In Aloguinsan: Oil to begin flowing April

CEBU, Philippines - Initial oil production in the Malolos-1 Oil Field in Aloguinsan, Cebu is set next month after the Department of Energy (DOE) approved the application of the Australian-based Gas2Grid Limited to commence field operations.

The company announced in its website that it received Thursday the written approval from the DOE to commence the Malolos-1 extended oil production.

“The operations will commence as soon as the crew and equipment have been mobilized to the site, with likely initial oil production commencing in April,” Gas2Grid said.

The operation is still meant as a testing process, though, because the company still has to confirm commercial viability of the oil field.

The DOE had previously extended Gas2Grid’s Service Contract 44 for a 12-month period from Jan. 29, 2014 so it can do more tests.

The prolonged period of oil production testing aims to gather sufficient technical information to confirm commerciality of the Malolos Oil Field to justify the DOE awarding Gas2 Grid a 25-year production period leading to full field appraisal and development.

“Proving commercial production at Malolos Oil Field will have a very significant impact on the value of the company and will benefit the Philippine economy,” Gas2Grid said.

The company earlier reported a “contingent resource” of oil in the two productive sandstones for the Malolos Oil Field. It made a “low estimate” of 6.8 million barrels and a “high estimate” (3C) of 68.1 million barrels, with a “best estimate” of  20.4 million barrels of  “total oil initially in place.”

This contingent resource is in addition to the unrisked prospective resources released to the Australian Stock Exchange on January 29, 2014.

Gas2Grid said the large size of contingent and prospective resources justifies further exploration within SC 44.

The company is continuing discussions with interested parties for funding the complete appraisal and development work (seismic acquisition, production well drilling and production facilities) at the Malolos Oil Field.

The company directors recently held meetings in the Philippines as part of the required process for the production testing.

These meetings included Cebu Governor Hilario Davide III, DOE-7 Director Antonio Labios and other officials in Manila.

The company has also reportedly held meetings with potential buyers of the oil that will be produced. — /RHM (FREEMAN)