Commercial viability of onshore Cebu oil discovery still unknown – DOE official
Hold your horses.
There's no reason yet to be overly excited about the new oil discovery by Australian firm Gas2Grid Ltd. in its onshore Cebu oil field in the absence of tests to determine if the oil field is commercially viable, an Energy official said Thursday.
In a statement posted on its website, Gas2Grid said the Energy Department formally recognized Malolos-1 under service contract (SC) 44 as an oil discovery, which extended the contract by 12 months starting January 28.
"It's an oil discovery during their drilling October to November last year," Undersecretary Ramon Allan Oca told GMA News Online.
"We are happy with the discovery, but it's too premature to say if it is commercially viable. They still have to find out how big the oil reserves are," he added.
Gas2Grid said it produced oil on short term test and initial assessment of the oil volume potential showed the Malolos oil field is a “contingent resource” oil – lowest estimate is 4 million barrels, best estimate is 12 million barrels and highest is 42 million barrels.
With the discovery, Oca said Gas2Grid's next step is to appraise the reserves. "They have to drill additional wells...which would entail more spending," he said.
Part of Gas2Grid's forward plans is to engage the services of an independent expert "to certify and convert some of the contingent resource of oil in place into proven, probable and possible oil reserves."
It also targets to start lengthier oil production tests to know if the reserves are of commercial quantity and quality, which will cost $500,000 to $1 million.
"It is now a high priority to appraise the Malolos oil field and actively explore the surrounding surface anticlines, which are also very attractive exploration targets," Gas2Grid managing director Dennis Morton said in a statement.
He said funds raised from the sale of oil during the test production period will generate revenue to finance additional SC 44 operations.
The firm is also considering to reduce its 100-percent interest in SC 44 through farmout arrangements to complete the appraisal and development work for the oil field. – VS, GMA News