Prime Energy set to drill 3 wells in Malampaya–exec
By Lenie Lectura – June 24, 2024
from Business Mirror
Prime Energy Resources Development (Prime Energy) is set to drill two wells in the Camago and Malampaya East fields and a third exploration well, approximately 15 kilometers north of Malampaya, in 2025.
“They will be drilled at the same time, total of three. I think it will start middle of next year,” said Prime Energy Managing Director and General Manager Donnabel Kuizon Cruz.
The drilling of the two wells is estimated to cost $800 million while the budget for the third well has yet to be finalized. “The third is an exploration well. It’s included in the plan but the budget for it has to be approved separately,” she added.
A fourth well is possible only after the results of the drilling for the three wells are determined.
“It depends on the outcome next year. If the outcome is very good,” added Cruz.
Prime Energy operates the Malampaya Deep Water-Gas-to-Power Project, the country’s first and only indigenous gas resource off the province of Palawan. The gas field supplies indigenous fuel to four gas-fired power plants in Batangas—Santa Rita, San Lorenzo, San Gabriel and Avion.
Cruz said Malampaya plays a critical role in ensuring that the Philippines is shielded from volatility, the stability of gas prices, and energy security as indigenous gas guarantees fuel supply unlike liquefied natural gas (LNG) which is more vulnerable to market shocks.
She said during strong winds and waves, LNG floating storage and other facilities could be disconnected from their berths and pause the supply of gas to power plants. This is in stark contrast to Malampaya production facilities which had been designed to withstand inclement weather.
During the April heat wave, when the Luzon grid was on yellow and red alert, Malampaya operated at close to 120 percent of its current system capacity. This, she said, allowed Luzon consumers to saved 50 centavos to P20 per kilowatt hour in their electric bills.
“Imagine what would have happened if this weather situation was global and we couldn’t even import LNG,” said Cruz. “By using LNG, we became more vulnerable to market shocks. Indigenous gas prices remain largely stable against these shocks, cushioning our electricity bills from its adverse effects.”
The Malampaya gas project also provides remittances to the government for use in energy development projects.
“For every peso of net revenue or sales from Malampaya gas, 60 centavos is remitted to the government. This amounts to $300 to $500 million annually for use in energy development projects,” Cruz said.
Energy Secretary Raphael Lotilla said energy security is the Marcos administration’s priority and that it will tap renewable energy to achieve its goals.
In the transition to full renewable energy use, Lotilla said the government is pursuing a “robust natural gas strategy.”
“Successful exploration and production activities will not only contribute to the country’s energy security goals but also drive economic growth, create employment opportunities, and generate revenue stream. Ultimately, the Filipino people will be benefited,” said Lotilla.
“Exploration and development of these resources including the building of necessary infrastructure will certainly take time, making it essential to have a reliable energy transition source in the meantime. This is where LNG plays a crucial role, serving as a cleaner substitute for traditional fossil fuels and a more reliable source than renewable energy.”
Malampaya supplies 20 percent of Luzon’s electricity requirements.
