Gas well found in Isabela
ISABELA, Philippines (UPDATED) – After 30 years of exploration in the Cagayan Basin, state-owned Philippine National Oil Company-Exploration Corporation (PNOC-EC) finally discovered a gas well in the site.
PNOC-EC said the discovery was made on June 29, showing positive signs that it had found a reserve. Energy officials, however, said it was still too early to determine whether this would be commercially vialble.
PNOC-EC chairman Gemiliano Lopez Jr said the gas well, explored through the Mangosteen Project under the 360-square kilometer Service Contract 737 (SC 737), may be the next major natural gas supply in the country next to the Malampaya facility, according to a report published in the Philippine Daily Inquirer.
The Mangosteen Project is located in the village of Balintocatoc, Santiago City, Isabela.
Lopez said he already relayed the good news to President Benigno Aquino III. “We found natural gas within the President’s term, one that would complement the production of the Malampaya offshore project in Palawan and allow us to supply additional cheap and clean energy to our people.”
Should it be a success, the SC 737 contracted that 100% of the revenues will be owned by the government.
The PNOC-EC has ventured into gas exploration in the Cagayan Basin, which covers Isabela and Quirino, since the 1980s, according to a city council resolution approving the operation of Mangosteen Project in Santiago.
The resolution said “after the exploratory drilling, PNOC-EC should report the result of the project to the Sangguniang Panglungsod (city council) and should the project be successful, PNOC-EC will have to secure another resolution authorizing it to continue with the second phase/production phase thereof.”
In December 2013, the City of Santiago approved the Mangosteen Project, saying that there is “considerable” benefit from the exploration.
Rappler is trying to reach Santiago City Mayor Joseph S. Tan for further information as of posting.
PNOC-EC records showed that the Mangosteen Project is one of the 6 energy explorations under SC 737, having a recoverable resource potential of 70 billion cubic feet, enough to provide up to 60 megawatts to Luzon, if converted into a gas power supply.
The Department of Energy (DOE) said on Thursday, July 9, that the PNOC-EC discovery is yet to be determined as commercially viable.
“They’re only in the discovery stage. To speculate on its commerciality is way too early and the DOE can’t comment on that. The only way to determine it is drilling,” said Rino Abad, Director of DOE-Energy Resource Development Bureau.
During a recent drill stem test, PNOC-EC was “unable to flow gas in commercial volumes due to restricted flow of gas,” the DOE said in a statement.
“They were still able to flow and flare gas twice for a short period from the accumulated gas in the separator. The gas that flowed out at this time only confirmed the discovery of gas in the area,” it added.
To determine an accurate estimate of gas volume, a stimulation testing should be conducted, the DOE further said. It is the DOE that will verify if a gas discovery is commercially viable or not, Abad said.
“To speculate at this point in time that it is already commercially viable is just a dream,” Abad added.
“Normally, the computation works by multiplying the volume to the prevailing market price then deduct possible expenses. But how can you arrive at the volume if a drilling has yet to take place? To say something that it’s already commercially viable is reckless,” Abad explained.
The DOE is set to meet with PNOC-EC on Friday, July 10.
PNOC EC President Pedro Aquino Jr. earlier said they are hoping to find enough gas that could power up to 100 MW of natural gas power plant. – Rappler.com
Oil gas flare image via Shutterstock