Ayala firm moves petroleum drilling in Palawan to next year

Published March 18, 2022, 2:27 PM

by Myrna M. Velasco

With the approval granted by the Department of Energy (DOE) on its bid for force majeure declaration at its prospect area, Ayala-led ACE Enexor Inc. will be moving to April next year its targeted well drilling at its petroleum block in southwest Palawan basin.

“The drilling of the appraisal well is estimated to be in April 2023, before the expiration of the DOE-declared one year force majeure period on SC (service contract) 55,” the Ayala firm has stated in its disclosure to the Philippine Stock Exchange on Friday, March 18.

The consortium undertaking the oil and gas exploration venture comprises of Palawan 55, which is a project company of ACE Enexor and owns 75-percent shareholdings in SC55; while the balance of 25-percent is held by Pryce Gases Inc. of the Escaño group.

Relative to the energy department’s nod on the “force majeure status” for the petroleum block, Palawan 55 has been further instructed “to submit to the DOE a digital copy of the geological model of the Cinco prospect and a drilling montage prior to the commencement of the drilling activity.”

The DOE originally affirmed the re-entry of SC 55 into its appraisal period effective April 26, 2020 – and that was then premised on the drilling of at least one well within the first two years of the appraisal period.

However, because of Covid-19 that had thrown oil and gas exploration ventures into a screeching halt, the Ayala firm opted to defer well drilling schedule and had sought the government’s imprimatur for force majeure stature for the project.

ACE Enexor executives had previously laid down preparatory works on the targeted well drilling – including project execution plan, rig market survey, tendering for long-lead drilling equipment and supplies, as well as preliminary well budgeting.

For the targeted well drilling, the budget submitted by ACE Enexor and had been subsequently approved by the DOE had been pegged at US$1,702,020.

The Ayala firm pointed out its service contract’s advancement into appraisal phase had been tied to the DOE’s evaluation and review that the block’s previous drilling at Hawkeye well “did encounter a significant volume of movable natural gas and is deemed to be a non-associated gas discovery.”

Back in 2015, Palawan 55 drilled the Hawkeye-1 well up to 9,580 feet at a cost of $23.5 million; but the extracted gas then failed to reach “commercial scale” level.

The Ayala-led company thus carried out “quantitative interpretation of over 1,000 square kilometers of recently reprocessed 3D seismic data over the greater Hawkeye area and a large carbonate reef prospect,” and potential for commercial gas find is still largely anticipated.

SC 55 is a deep-water petroleum block covering an area of 9,880 square kilometers. It is said to be in the middle of proven regional oil and gas channel that stretches from Borneo offshore region in the southwest; and then to offshore Palawan in the northwest.