Spex to start drilling for oil in northeast Palawan

Shell Philippines Exploration B.V. (Spex), one of the major operators of Service Contract 60 in northeast Palawan, plans to start drilling an exploratory well later this year.

Shell country chairman Edgar Chua said that the consortium had just completed the seismic survey for SC 60.

“We’re not sure yet but maybe late this year or next year the consortium will start drilling,” he said.

SC 60 covers a relatively unexplored area of 1.8 million hectares in Northeast Palawan.

Under the contract, the consortium will conduct seismic and exploration works for petroleum and optional exploration drilling within the first seven years.

SC 60 also includes a 25-year production term in the event of a commercial discovery of petroleum.

Aside from Spex, the other members of the SC 60 consortium are: South China Resources Inc. (SCR) and Kuwait Foreign Petroleum Co. Ksc. (KUFPEC). Spex holds 55 percent of the contract, KUFPEC has 30 percent and SCR has 15- percent stake.

Spex operates the Malampaya deep water gas-to-power project, the country’s largest natural gas find, in northwest Palawan. KUFPEC is a wholly-owned subsidiary of the Kuwait Petroleum Corp., owned by the State of Kuwait while SCR is a Philippine company involved in, among others, hydrocarbon exploration.

Last year, Spex completed the first 3D seismic survey as part of a work commitment under SC 60 to explore for oil and gas within the one million-hectare acreage in northeast Palawan.

“The survey enhances understanding the prospectivity of the license area and will determine the need to further explore in the block,” Spex said earlier.

Northwest Palawan is one of the promising sites for petroleum exploration identified by the Philippine Petroleum Resource Assessment Project study conducted by the Norwegian Agency for Development Cooperation and the Department of Energy.

During the seven-year exploration period covered by SC 60, the consortium committed a minimum investment of $24 million.

The DOE approved the application of the consortium for the conversion of SC 60 from geophysical survey and exploration contract 99 (GSEC) in January 2006. It awarded GSEC 99 to the consortium of South China Resources in November 2000.