Gas field operator Prime Energy Resources Development B.V. (Prime Energy) has announced the award of a contract to US firm subsidiary One Subsea of the Schlumberger group, for the supply of equipment for phase 4 drilling in the extended Malampaya project.

The supply of equipment, according to the company, will cover wellheads, christmas trees (or control equipment), and subsea production system that will be up for delivery by end-2024. The amount of the awarded contract was not divulged as of press time.

“The equipment will be used for Malampaya Phase 4 to drill and tie-in two new deep water wells in the Camago and Malampaya East fields to the Malampaya shallow water platform,” Prime Energy noted; while emphasizing that the drilling program will kick off next year.

If the fresh round of drilling activities will yield commercial discovery, additional gas from Malampaya is expected to be lifted starting 2026.

The company specified that it will be drilling the Bagong Pag-asa third well next year, and this specific  exploration venture  “will determine the presence of oil and gas in a structure approximately 15 km from Malampaya, hopefully to further extend the flow of indigenous gas for the benefit of the Philippines.”

The Razon-led firm added that other major contracts will be awarded soon for deep water drilling unit, specialized pipeline manufacturing as well as integrated well services – but it qualified that this will be subject to the approval of its consortium-partners, primarily  UC38 LLC of the Udenna Group and state-run Philippine National Oil Company-Exploration Corporation (PNOC-EC).

Prime Energy similarly declared that on February 22 this year, “the project successfully passed an external independent review, the estimate schedule analysis review (ESAR), which concluded that the project’s schedule estimate is sound.”

It further stressed “this renewed cycle of exploration and development activities by SC38, while production from an ageing asset is in decline, calls for a temporary recalibration of Malampaya pricing, to ensure sufficient funding for the drilling project, extend the life of the Malampaya facilities, keep operations running safely and reliably.”

On the new gas sale and purchase agreement (GSPA) signed for the project, Prime Energy indicated that “the pricing formula is set to decrease over the next 15-year SC (service contract 38 contract renewal term,” which had been set from 2025 to 2039. The initial 25-year contract for the project lapsed on February 24 this year.

Prime Energy Managing Director and General Manager Donnabel Kuizon Cruz asserted that “exploration and development of a late-life gas field like Malampaya requires extraordinary feats of engineering, which we are committed to deliver safely.”

Early this week, Prime Energy stated that it is sorting out ‘rigorous routine maintenance inspections’ and plant shutdowns at the Malampaya facility as a preparatory step for planned fresh round of exploration and drilling activities for the extended production life cycle of the gas field.

“For a facility with over 20 years of operation, rigorous routine maintenance inspections and plant shutdowns are imperative to uphold its world-class status. This is crucial as Prime Energy conducts exploration and development activities to extend Malampaya production for the long-term,” the company said.

Based on the work program that had been submitted by the Malampaya consortium to the DOE, the scale of investment they will be injecting for new wave of exploration as well as drilling of additional wells will be more than $600 million.

Last week, a gas restriction predicament hobbled Malampaya’s operations, but Prime Energy claimed that it was able to complete repair ahead of targeted timeframe.

“Prime Energy safely completed the regular maintenance activity at the Malampaya shallow water platform ahead of schedule, ensuring smooth operations and timely maintenance for the platform's continued reliability,” the company conveyed, adding that gas production at the field had been fully operation since February 22.

The company expounded that production hold or gas restriction at the field started on February 13 – and that was done in coordination with the Department of Energy (DOE) and the other consortium-members for the gas field.

In the repair work undertaken, Prime Energy explained that such activity had been intended to “manage high gas export pipeline pressure, owing to LNG commissioning activities at the First Gen plants,” and that in turn, precipitated decline in draw rates for gas from the Malampaya field.

Prime Energy noted that within the period, it had “implemented preventive maintenance activities and discovered severe corrosion in a section of the shallow water platform that required immediate permanent repair to guarantee the safety and reliability of operations.”

That setback in the facility, Prime Energy reiterated, had resulted in “staggered restriction of gas supply from February 18 to 20 with full lifting of restrictions to customers by February 22.”