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NEWS UPDATES 5 October 2009

Shell unit to drill new well in Malampaya

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Philippine unit of Royal Dutch Shell plans to drilling another well in the Malampaya, the country’s largest natural gas field, the Manila Times reported.

“We are going to make additional investments. There would be a second phase,” said Edgar Chua, country chairman of Pilipinas Shell Petroleum Corp. The drilling is to be carried out by the company’s local oil and gas exploration and development unit, Shell Philippines Exploration BV (SPEX).

The Malampaya field is run by a consortium led by SPEX, Chevron Malampaya LLC, and state-owned Philippine National Oil Co Exploration Corp. (PNOC-EC). SPEX and Chevron each hold a 45-percent stake in Malampaya, while PNOC-EC has the remaining 10-percent interest.

Located in Service Contract (SC) 38 in offshore Northwest Palawan basin, the Malampaya supplies natural gas to state-owned National Power Corp.’s 1,200-megawatt Ilijan natural gas power plant, as well as to First Gen Corp.’s 1,000-megawatt Sta. Rita and 500-megawatt San Lorenzo natural gas facilities.

Jose Jerome Pascuall 3rd, SPEX finance manager, said the additional exploration well eyed for Malampaya will help assess the viability of further production from the natural gas field.

“Once we are able to finalise the drilling and we know the outcome of the drilling—then we can say if it’s worth further investments,” he said.

Pascual said this is part of SPEX’s plan to intensify drilling operation at the Malampaya. The company will invest $80 million for the initial drilling to identify the volume of reserves at the field.

Chua said the company will find out if they can pour in additional capital for more drilling activities in the contract area.

“Depending on the results, the joint venture would decide whether to commit a much more significant investment by the first quarter. And the assessment will be in the middle of next year,” he said.

Shell’s announcement comes on the heels of the start of ExxonMobil and BHP Billiton’s exploration activities in Southern Philippines.


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