Forum Energy calls on DOE to lift oil exploration ban in Reed Bank

Forum Energy Ltd., the contractor of Service Contract 72 in Reed Bank, has formally asked the Department of Energy (DOE) to lift the oil exploration ban in the West Philippine Sea.

In a regulatory filing, Pangilinan-led PXP Energy - which holds 77.5 percent controlling stake in Forum Energy - said it has sent a letter to the DOE on Friday to lift the force majeure impose on SC 72.

Forum Energy holds a 70 percent interest in SC 72.

The DOE declared Reed Bank in force majeure in 2014 as part of disputed waters between China and the Philippines.

It encompassed SC 72 in offshore Northern Palawan.

The declaration suspended oil drilling and exploration activities in area as part of disputed territories between Manila and Beijing.

In his letter to Energy Secretary Alfonso Cusi, PXP Energy president Daniel Carlos said the request was in line with DOE a directive to the SC 72 Consortium to make a request to lift the force majeure over the department declared on December 15, 2014.

The consortium comprises Forum Energy and Monte Oro Resources and Energy Inc.

Earlier this December, Cusi signaled the private sector to ask for the oil exploration and develop ban to be lifted from West Philippine Sea. 

Carlos cited the recent signing of a memorandum of understanding between the Philippines and China on joint exploration for oil and gas in the West Philippines Sea during the state visit of Chinese President Xi Jinping on November 20.

“We see the lifting of the moratorium of the force majeure as a positive development for our SC 72 and for the country in general as it will enable Forum and Monte Oro to resume exploration and appraisal activities in SC 72, which include the drilling of two appraisal wells in the Sampaguita gas discovery,” he said.

SC 72’s Sampaguita Gas Field holds substantial volume of potential gas reserves, according to PXP, citing verified data from seismic surveys originally conducted in 2011.

“We expect the drilling of the two appraisal wells to take two to three months to complete. Based on our current studies, Sampaguita has potential reserves of approximately 2.5 trillion cubic feet of recoverable gas,” Carlos said.

“This would be a new source of gas as replacement for Malampaya,” he said, noting that the gas-to-power facility’s output will likely start declining in 2022.

Malampaya supplies the liquefied natural gas requirements of three power plants with a combined generating capacity of 2,700 megawatts in Luzon—enough to meet up to 30 percent of Luzon’s electricity needs, or about 20 percent of the country’s total electricity requirements.

“To be an effective replacement for the Malampaya gas, the development of SC 72 must commence no later than 2027 as it will take at least six years from start of development of SC 72 to first gas,” Carlos said.

“This urgency puts in sharp focus the need to lift the force majeure in SC 72 ...” he added. —VDS, GMA News