DOE approves SC 44 in Cebu

MANILA, Philippines - The Department of Energy (DOE) has approved Service Contract 44 in onshore Cebu, its proponent, Sydney-based petroleum exploration firm Gas2Grid said yesterday.

“The company advises that the Department of Energy has formally recognized Malolos-1 as an oil discovery and approved an extension of SC 44 in order to conduct oil production with the aim of establishing a commercial oil field,” Gas2Grid said in an advisory.

The company is setting aside $500,000 to $1 million to conduct longer period oil production testing to establish commerciality beginning in February.

The DOE issued the approval after Gas2Grid submitted a formal application. The approval, which takes effect on Jan. 28, 2014, will be good for a period of 12 months.

Gas2Grid Limited successfully perforated and flow tested two oil-bearing sandstones in Malolos-1.

Oil was produced on short-term test at indicative production rates of between 100 and 200 barrels of oil per day (bopd). Oil from the lower sandstone also flowed to just below surface, the company said.

Gas2Grid Limited has a 100 percent interest in SC 44. 

In the 1960s, petroleum exploration wells drilled in the area had flowed natural gas to surface and recovered significant volumes of oil during testing.

Gas2Grid said that since the 1960s there had been no further evaluation of these discoveries and because the price of natural gas and electricity has increased significantly over the last 40 years, the government decided to evaluate the oil and natural gas flow potential of the original discoveries and assess their potential for oil field development and also as a fuel supply for a natural gas fired power station.