Philippines Central Valley basin may hold carbonate and sandstone gas

April 26, 1999
Like elsewhere in the world at the moment, when it is very difficult to sell an oil prospect, gas if found in the right economic and geographic situation provides an opportunity for the smaller explorer to still move on. This even seems apparent in the Philippines. Hence Pacrim Energy Ltd. and E.F. Durkee & Associates have initiated a potential gas exploration program on Luzon, northwest of Manila. The area of interest is known as the Bamban-Clark-Manila Corridor (Fig. 1) 231,152 bytes]
E.F. Durkee
E.F. Durkee & Associates
Manila
Like elsewhere in the world at the moment, when it is very difficult to sell an oil prospect, gas if found in the right economic and geographic situation provides an opportunity for the smaller explorer to still move on. This even seems apparent in the Philippines. Hence Pacrim Energy Ltd. and E.F. Durkee & Associates have initiated a potential gas exploration program on Luzon, northwest of Manila.

The area of interest is known as the Bamban-Clark-Manila Corridor (Fig. 1) 231,152 bytes]. The Philippine Department of Energy granted the area as a Nonexclusive Geophysical Permit to Pacrim and its associates on Mar. 1, 1999. This will enable the companies to assess pre-existing data, surface mapping, and reprocess and re-interpret a limited data base of existing seismic, gravity, and magnetic data.

There were two principal concerns in selecting this area. The overriding consideration has to be the position with respect to industrial developments, population centers, electric power grids, and perhaps some of the best infrastructure in the Philippines. This in no small way involves the industrial and economic growth potential of the areas formerly occupied by the U.S. Air Force base at Clark and the nearby U.S. Naval facility at Subic Bay.

Both of these areas were declared to be Special Economic Zones and in recent years have perhaps exceeded anyone's expectations as sites of industrial development. The Philippines is probably the fastest recovering Asian country, with respect to recent years' currency devaluations and economic depression in Asia. With a population of some 12 million or more people in the greater Manila area at the south end of the subject exploration permit and the Clark Special Economic Zone on the north, the region is already a site of many investments and developments in new businesses. The market potential appears to be good.

Existence, volume of gas

Geologically, the BCMC-NGP lies along the southwest side of the Central Valley basin. This is a Tertiary basin underlying that area between Manila Bay on the south and the Lingayen Gulf to the north. This expanse is about 120 miles in length.

The basin is 50-70 miles wide and is bounded on the east by the Sierra Madre Mountains and on the west by the Zambales Mountains to the north and a southerly, on trend volcanic chain extending from Mt. Pinatubo west of Clark to the Bataan Peninsula west of Manila Bay.

The Central Valley has a random and sporadic exploration history extending from the late 1940s to 1996. Most of the seismic work and drilling were done in the east and central parts of the basin. This work demonstrates the presence of a gas generating Tertiary section (Miocene to Pliocene). The Amoco Victoria 1 well flowed gas at a rate of 1.2 MMcfd in 1969 from Miocene clastics at 4,400 ft and 50 Mcfd from about 8,000 ft. This well is 40 km northeast of Clark.

In 1989, the deepest test in the Philippines was completed as a dry hole in Oligocene sediments at 18,360 ft. This well is also in the Victoria area, just north of Amoco's well. The basin has ample sedimentary section to generate hydrocarbons (Fig. 2) [260,083 bytes].

Other gas shows have been logged in years gone by in wells such as Oriental et al. Cuyapo 1 (1983) and the Union Luisita 1 (1964). Of greater importance for the subject NGP, however, are the strong gas shows that were found in the two wells drilled in Manila Bay in 1995-96. More importantly, the latter shows were in limestone reservoirs, which until then had not been favored as even a possibility of being present.

As in many parts of the Philippines, clastic reservoirs are not favored because of their dirty, argillaceous, wacke-like composition. The presence of good reservoir potential will likely be the key to success. Often overlooked are the presence and significance of Middle Miocene to Pliocene reef limestone outcrops in the area north of Clark and adjacent to the Zambales Mountains.

These outcrops-a single seismic line south of Clark that comes up on the west flank of the basin (and has reef-like seismic evidence), together with the Manila Bay wells even farther south-demonstrate the presence of a Miocene-Pliocene stratigraphic section that can contain reef horizons. They also suggest the presence of a carbonate shelf along the west flank of the basin and beneath the BCMC NGP.

Fortuitously, the BCMC area might also have Miocene sandstone reservoir potential.

Within the Central Valley basin, the Oriental Cuyapo well flowed gas-cut (C4) salt water at a rate of 1,470 b/d.

In the Union Oil Tarlac 1 test, drilled four miles down the south plunge and off the east side of the axis of the Tarlac anticline, Miocene core analyses indicate some of the best sandstone reservoir characteristics observed in the Philippines. A core in Miocene sandstone at 1,800 ft in the Tarlac 1 well, demonstrates permeabilities ranging as high as 3,300 md and porosities of up to 25%.

Existence, size of traps

It is almost too good to be true that structural traps of quite significant size are indicated right on the doorstep of the Clark Economic Zone. In 1958, geologists for San Jose Oil Co. mapped the presence of a surface anticline they named Bamban.

This feature is some 15 miles in length and has critical west flank width of about three miles. Based on surface interpretation it is possible that the Bamban anticline has an areal closure of about 15,000 acres and a vertical closure of up to 800 ft (Fig. 3) [192,678 bytes]. This structure was shown to have a gravity positive anomaly associated with its crestal area in 1958 and again by a survey survey in 1996.

Structures of this magnitude, with reasonable reservoir thicknesses (50 ft) could have gas resource potentials ranging between 250-450 bcf.

Immediately south of Bamban is a trend of gravity positive anomalies with no surface expression, lying between Bamban and Manila Bay. The largest of these anomalies is here called the Angeles prospect lead. It is immediately south of Clark and has a contour closing of about 33,000 acres. On the south plunge of this contoured anomaly is the only seismic line surveyed to date, across a part of the west flank of the basin. This is Line CV 4 shot by Houston Oil and Minerals in 1977. The data quality appears good, and reef interpretations have been made in the Miocene-Pliocene section.

Needs for evaluation

It is believed that a minimum of 100 line km of seismic acquisition is needed on the Bamban anticline and the Angeles lead. The historic record (Union and others) demonstrates that drilling on surface work alone was unsatisfactory and nearly always resulted in off-structure wells at depth. Subsequent to satisfactory seismic results, one well with an optional second test would be required to evaluate the concepts and prove or disprove the presence of commercial volumes of gas.

Economic considerations

The electric energy budgets for Luzon as prepared by the National Power Corp. demonstrate that a growing electric energy gap will commence to take shape in the year 2004. It could occur a year sooner.

The major Luzon power grids cross the subject NCP. There are also local generation plants within and adjacent to the area. A comparison of the various electric generation costs based on the type of fuel on a kilowatt hour basis is tabulated as follows (Napocorp):

Coal = 0.65 centavos/kw-hr

Bunker oil = 1.00 peso/kw-hr

Geothermal = 0.65 to 1 peso/kw-hr

Diesel oil = 2.50 pesos/kw-hr.

These suggest that, on an energy equivalent basis, gas could be priced as follows on a "heads-up" basis with the above sources:

Coal = gas at $1.90 (U.S.)/Mcf

Bunker oil = gas at $3.13 (U.S.)/Mcf

Geothermal = gas ranging between $1.90 and $3.13 (U.S.)/Mcf

Diesel oil = $5.90 (U.S.)/Mcf and higher

It is apparent therefore, that gas marketed in the range of $1.90 to $2.50 (favored) would be very competitive relative to other sources of electric energy generation in the BCMC area.

Conclusion

There appears to be good reason to focus on gas exploration in the Philippines, in that specific area lying between Manila Bay and the Clark Special Economic Zone, both from a geological point of view and a commercial point of view.

Economic analyses for 15-year life spans of successful gas exploration projects in the subject area indicate very high internal rates of return and returns on investment of six to one or more.

The Author

Ed Durkee has spent nearly 45 years in oil and gas exploration. He has worked on all continents except Antarctica and in most of the world's principal oil provinces. Since 1987 he has concentrated on the Pacific Rim in New Zealand, Papua New Guinea, and Southeast Asia. He heads E.F. Durkee & Associates Inc. in Manila and is a director of Pacrim Energy NL, Brisbane. He holds geology degrees from the University of Wyoming.

Copyright 1999 Oil & Gas Journal. All Rights Reserved.