The DOE chief said in an interview that Exxon has indicated certain “challenges” in its service contract area.
Almendras said ExxonMobil’s report has been submitted to the department. The report covers the results of the drilling of its four exploratory wells.
DOE is currently reviewing ExxonMobil’s report on the viability of the drilling project. “There are some challenges; we’re reviewing it,” the Energy chief said without providing details of the Exxon report.
For his part, Energy undersecretary Jose Layug Jr. said the Exxon-led joint venture is discussing options on the project.
Apart from ExxonMobil, the other SC 56 consortium members are Mitra Energy (Philippines SC 56) Ltd. and BHP Billiton International Exploration Pty Ltd.
Layug said the joint venture are reportedly in talks on how to proceed with the project. “We’re reviewing their report on the review of the block.” He added that exploration companies like ExxonMobil have been on the lookout for bigger prospects. “The likes of Exxon, Chevron and Shell or the big companies always look for huge fields or reservoirs. We need to see if the Sulu Sea exploration falls within that parameter for a large oil and gas company,” he added. These big companies, Layug explained, usually leave the development small fields to smaller exploration companies.
Layug said most of the fields in the country are marginal, which means these hold relatively small oil reserves. The Malampaya project, with 2.7 trillion cubic feet of reserves, is considered big enough for larger oil companies.
Layug explained that whether ExxonMobil considers the Sulu Sea prospect as small will depend on the size of the reservoir and the cost of producing oil.
Layug said most of the existing service contract areas—particularly those in West Linapacan, Cadlao and Nido—are generally marginal fields and are being developed by smaller companies.
Layug said they expect to complete the review of ExxonMobil report before year ends.
Drilling operations under SC 56 first began on October 11, 2009, while ExxonMobil completed drilling the fourth well, called Babendil-1—in October 2010. This well was drilled to a total depth of 4,092 meters.
With the completion of the Babendil-1 drilling, Exxon has fulfilled all its commitments under SC 56 with the government.
