DOE expects positive results in Galoc, Cadlao drillings

Manila, Philippines - The Department of Energy (DOE) said it expects positive developments in two offshore gas fields in Palawan soon.

The second phase of the Galoc project and the start of operations of the Cadlao gas field will increase output of the import-dependent Philippines.

“[Galoc Production Co. (GPC)] committed to us to do Phase 2,” DOE Undersecretary Jose Layug, Jr. said.

He said the final investment decision for the expansion plan of the Galoc project should be announced within the year.

GPC, which is co-owned by international oil firm Vitol Group and Otto Energy Ltd. of Australia, holds a 58.29-percent stake in the Service Contract (SC) 14 consortium.

Other members of the consortium are Nido Petroleum with 22.8 percent; Oriental Petroleum and Minerals Corp., 7.57 percent; The Philodrill Corp., 7.03 percent; UK firm Forum Energy Philippines Corp., 2.27 percent; Alcorn Gold Resources Corp., 1.53 percent and PetroEnergy Resources Corp., 1.03 percent.

“They are looking at [Phase 2] already. The last time I spoke with them they are already studying it,” Layug said.

The Galoc oil field is estimated to contain 10 million barrels of oil and the Galoc consortium is planning to drill additional wells to increase production reserves by five million barrels. It has produced more than six million barrels of oil.

Galoc lies within SC 14 in 300 meters deep of water, some 60 kilometers offshore of Palawan. The Galoc reservoir lies 2,200 meters below the sea floor, with its first production on Oct. 9, 2008.

Layug said part of the optimism in the project is the forecast on oil prices.

Most gas fields in the country are cyclical, with companies stopping production when oil prices are low and resuming operations once prices become more favorable, Layug said.

Meanwhile, the DOE is looking for the resumption of operations of the Cadlao gas field.

“We have received already a report from Cadlao that they are pushing through though they asked for a one-year extension because now they have to engage vessels and oil rigs for the project,” Layug said.

Layug said the project’s reserves are estimated at two million barrels of oil.

The Cadlao field previously produced up to 11 million barrels of oil back in the 1980s before it was plugged in 1991.

A consortium led by Australia-based Blade Petroleum Philippines Ltd. is now developing the field through SC 6Blade Petroleum owns an 80 percent equity interest in SC 6 and is operator of the field while VenturOil owns the remaining 20 percent.

Production in the oil fields will increase the output of the country, Layug said.

The Philippines produces only 6,000 barrels of oil per day, way below the demand of around 300,000 barrels per day, he said.

Compared with its peers in the region, the country’s upstream oil and gas industry is relatively small. This has been generally attributed to the high cost of development along deep seas and the quality of reserves that have been discovered.