.

Official documents from the Department of Energy (DOE) show that SPEX is drilling a 16-inch hole and has reached a depth of 1,248 meters, an advance of 146 meters since Oct. 9.

SPEX is the main operator of the $4.5 billion that successfully delivered natural gas to its power plant buyer last Oct. 1. The natural gas was used to fire the 250-megawatt of Sta. Rita power plant owned by the Lopez group.

SPEX is also the operator of service contract no. 38 which allows the company to re-enter the Malampaya-10 well (MA-10).

The SC-38 consortium is composed of SPEX (45 percent), Texaco of USA (45 percent), and state-owned Philippine National Oil Co.-Exploration Corp. (PNOC-EC) (10 percent). They are the same proponents of the Malampaya natural gas project.

The exploration company pushed through with the oil rim development although the government has not firmed up any commitment to grant it 100-percent cost recovery. SPEX has requested the National Government to allow it to have 100 percent cost recovery for the development of a nearby oil field near its Malampaya natural gas power project in northwest Palawan.

Earlier estimates show that SPEX would spend about P600 million to P700 million on a so-called extended well test to check the commercial viability of the soil in the area.

Apparently, the government is not keen on giving in to the request of SPEX because of the country’s widening budget deficit.

The SPEX oil exploration project is considered very timely since it was noted that one of the two oil producing wells in Northwest Palawan is expected to dry up this year.

As of May this year, Matinloc, located in offshore Northwest, Palawan was estimated to have remaining reserves of only about 240,000 barrels of oil. Aside from Matinloc, the other well producing oil in the country is Nido, also located in offshore Palawan.

As of end-2000, the Matinloc well was able to produce some 12.3 million barrels of oil. Matinloc produces the more expensive type of oil or the so-called light oil (light sweet crude), which has low sulfur content. The other types of oil are: Dubai crude and Northsea Brent.

SPEX, in a daily drilling bulletin submitted to DOE, said it would continue drilling through the conglomerates section of the Matinloc formation.

The MA-10 appraisal well is the first horizontal well to be drilled in the Malampaya field, which is estimated to contain about 17-57 million barrels of recoverable oil.

The main objectives of the MA-10 appraisal well are: to gather data on the oil rim during the drilling, logging and ensuring extended well test (EWT) and to determine the feasibility of drilling a horizontal well into the oil column for 1,000 meters.

Located at a water depth of 794 meters in offshore NW Palawan, the MA-10 well will be drilled to a total depth of 4,927 meters.

SPEX drilled the upper section of the well from Dec. 27 to 30, 2000 to a depth of 1,176 meters. The drilling was temporarily suspended thereafter to give way to pipe laying activities near the location of the MA-10 well and the well completion operations on the five Malampaya development gas wells.