SPEX to start drilling in northeast Palawan

MANILA, Philippines - Shell Philippines Exploration B.V. (SPEX), the local oil exploration unit of Royal Dutch Shell, will start drilling activities at its Service Contract (SC) 60 in Northeast Palawan.

SPEX is also the operator of one of the largest natural gas drilling projects in the country the $4.5-billion Malampaya deep water gas-to-power project.

Joining SPEX with a majority 55 percent stake in SC 60 are Kuwait Foreign Petroleum Co. (30 percent) and South China Resources Inc. (15 percent).

Publicly-listed South China disclosed to the Philippine Stock Exchange (PSE) that they have commissioned the services of a drillship, the Norwegian Frontier Phoenix, for oil and gas exploration in SC 60.

Norwegian Frontier Phoenix is owned by Frontier Drilling. The company is an independent supplier of drilling and production services for the oil industry such as conventional drillships, semi-submersibles and floating production, storage, offloading vessels.

According to SPEX officials, Frontier Phoenix will arrive in the Philippines in the latter part of the year.

South China vice president for operations David Baladad told the PSE that the drillship “will proceed to Northeast Palawan upon completion of its five-well program in Malaysia.”

“This is the reason why an exact date on drilling cannot be given and can only be at best estimated,” Baladad said.

South China said SC 60 is one of the country’s most promising areas in terms of potential for large accumulations for petroleum.

“A rigorous study of the 3D seismic data was conducted and highlighted a number of leads, several of which have been elevated to prospect status,” the company said in a separate disclosure.

In July last year, South China, together with SPEX and Kuwait Petroleum entered the second sub-phase of SC 60.

“The objective is to continue and further the exploration of the block with a commitment to drill one well during the sub-phase. The second sub-phase is valid until Feb. 10, 2010,” South China said.

Sources earlier said SPEX is “preparing to drill its commitment well by the second half of this year.”

Under its contract with the Department of Energy (DOE), the consortium will conduct the seismic and exploration work in a relatively unexplored area of 1.8 million hectares in Northeast Palawan.