Razon firm to drill 3 new wells in Malampaya

By MYRNA M. VELASCO

Razon-led Prime Infrastructure Capital Inc. is scheduling the drilling of at least three wells to extend the production life cycle of the Malampaya gas field, once the project’s application for license extension is approved by the Philippine government.

In a press conference, Prime Infra President and CEO Guillaume Lucci indicated that apart from fresh round of seismic survey within the covered blocks of the Malampaya service contract, “there will be number of wells to be drilled – it could be two operational wells as well as one exploratory well.”

He has not given actual cost on the work program budget, including those on new seismic survey and well drillings, but according to sources from the Department of Energy (DOE), deep water drilling would cost between $60 million to $100 million per well. Thus, the three wells to be drilled could command an investment of up to $300 million.

“We are going to extract as much gas as we can. It is a combination of exploring within the same field, as well as looking at additional fields.” Lucci stressed.

The last investment made by the previous interest-holders in Malampaya to reinforce the field’s gas production for 7-9 years or from 2015-2024 was pegged at $1.0 billion.

On the anticipated license extension, Lucci emphasized that “for the details, that’s part of the discussion with the Department of Energy. License extension is in the works...so we’re patiently waiting.”

The Prime Infra executive qualified though that when it comes to rig contracting, especially for a marginal and higher risk market like the Philippines, “drilling nowadays will really depend on rig availability...what used to be easy to get five years ago is increasingly becoming complicated to get, but we are attending to that.”

When it comes to the gas supply and purchase agreements (GSPAs) that will be expiring in 2024, Prime Infra is placing bet on prospects that indigenous gas may eventually come out cheaper compared with imported liquefied natural gas (LNG) commodities.

“The gas supply or off-take agreements are expiring in 2024, but indigenous will always play a vital role; and commercially, it will always be more attractive than LNG,” Lucci stated.

At this stage, the company cannot give any definitive projections yet on the magnitude of gas volumes that can still be extracted from the field – especially after the lapse of its initial service contract by February 23, 2024.

Based on data that had been previously presented by the DOE, the prospective gas supply that can still be lifted from the Malampaya field could still reach as much as 1.0 trillion cubic feet (TCF), but that has yet to be confirmed by seismic survey as well as drilling that have to be carried out at the field.

There could still be "commercial gas potential" discovery in the Malampaya East, Iloc, Nido and the Linapacan, which are all within the coverage of the field’s existing service contract, according to the energy department..

The assumption also is that the remaining gas resources that Malampaya could still yield could top roughly half of its current capacity – hence, this could still power gas-generating plants of 1,500 to 1,600 megawatts in the next 6-7 years.