Shell probing oil reserves at Malampaya field off Philippines

Oct. 15, 2001
On the eve of the official inauguration of the $4.5 billion Malampaya deepwater gas-to-power project in the Philippines, operator Shell Philippines Exploration plans to begin tests on an exploration well that it hopes will provide better data on the 50 million bbl of oil reserves.

By David Young
OGJ Online

MANILA, Oct. 15 -- Shell Philippines Exploration plans to begin tests soon on an exploration well that it hopes will lead to development of 50 million bbl of oil reserves at Malampaya field off the Philippines.

On the eve of the official inauguration of the $4.5 billion Malampaya deep water gas-to-power, SPX said the extended test, if successful, will lead to a further $600 million investment bring the oil ashore via an FPSO.

The targeted area in the complex Malampaya reservoir lies under the existing gas producing area in a narrow strata, into which a 1,000 m horizontal well will be drilled. The well, M10, was suspended several months ago to allow completion of the five producing gas wells. It is being drilled 5 km west of the gas wells in an oil rim that has an estimated 200 million bbl in place.

The hole will be tested for 105 days. Shell expects a 25,000 b/d flow, which will go into the dynamically positioned tanker Stena Nautica.

The well is being drilled by the Atwood Falcon, owned by Atwood Oceanics, which was used to drill the existing gas wells and has been under contract to Shell for the past 3 years.

Shell said another well would be needed to bring the reservoir into production.

David Greer, SPX managing director, said the oil is high in hydrogen sulfide and would require treatment on an FPSO before being exported by tanker. Associated gas would be tied into the Malampaya gas production platform and then exported through the 504 km pipeline from Malampaya to Batangas.

Shell, a Royal Dutch/Shell Group subsidiary, has 45% of the project. Greer revealed that Shell is in advanced talks with its partners, Texaco Inc. (45%) and the Philippines National Oil Co (10%), and with potential customers, to build a 100 km land pipeline.

The line would take Malampaya gas from the shore terminal at Batangas to Manila, where it could be used in the Sucat power station. The proposed Batman pipeline would allow Shell to bring Malampaya to its full production rate of 500 MMcfd. A proposed 1,000 Mw gas-fired power station would replace an existing smaller oil-fired unit, with Shell's Intergen subsidiary likely to hold a substantial interest.

Philippines President Gloria Macapagal-Arroyo is due to inaugurate the Malampaya project Tuesday with warships and military aircraft patrolling the area.

Malampaya is 50 km northwest of Palawan Island and about 600 km southwest of Manila. It was discovered on block SC38 in 1992 and has reserves of more than 3 tcf of gas and 120 million bbl of condensate.

Production from a subsea manifold in 850 m of water will be transported to the production platform in 43 m of water.

The platform is a concrete gravity structure built at Subic Bay and mated to a steel topside built in Singapore. At 11,500 tonnes, the topside deck was the heaviest structure installed using the "float-over" technique (OGJ, Apr. 30, 2001, p. 78).

The Malampaya topsides will separate gas and condensate. The condensate will be temporarily stored in the concrete gravity structure caisson shells. It will be transferred to tankers via a catenary anchor leg mooring (CALM) buoy.

The dry gas will be moved via a 504-km, 24-in. pipeline to the onshore gas terminal at Batangas on Luzon Island. After treatment, it will supply three power stations nearing completion.

The offshore facilities and pipelines cost $2 billion. The rest of the $4.5 billion investment involves construction of three power plants. Korea Electric Power Co. is building a 1,200-Mw gas-fired power plant at Ilijan, and First Gas Power Corp. is constructing a 1,000-Mw plant at Santa Rita, both in Batangas. Manila Electric Co. will have a 500-Mw plant in the Calabarzon region.

The project is estimated to generate $10 billion in revenues for the Philippines government over the next 20 years and cut the country's dependence on fuel imports, mainly high-sulfur coal and fuel oil, by 20-30%.

It also will cut $670 million/year from the nation's energy import bill of $2.5 billion/year, as well as bring in $420 million/year until 2021 in royalty payments from the 504-km, 24-in. pipeline connecting the platform to the onshore gas terminal.

Contact David Young at [email protected]