ExxonMobil undecided on South Sulu Sea proj

MANILA, Philippines - ExxonMobil Exploration and Production Philippines B.V. (EMEPP) is still studying if it would push through with its drilling activities in the South Sulu Sea, a top energy official said.

Energy Secretary Jose Rene Almendras, in an interview with reporters, hinted that there are some indications of “challenges” in the Exxon drilling project.

Almendras said Exxon had already submitted its report on the results of the drilling of its four exploratory wells.

The energy chief said the Department of Energy (DOE) is currently reviewing Exxon’s report on the viability of the drilling project.

“There are some challenges, we’re reviewing it,” Almendras said, declining to reveal the exact content of the Exxon report.

Energy undersecretary Jay Layug said members of the Exxon-led consortium have been conferring among themselves on what to do with the project.

“It depends, among Exxon, BHP and Mitra – they’re talking amongst themselves on how to proceed or whether to proceed at all on the part of Exxon. We’re reviewing their report on the review of the block,” Layug said.

Layug said huge exploration companies like Exxon have been on the look for bigger prospects.

“The likes of Exxon, Chevron, and Shell or the big companies – they always look for huge fields or reservoirs. We need to see if the Sulu Sea exploration falls within that parameter of a large oil and gas company,” the DOE official said.

Layug said: “Worldwide the big companies’ portfolio have huge fields or reservoirs. They usually leave the small fields to small or medium sized exploration companies. Most of the fields we have in the country are marginal fields, which means are relatively small reservoirs.The Malampaya, for instance, has 2.7 TCF is enough for a big oil and gas company to go in to.”

Asked if Exxon considers its present drilling site as “small reservoir,” Layug said, “The measurement of whether it falls within the criteria depends on the size of the reservoir and the cost of producing it. For instance, the Malampaya has 2.7 TCF and is a deepwater – the consortium measured the cost between size and the cost of developing it. But most of our existing service contractors, especially in the oil side are marginal fields. We’re talking about West Linapacan, Cadlao, Nido — these are marginal fields that are developed by small oil and gas companies.”

According to Layug, they expect to complete the review of Exxon report before the year ends.

In Oct. 2010, it was announced that Exxon completed drilling its fourth well under the DOE Service Contract 56 (SC-56) in the South Sulu Sea. The Babendil-1 well was drilled to a total depth of 4,092 meters/13,425 feet.

Drilling of Babendil-1 began August 4, 2010. The West Aquarius, the same drilling rig used in the first three wells, was used to drill Babendil-1.

With the completion of Babendil-1, EMEPP has fulfilled all commitments under Service Contract 56 with the Philippine Department of Energy.

Drilling operations under the DOE Service Contract 56 first started on October 11, 2009.

Aside from Exxon, other members of the SC 56 are Mitra Energy (Philippines SC 56) Ltd. and BHP Billiton (International Exploration Pty Ltd).