Malampaya yields oil

After almost three decades of frustration, the Phi-lippines has finally struck oil in a potentially rich reservoir beneath the Malampaya natural gas fields off Palawan — a major step in achieving independence from imported fuel sources.

Energy Secretary Vincent Perez said the oil field, discovered by Shell Philippines Exploration BV (SPEX), is the biggest oil reservoir in the country to date with the highest production rate since the 1970s. It yielded about 8,000 barrels of oil per day (BOPD) following an initial oil well test of a rim below the Malampaya gas field that began Sunday.

"We are happy that after almost 30 years, we have found a potentially commercial oil field," said Perez, who visited the project site over the weekend.

"This is significant because we are trying to achieve energy self-sufficiency by lessening our dependence on imported oil."

He said an extended well test is expected to produce 25,000 to 50,000 BOPD.

Shell, which just recently opened the country’s first deep water gas-to-power project at an on-shore plant in Batangas, announced the landmark oil discovery yesterday during the 25th celebration of Energy Week.

The company said the oil test beneath the Malampaya field is believed to be "the deepest horizontal subsea well test undertaken in the world" at a depth of about 2,788 feet.

SPEX managing director David Greer said the development of a new well will be finalized in the next two days, once the company evaluates the results of an initial monitoring program.

"The results of this important test, coupled with ongoing discussions with partners and the government, will eventually determine whether subsequent long-term commercial production is feasible," Greer said.

SPEX conducted the extended well test despite the absence of a government guarantee for 100 percent cost recovery.

The Department of Energy (DOE) noted that from 1979 to the present, seven oil fields — all located northwest of Palawan — have been discovered.

As of last year, however, annual production has dropped to 417,000 barrels from some 8.56 million barrels in 1979. Operations in four of the seven oil fields have been suspended as early as 1988.

The remaining fields — Nido, Matinloc and North Matinloc — are still operational, but production has been limited to 1,000 BOPD, which is quite insignificant considering that the country consumes some 340,000 BOPD.

Of the country’s three remaining fields, Matinloc was the top producer with 215,419 barrels last year. Nido’s output was 186,000 barrels while North Matinloc produced 15,000 barrels.

The DOE said the use of indigenous sources of fuel, particularly the natural gas from Malampaya field, will make the country 52 percent self sufficient in energy.

"If we include the use of local oil following the latest discovery, our self sufficiency in energy will further increase," Perez said.

Malampaya is the country’s largest natural gas field, with proven reserves of 2.6 trillion cubic feet.

Last October, the opening of a 500-kilometer natural gas pipeline that fed fuel for the 1,000-megawatt power plant in Sta. Rita, Batangas marked the birth of the country’s first natural gas industry.

The $4.8-billion Malampaya Deep Water Gas-to-Power project is expected to go into full commercial operation by January 2002. This means electricity produced from natural gas will reach end-consumers by early next year.

The project involves the extraction of natural gas from 3,000 meters below sea level in water depths of 820 meters.

The gas is transported by two 30-kilometer flowlines to a shallow water production platform for separation of the condensate from the gas. Dry gas then flows for 504 kilometers by a subsea pipeline to an on-shore gas plant for final processing and delivery to three power stations.

Apart from Shell, other investors in the natural gas project are US oil giant Texaco and state-owned Philippine National Oil Co. The gas is slated to provide up to 2,700 megawatts of power annually for 20 years, during which the government is expected to earn at least $8 billion in revenue.