Oil discovered in south Cebu

"Australian firm Gas2Grid Limited, through its website, announced that the Department of Energy (DOE) has recognized the oil exploration in central Cebu as an oil discovery, as well as the energy department's extension of the firm's service contract for one year.

The recognition of the oil discovery opens the possibilities of the province having a commercial oil field.

"The Company advises that the Philippine Department of Energy (DOE) has formally recognized Malolos-1 as an oil discovery and approved an extension of SC (Service Contract) 44 in order to conduct oil production with the aim of establishing a commercial oil field," the foreign oil producing firm said in a statement posted via www.gas2grid.com.

Local energy officials, however, have not received the official report from their head office.

DOE- 7 Regional Director Antonio Labios said he will reserve his comment and assessment on the discovery until he gets hold of the official report from their head office."


http://www.philstar.com/cebu-news/2014/01/10/1277135/oil-discovered-south-cebu

http://www.gas2grid.com/irm/content/philippines.aspx?RID=219

I believe that the oil will be consumed internally and not exported, thus negating the need to import so much.

However, it is an Ozzie company so it does depend on how much the local or national government is applying taxes.

It could too, of course, give a boost to local employment.


According to the blurb : profit share is 60% DOE/40% Contractor

Profit share, according to the blurb: 60% DOE/40% Contractor

Exactly.

There's young and young. But this oil field appears to be in what one might call relatively recent sediments (Miocene). And therefore post date some of the older rocks on the island which are Jurassic in age at the earliest.

To be honest I don't know exactly how these Philippine plates formed originally. Wether they are fragments from another plate or have been created anew by volcanic activity, or a mixture of the two, I don't know. Something I want to find out. But one thing is for certain, the rocks that form the islands are all of differeing ages, just like anywhere else. So on Cebu their are a range of years for the range of differing rocks.

Jurassic being 150 to 200 million years ago.

Miocene being 23 to 5 million years ago. In terms of geological time this oilfield is very recent.

There are examples in Java and Sumatra of back arc basins containing hydrocarbon reservoirs.

Miocene oil fields aren't uncommon either.

A couple of years ago, a British survey ship spent some months checking data that the government had received from oil exploration companies and it strongly believes that there are explorable deposits under the Tanon Strait between south Cebu and Negros, between Cebu and Mindanao and down the west coast of southern Mindanao. These are in addition to the fields around Palawan and the Spratleys.

But knowing/strongly suspecting that deposits are there and drilling for them are two entirely separate things as local politics rears is ugly head. The south Cebu deposit will require licences issued by the mayors of all the affected communities who will very likely demand a percentage of the profits - and that percentage will not be paid out of the government's share. And since it is almost certain that the foreign oil producer will face all the financial risk, it may not be profitable for them to proceed. The intransigence of local politicians was very likely one of the factors that led to Shell and BHP Billiton's pull-out from Palawan.

It looks to me like, seismic data has already been aquired and licenses have already been granted and at least one well drilled which has been designated a Discovery well (meaning there is a proven oil column in place of a decent thickness and quality that will flow to surface). It also looks like the Ozzie operator has applied for time to continue evaluating the geological structure, by further drilling, in the belief that the oil is in a large enough pocket to warrant investing any more of their money in pursuit of production.

It is entirely possible that the Mayors here have seen sense and realise that the discovery is potentially beneficial to the region and arent being too greedy to pee this company off? Maybe?

""The Company advises that the Philippine Department of Energy (DOE) has formally recognized Malolos-1 as an oil discovery and approved an extension of SC (Service Contract) 44 in order to conduct oil production with the aim of establishing a commercial oil field," the foreign oil producing firm said in a statement posted via www.gas2grid.com".

Having said that, the reservoir rock appears to be Miocene in age but the oil thats in it could easily be older.

I like the way they are flaring off in the jungle.....

I wouldn't be counting any chickens just yet This is the Philippines and permits and licences issued by local Mayors are required for absolutely everything and my reading of Biliton's withdrawal statement indicates that whilst Biliton had DoE permits and licences, the local Mayor wanted too high a price for his signature.

The last people to be counting any chickens will be the operator Gas2Grid who is piling money into the project. These guys take business risks but dont count chickens before they have hatched. You can be sure that theyvwill be only too aware of BHPs experiences.

As things stand the exploration procedure is going to form and is in an advanced stage. It could fold purely owing to establishing lack of lateral extent. Could...but if they have done their homework they will already have a shrewd idea.

Who knows, WW 3 could start next week. How about an upbeat story or isnt that permitted?

Lets wait and see before poo poo-ing this.

Anyone recall the reason BHP pulled out?

The company has an ethical disdain for bribery.

Here you go, John:

Energy Giant BHP-Billiton Succumbs to Local Philippine Politics (Energy Tribune)
BHP Billiton wants out of Cinco drilling (Philippine Inquirer)
Australia's BHP Billiton withdraws from group exploring oil off Palawan (Interaksyon)

You may recall I posted a thread on this very topic ( BHP backing out ) some months back. Yes, they backed out for that reason.


http://www.british-filipino.com/sho...itics&p=38388&highlight=BHP+bribery#post38388

That doesnt mean that every other oil company on the planet would take the same approach.

I agree but PHP only had to deal with one local entity, Gas2Grid will have to deal with quite a few more. Some of the Mayors support Aquino's Liberal party whilst those further west are aligned with former Governor Garcia who supports Estrada/Binay.

Nevertheless I hope it all works out to everyone's satisfaction.

How do you know if the Mayors havent already been dealt with?

Gut feeling with a slight sense of deja vu.

Oil companies and bribes go back a long way in time. Deja vu applies each way. There is nothing new here. Some choose to take an ethical approach. Others don't and all shades in between.

Also, having seen BHP pull out might have softened the stance of some of these Mayors.

2 Pages from RIGZONE

Its there, wether the Mayors want to faff around or not.

http://www.rigzone.com/news/oil_gas...Oil_at_Malolos1_Well_in_SC44_in_Cebu/?pgNum=0

http://www.rigzone.com/news/oil_gas...Oil_at_Malolos1_Well_in_SC44_in_Cebu/?pgNum=1

Well that's all well and good but if the local Mayors aren't on-side then watch out for eye-wateringly high demands for the licences and permits once this news gets out.