Oil rim found beneath Malampaya gas field off Philippines

What is likely to be the Philippines' first commercially viable oil deposits have been found by Royal Dutch/Shell Group in a deep well drilled through its existing Malampaya gas reservoir. Initial well tests from the thin oil rim beneath the gas yielded 8,000 b/d.

By the OGJ Online Staff

LONDON, Dec. 11 -- Royal Dutch/Shell Group has found what is likely to be the Philippines' first commercially viable oil deposits in a deep well drilled through its existing Malampaya gas reservoir.

Initial well tests from the thin oil rim beneath the gas zone yielded 8,000 b/d of 30°-gravity crude, the highest single-well oil production rate in the country since the 1970s.

Shell had predicted 25,000 b/d, but the flow rate was constrained by processing facilities.

The oil well test, performed by the Atwood Falcon rig and Stena Natalita floating storage unit, is believed to be the world's deepest horizontal subsea well test at 850 m below sea level, adding to the records for the Malampaya team.

Development could lead to a further $600 million investment to bring the oil ashore via a floating production, storage, and offloading vessel. Shell is operator with 45%, ChevronTexaco Corp. has 45%, and Philippines National Oil Co.-Exploration Corp. has 10%.

The oil area is under the complex gas producing area in a narrow stratum, into which a 1,000 m horizontal well was drilled. The M10 hole was suspended several months ago to allow completion of five gas wells. The oil well is 5 km west of the gas wells.

Shell said another well would be needed to bring the reservoir into production. Reserves are estimated at 50 million bbl.

Philippines Energy Minister Vincent Perez said, "We are very happy to hear that after almost 30 years we may have found a potentially commercial oil field. This is especially significant because we are trying to wean ourselves from the use of imported energy sources."

Malampaya oil is high in hydrogen sulfide and would require treatment on an FPSO. Associated gas would be tied into the Malampaya production platform and then exported by the existing 504-km pipeline to Batangas.

Malampaya field is 50 km northwest of Palawan Island and 600 km southwest of Manila. It has 3 tcf of gas reserves. Production is from a subsea manifold in 850 m of water to the production platform, in 43 m of water.

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