The Philippine National Oil Co.-Exploration Corp. (PNOC-EC) is upbeat about the prospects for the new wells that would be drilled by the Malampaya consortium, citing a success rate of around 80 percent.
At a budget hearing of the Senate sub-finance committee last September 22, PNOC-EC President Franz Josef George Alvarez said the consortium—led by operator Prime Energy Resources Development B.V.—will drill two new wells in 2025.
Alvarez said preparations for actual drilling are ongoing. “By 2025, we will drill two additional wells,” he told the Senate subcommittee. “If successful, by 2026 we will have additional production. “The probability of success is around 80 percent,” he told the senators.
The Malampaya consortium is composed of Prime Energy, a subsidiary of Razon-led Prime Infrastructure Capital Inc. (Prime Infra), UC38 LLC and PNOC-EC. Prime Energy has a 45-percent stake in the consortium.
Service Contract (SC) 38, which covers the Malampaya gas field, has been renewed for another 15 years and required the consortium to explore and drill at least two new deep water wells in the first phase of its work program or 2024 to 2029. It is designed to unlock the potentials of both the existing Malampaya gas field and nearby areas.
During the hearing, Alvarez said the consortium is expected to invest at least $690 million to finance the 15-year renewed production contract awarded by the government. As part of the consortium, PNOC-EC’s share would be around P3.45 billion, representing 10 percent of the total investment cost.
“The total cost would be around $690 million spread throughout 2023 to 2026 and then for EC’s participation its 10 percent of that,” added Alvarez.
During the hearing, PNOC-EC proposed a budget of P11.94 billion for 2024. Of which, P2.02 billion is for continuing business operations at Malampaya; P6 billion for petroleum exploration activities; P3.1 billion for coal exploration; and the remaining amount for operational expenditures.
The renewal of SC 38 is a key development for the country’s national energy security and independence. The current best estimate for the near field is an additional 210 billion cubic feet of gas.
The Department of Energy earlier said Prime Energy and its personnel have shown technical competence in managing the decline in gas supply and completing an accident-free maintenance program of Malampaya.
The Malampaya project is one of the country’s most important power assets, feeding natural gas to power plants in Batangas City that account for 20 percent of Luzon’s total energy requirement.
The consortium has remitted to the national government more than $13.14 billion from October 2001 to December 2022 as net proceeds from Malampaya.
Another subsidiary of Prime Infra, meanwhile, said its solar power projects in Batangas and Cavite are in already in advance stages of development.
Solar Tanauan Corp.’s Tanauan and Maragondon solar power plants will have an installed gross capacity of up to 140 megawatts (MW). Total annual generation capacity is estimated to power over 84,000 households and displace over 100,000 tons of coal per year.
In a statement, Solar Tanauan said it utilizes digital twin technology, drone verification of progress, optimized string sizing, and 24/7 quality assurance or quality control monitoring both at factory and at site.
It also conducted a Front-End Engineering Design to streamline the procurement and construction phases, packaged contracting and owner supplied materials allowing each party to focus on their specialties, optimized risk allocation, and uses software for simplifying complex earthwork assessment for terrain-following layouts.
“Advanced project design and execution tools and strategies are driving the significant progress in the implementation of Solar Tanauan Corp.’s solar power plants in Batangas and Cavite,” the company said.
The solar project, which broke ground last April, is on track to start commercial operations by December 2024. The power generated from the project will be sold to the Manila Electric Co. under a power purchase agreement.