MANILA, Philippines - UK-based Forum Energy Plc has passed the scrutiny of the Department of Energy (DOE) on its compliance with its work program for Service Contract 72 (formerly Geophysical Survey and Exploration Contract 101) in the Reed Bank Basin, the country’s top energy official said.
Energy Secretary Jose Rene Almendras said as far as the DOE is concerned, they have found Forum’s work program in order.
Since November last year, Forum has not provided any update on its activities at the controversial SC 72, but Almendras said its work program remains in compliance with the DOE’s requirements.
Almendras has earlier threatened to cancel all the service contracts that have not been performing based on their submitted work programs with the DOE.
At least three contracts, he said, including a renewable energy project, will be cancelled, although Almendras did not identify the companies that would have their contracts revoked for non-compliance.
Based on the initial estimates, Forum is likely to spend about $10 million for a 3D seismic study to affirm the potential of the Sampaguita gas field and is expected to drill two to three appraisal wells at a cost of $30 million per well in the next 36 months.
Edison Investment Research Ltd., commissioned by Forum Energy to conduct a research report, said Forum may need to invest some $3 billion - or close to the Malampaya natural gas project consortium’s investment of $4.5 billion - to be able to develop into commercial production SC 72, which is within the gas-rich Sampaguita field in the South China Sea near Palawan.
“The Malampaya consortium, which includes Shell, has already recovered the $4.5 billion investment since the field became operational in 2001. This would suggest a $3-billion price tag for a resource similar to Sampaguita with all the infrastructure in place,” the report said.
The report noted that the Sampaguita field under SC 72 is estimated to hold 3.5 trillion cubic feet (tcf) of gas in place while the Malampaya gas field contains around three tcf of gas and 40 million barrels of recoverable oil reserves.