The Malampaya consortium led by gas field operator Prime Energy Resources Development B.V. of businessman Enrique Razon Jr. is looking at initial investments of about $600 million for the drilling of up to three exploration wells by 2026.
The programmed investments also include a tieback production facility to allow the production of additional gas from the Malampaya field in northwest Palawan.
“In total, for two wells and the tieback for production, this would amount to about $600 million,” Department of Energy Undersecretary Alessandro Sales said in a media briefing Tuesday.
Sales said the Service Contract 38 Consortium indicated to the Department of Energy that they were preparing to drill for three wells which would be more cost-effective, above the committed program for the contract renewal.
“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,” Sales said.
He said that if the two of the wells would be found to be producing wells, the consortium would connect them back to production in the Malampaya facilities.
This would require an additional $330 million to $360 million for the tie-back and subsea facilities to allow these near field wells to produce.
Sales said the Malampaya field’s best estimate for the near field is about additional 210 billion cubic feet of gas.
Prime Energy, a subsidiary of Prime Infrastructure Capital Inc., owns a 45-percent stake in the Malampaya gas project, while UC38 LLC owns 45 percent and state-run PNOC Exploration Corp., 10 percent.
Energy Secretary Raphael Lotilla said this is the first extension granted to a natural gas producing service contract in the country.
“We hope that 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.
He said the Malampaya consortium is also the first backed up and run entirely by Filipinos, which is “a remarkable milestone in the maturation of the Philippine petroleum industry.”
Lotilla said Prime Energy and its personnel showed technical competence over the last six months by managing the decline of the gas supply and undertaking successfully a maintenance activity.
“This confirms the findings of the DOE last year on the operator’s technical, financial and legal qualifications,” the energy chief said.
President Ferdinand Marcos Jr. approved on Monday the renewal of SC 38 or the Malampaya Deep Water Gas to Power Project for 15 years until Feb. 22, 2039.
“This is a significant development for our national energy security and independence. The Malampaya asset will continue what it has started in operating this world-class installation for further exploration and utilization of the country’s remaining gas reserves, as well as open up the other potential near field areas for future production,” said Razon, who serves as Prime Infra chairman.
The Malampaya project supplies natural gas to power four power generation plants in Batangas province, including Santa Rita, San Lorenzo, San Gabriel and Avion with a combined capacity of 2,011 megawatts.
The major components of the Malampaya project are subsea wells and flowlines, a shallow water platform to process natural gas, a depletion compression platform, a catenary anchored leg mooring buoy for the export of liquid condensate, a 504-kilometer long gas export pipeline on the seabed and an onshore gas plant in Batangas City.
The SC 38 Consortium has been remitting 60 percent of the net proceeds from petroleum operations to the government. It contributed $13.14 billion to the government from October 2001 to December 2022.
