Nido Petroleum starts commercial production at Galoc field Nov 7

Australia’s Nido Petroleum Ltd. is expected to start its first commercial oil production from the Galoc oil field in Palawan on Nov. 7, the company said yesterday.

In a disclosure to the Australian Stock Exchange, Nido Petroleum said it was able to get a reserves certification from a third party.

"Nido is pleased to announce that Gaffney, Cline and Associates (GCA) have completed the reserves certification program for the Galoc oil field, yielding the following results: gross 100-percent proven reserves of 9.7 million barrels of recoverable oil (MMstb) as of August 2006 and proven plus probable reserves of 23.5 MMstb," it said.

GCA is a Canadian firm specializing in the audit of international petroleum reserves. In April 2006, Nido commissioned GCA to undertake an independent reserves certification of the Galoc oil field.

The purpose of the reserves certification was to provide independent verification of Nido’s methodology and results from seismic interpretation through petrophysical analysis and reservoir simulation.

In addition, GCA performed an economic limit test that satisfies the commercial requirements of the internationally recognized Society of Petroleum Engineers/World Petroleum Council/American Association of Petroleum Geologists reserves definitions.

Under the SPE/WPC/AAPG guidelines, proven reserves are those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with reasonable certainty to be commercially recoverable from a given date forward.

Nido Petroleum deputy managing director Joanne Williams said the company invested significant resources into evaluating the subsurface data from the Galoc field. "This certification confirms the Galoc oil reserves as a significant and bankable asset to Nido using the commonly used international standard. GCA is recognized around the world as one of the leading oil and gas industry reserves certifiers and they are continuing their work to evaluate the upside potential of the Galoc field."

The Galoc field is located at Service Contract 14 Block C, in offshore Northwest Palawan basin discovered in 1981. Since its discovery, the Nido-led consortium was able to drill at least two wells in the area.

The group is expected to spend an estimated $86 million to develop the area, whose estimated initial production is at 17,500 barrels of oil per day (bopd).

At present, the Galoc field is owned by Nido Petroleum (22.279 percent); Galoc Production Co. (58.341 percent); Oriental Petroleum (7.522 percent); Philodrill (6.397 percent); Basic Petroleum (2.276 percent); Alcorn Gold Resources (1.53 percent); Petroenergy Resources Corp. (1.03 percent) and Phoenix (0.6025 percent).