THE consortium operating the Malampaya deep-water gas-to-power project has committed an initial investment of $600 million to drill new wells under the first phase of its committed work program, according to the Department of Energy (DOE).
DOE officials said in a media briefing on Tuesday that the amount would cover for the drilling of possibly up to three wells and for a tieback facility connecting the gas to the platform.
The consortium is led by Prime Energy Resources Development B.V. of tycoon Enrique Razon, UC38 LLC, and Philippine National Oil Company-Exploration Corp. (PNOC-EC).
Prime Energy is the gas operator and has a 45-percent stake in the project. UC38 also has a 45-percent stake while the remaining 10 percent is owned by PNOC-EC.
The service contract for the Malampaya project has been extended for 15 years or until February 22, 2039. Under the contract, the consortium is required to continue production operations, as well as conduct a minimum work program consisting of geological and geophysical studies and drill at least two deep water wells during the sub-Phase 1 from 2024 to 2029.
DOE Undersecretary Alessandro Sales said the Malampaya consortium is preparing to drill up to three wells.
“In terms of committed investment, in the renewal contract itself, the work commitment for the first phase is at least two new wells. In their submissions to us, they are indicating that they are preparing to drill for three wells and this is above the committed program for renewal contract,” Sales said.
The cost to drill one well is between $80 million and $90 million. Sales said if the drilling activities prove successful then an additional $330 million to $360 million is needed for the tieback and subsea facilities.
“In total, for two wells and the tieback for production, this would amount to about $600 million. These are all, at the moment, high-level numbers because in fact the pricing of drill ships, equipment, specialist services are getting to be a little bit volatile,” he said.
Sales added that the Malampaya field’s best estimate for the near field is about additional 210 billion cubic feet of gas.
DOE Secretary Raphael Lotilla said Prime Energy, as lead operator of the gas project, has shown its technical competence over the last six months by managing the decline of the gas supply and undertaking successfully a maintenance activity. “This confirms the findings of the DOE last year on the operator’s technical, financial, and legal qualifications,” said Lotilla.
He also pointed out that this is the first extension ever granted to a natural gas producing Service Contract in the Philippines. “We hope that it would not be the last of its kind. That there are attractive prospects within the same Service Contract area worthy of an extension beyond the initial period shows promise in exploration activities in the Philippines,” Lotilla said.
He also said the Malampaya consortium is the first consortium backed up entirely by Filipinos and run entirely by Filipinos. “A remarkable milestone in the maturation of the Philippine petroleum industry,” the energy chief said. The consortium has been remitting 60 percent of the net proceeds from petroleum operations to the government. During the period from October 2001 to December 2022, the consortium has remitted more than $13.14 billion.