Spex to decide on Malampaya oil rim project early next year

Shell Petroleum Exploration B.V. (Spex), the upstream oil development arm of the Royal Dutch Shell Group, will decide early next year if it will continue its oil rim development project in the Malampaya field.

Spex managing director Jeremy Cliff told reporters Monday that a group of experts will come up with a recommendation in the next two months to help Spex in its evaluation of the Malampaya oil rim prospects.

"In the next couple of months, we shall be able to determine if the concepts we are using right now in the oil rim will lead to viable results. We have pooled experts that will tell us if we are on the right track and if we could push through with our investment," Cliff said.

Spex is a major operator of the $4.5-billion Malampaya Deep Water Gas-to-Power Project.

Under the oil rim the concept, Spex plans to drill not only deeper wells in the oilfield but also horizontally. This way, the company could avoid the high cost of drilling new wells.

Spex is planning to drill up five to six more oil wells within its service contract 38. Since the start of its operation in 1989, it had drilled 11 wells. Of these, only five wells are producing natural gas and oil.

Cliff said they expect the oil rim to have a total oil recoverable reserve of 25 million barrels and 25 trillion cubic feet of potential gas reserves.

Cliff said there is a need to review carefully their moves regarding the oil rim development since this will entail a huge investment. "We will be investing about $300 million to $400 million for this oil rim development project," he said.

In drilling alone, the company is expected to spend about $30 million for each well.

He said the consortium is studying the oil rim prospects so as not to put to waste government’s money. PNOC-Exploration Corp., a subsidiary of state-owned Philippine National Oil Co. has a 10-percent stake in the Malampaya project. Spex and Chevron Texaco own 45 percent each.

"We have to make sure that we do not use government’s funds for nothing so we have to study the investment very carefully," he said.

Last year, Spex decided to push through with the drilling of extended wells in a nearby oil field close to the Malampaya natural gas project in northwest Palawan. The extended well tests were concluded in May 2002.

Spex, in the meantime, was able to sell the barrels of oil produced from the Malampaya field to Singapore and Korea.

Aside from oil and natural gas exploration, Spex also entered into new agreement with the government to establish a pilot project utilizing Malampaya natural gas for public transport.