Pangilinan-led PXP Energy Corporation is now ready to advance on its drilling plan for two exploratory wells at its awarded oil and gas block at the Recto Bank, a petroleum basin under Service Contract (SC) 72 that is part of the diplomatically-strained territory in the West Philippine Sea.
PXP Energy Chairman Manuel V. Pangilinan indicated that the company “is ready to go in terms of (drilling) exploratory wells – two wells – and further surveys of the concession.”
He nevertheless stated that there is no agreement sealed with China National Offshore Oil Corporation (CNOOC) or with the Chinese government yet on propounded joint exploration activity, therefore, that is a major geopolitical risk that has been flustering the energy firm when it comes to advancing its work program in that Northwest Palawan petroleum block.
Pangilinan expounded “that implies that there will be no agreement that can be reached with China and CNOOC in the near or medium term…if there’s no agreement that can be reached, then what can we do?”
PXP Energy previously sought imprimatur from the Philippine government, via the Department of Energy (DOE), on concerns relating to ‘joint exploration activity’ with CNOOC at the Recto Bank, but that appeal has not led to any resumption of negotiations or discussions with CNOOC for the venture.
Pangilinan thus noted that such lack of ‘understanding’ or definitive pact with China remains a “big geopolitical issue” in the petroleum exploration and drilling activities being pursued by PXP Energy.
“Will China agree to an independent effort by SC 72, PXP to enter that territory – that particular concession territory and do work? I cannot answer that question,” the PXP chairman stressed.
On the planned well drilling at SC 72, the DOE said PXP Energy is now at preparatory phase on its work commitments, hence, it sought government’s “assurance on safety and security of offshore operations.”
The department added that it approved PXP Energy’s new sub-phase 2 work program in February this year; and that covers geotechnical surveys to be done at its awarded block and the drilling of two wells that will command an investment of US$7.5 million – and that will primarily assess the commercial viability of prospective gas find at the block.
On the safety aspect of the extended seismic survey and drilling to be carried out, the DOE conveyed that it has been arranging meetings with the Western Command (WESCOM), or the league of the Armed Forces of the Philippines (AFP) that has been guarding the disputed territories at the West Philippine Sea.
According to PXP Energy, it still needs additional round of seismic survey, so it can determine the baseline; as well as the environment conditions on where it targets to drill and to establish the stability of the underwater soil in terms of supporting an oil rig that shall be installed there.
Planned drilling at the Recto Bank petroleum basin should have started in 2013, but because of the diplomatic tension in some domains of the West Philippine Sea, PXP Energy then just opted to seek government’s approval on extension of its work program. A moratorium on petroleum exploration activities was also enforced by the State and that was just lifted last year.
Interest-holders in the block are betting on gas yield that could potentially match the commercial development success of the Malampaya field.
As could be gleaned from the past evaluation of the Count Geophysics and Oilfield Production Consultants (OPC) Ltd, it was established that the block’s resources may reach 3.4 trillion cubic feet (TCF) gas-in-place, with potential upside of up to 20TCF gas-in-place.