BHP Billiton to drill for oil in northwest Palawan
MANILA, Philippines - BHP Billiton has committed to conduct drilling works in an offshore natural gas field in northwest Palawan, Energy Undersecretart Jose Layug Jr. said yesterday.
The Department of Energy (DOE) is looking at Service Contract (SC) 55 as the potential next big gas field after the Malampaya gas-to-power project.
“While we have been looking at Recto Bank as the next Malampaya, one of the SCs we are very positive about is SC 55,” said Layug.
Layug said the exploratory drilling of the Cinco well is expected in the first quarter of 2013.
The petroleum unit of BHP Billiton, which is the largest mining firm in the world, has a 60-percent stake in SC 55. Other stakeholders are Australia’s Otto Energy Ltd. (33.18 percent) and Trans-Asia Oil and Energy Development Corp. (6.82 percent) of the Phinma Group.
While the market for drill rigs is getting tighter amid numerous exploration projects worldwide, BHP Billiton is already conducting negotiations for two rigs, Layug said.
High prices of fossil fuel have encouraged foreign and local firms to invest in oil and gas exploration.
Layug said the potential resource in SC 55 is trillion cubic feet (TCF) of natural gas, slightly lower than Malampaya’s 2.7 TCF.
SC 55 covers an area of 9,000 square kilometers and is located in offshore Palawan. It is located on a regional oil and gas fairway that extends from the productive Borneo offshore region in the southwest to the offshore Philippines production assets northwest of Palawan
“We are hoping that Cinco will be the gas reserve that can backfill Malampaya as we look for potential resource of natural gas,” Layug said.
The Malampaya project fuels three natural gas projects that that supplies up to 45 percent of Luzon’s power generation requirements.
The license for SC 38 that allows the exploration of the Malampaya gas field in northwest Palawan will expire in 2024, with production expected to decline starting in 2015.