Manila: Philippines’ energy department put out an upbeat note of a new inland oil deposit discovered in Cebu, and raising the country’s prospects as a potential future oil producer.
“The discovery in the Service Contract 44 (of Gas2Grid) is a boost to the country’s ‘upstream’ industry, and we will provide necessary support to advance its development,” said Department of Energy secretary Jericho Petilla. It was the Australian firm Gas2Grid Ltd which found the oil at the Malolos-1 well. The exploratory drilling contract for the Malolos-1 well was awarded in January 2004. SC 44 has been calculated by Gas2Grid to be capable of producing oil in the range of 4 to 42 million barrels a day with a “most likely” assessment at 12 million barrels per day.
Petilla said the discovery of the deposit, located in Cebu’s western coast, would be good for the country’s energy security efforts as it is currently dependent on imports. “The operator [Gas2Grid] has drilled for a decade prior to the discovery... with the extension, Service Contract [SC] 44 operator was given an additional 12 months to further develop the well,” the energy secretary said.
Greg Ilang, equity analyst at AB Capital, said the new find indicates viability for the country’s oil industry. “Developments like this somehow improve the country’s regulatory regime concerning oil contracts,” he said, pointing out that the Philippines’ oil and gas industry is not as mature as those of its neighbours like Malaysia and Indonesia.
Production
According to a local industry source, it could take months before SC 44 could actually be producing oil.
Although the Philippines has several known gas deposits in various parts of the country, most are located offshore. Petroleum exploration wells had been drilled in the country as early as 1960s within the area now covered by SC 44.
“Because the price of natural gas and electricity has increased significantly over the last 40 years, it was 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,” Gas2Grid said in a statement.
Gas2Grid also said that is has also become viable to put up a power station close to the oil well. “Electricity from a power station located within SC 44 would be sold on the island of Cebu, which has a total population of just under 4 million people,” the statement added.
