SC 55 proponents working on Cinco well in Palawan

MANILA, Philippines - The proponents of Service Contract 55 in Southwest Palawan are working on the drilling of the Cinco-1 exploration well, one of its consortium members said.

SC 55 is located near the Malampaya gas field in offshore Palawan. It includes the Cinco well but to date, no offshore drilling has occurred, prompting Energy Secretary Carlos Jericho Petilla to issue a warning that if the consortium is unable to fulfill its obligations by August 2013, the Department of  Energy could give it to other interested parties.

However, the consortium behind the project said it is open to suspending the work program through force majeure if it continues to encounter delays in the drilling.

In a report published yesterday, Australian firm Otto Energy Ltd., one of the partners in the SC 55 consortium led by BHP Billiton Petroleum, said it is studying its options.

“Otto is continuing to actively engage BHPB regarding such options which include potentially temporarily suspending SC 55, the joint operating agreement and farm-in agreement under force majeure. The effect of a force majeure notice would be to suspend time while the event continues and preserve the exploration program in SC 55,” it said.

However, Otto stressed that at the moment, the joint venture is currently preparing for the drilling of the Cinco-1 exploration well.

The company said the joint venture partners are “focused on delivering the Cinco-1 well in SC 55 in accordance with the contractual work program commitments to the Department of Energy.”

Furthermore, Otto said the joint venture has not sought an extension to the current sub-phase, which ends in August 2013 and continues to work with the DOE to ensure that work program commitments are met in accordance with the contractual undertakings.

In terms of potential resource, the DOE estimates that SC 55 has some 2.2 trillion cubic feet of gas.

SC 55 is led by BHP Billiton, which owns a 60 percent stake, and partners Trans-Asia Oil and Energy Development Corp., which has a 6.82 percent stake, and Otto Energy.

Proponents earlier said they have been encountering delays in the drilling operations of the Cinco well, prompting them to seek an extension to fulfill their obligations in the contract.