The Malampaya consortium led by gas field operator Prime Energy Resources Development B.V. has programmed initial investments of about $600 million under the renewal of Service Contract (SC) 38.
Undersecretary Alessandro Sales of the Department of Energy (DOE) said in a briefing yesterday the amount will be spent for the drilling of up to three exploration wells by 2026 and the establishment of a tieback production facility that will allow production of additional gas from the field in northwest Palawan.
The DOE also said the Malampaya field’s best estimate of additional supply for the wells could be at 210 billion cubic feet of gas.
“In total, for two wells and the tieback for production, this would amount to about $600 million… 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 they are preparing to drill for three wells and this is above the committed program for renewal contract,” Sales said.
The DOE said the consortium wants to drill three wells as this would be more cost-effective.“In terms of the cost of drilling one well, currently the cost increased and they are looking at between $80 million and $90 million per well… If these wells are successful and we move into connecting them back to production in the Malampaya facilities, we would require an additional $330 to $360 million for the tieback and subsea facilities to allow these near field wells to produce,” Sales further said.
The Malampaya consortium is comprised of Prime Energy as the operator with a 45 percent stake; Udenna Corp. through UC38 LLC, 45 percent; and the government through PNOC-Exploration Corp., 10 percent. Prime Energy is a subsidiary of Prime Infrastructure Capital Inc. chaired by businessman Enrique Razon Jr.
Last Monday, President Ferdinand Marcos, Jr. approved the renewal of SC 38 for 15 years or until Feb. 22, 2039.
DOE Secretary Raphael Lotilla said this is the first extension ever granted to a natural gas producing service contract in the Philippines.
“We hope 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.
The Malampaya resource provides natural gas fuel for four power plants in Luzon with a combined capacity of 2,011 megawatts.
