PHILIPPINE CASE STUDY SULU SEA AND EAST PALAWAN BASINS

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1 PHILIPPINE CASE STUDY SULU SEA AND EAST PALAWAN BASINS GUILLERMO H. ANSAY and EDITHA S. ABANGAN Department of Energy Philippines 4 th Petroleum Policy and Management Seminar 4-77 October 2005, Hua Hin,, Thailand OUTLINE Sulu Sea Case Study Exploration Activities in Sulu Sea Basin 4 th Philippine PPM Workshop PPM Plans and Programs Participation on other Case Studies Gas Field Development Offshore Field Decommissioning

2 20 0 m Sulu Sea Case Study 1000m 200m REED BANK PANAY 1000m 200m PALAW AN Section Line 1000m SULU SEA 1000m 200m M IN D AN AO BORNEO Sulu Sea Case Study NW 0 East Palawan Basin Balabac Bancauan Cagayan Ridge Sulu Sea Basin Sandakan Tawi-Tawi SE 4 8 Plio-Pleistocene Middle to Late Miocene Paleocene-Early Miocene East Palawan Basin Sub-basins: Balabac & Bancauan Area: 92,000 sq km Max. sediment fill: 3.5 km Sulu Sea Basin Sub-basin: Sandakan Area: 115,000 sq km Max. sediment fill: 6 km

3 Exploration Activities in Sulu Sea Basins Service Contracts SC 41 Basic Consolidated SC 56 BHP Billiton Petroleum Exploration Activities in Sulu Sea Basins PECR-2 Opening: Aug Closing: Nov Areas Offered 3 in the Sulu Sea region 1 in NW Palawan Average acreage 13,500 sq km 0 km 200 km AREA 1 14,760 sq km AREA 3 13,020 sq km AREA 2 13,560 sq km AREA 4 12,649 sq km

4 4 th Philippine PPM Workshop March 2005, Manila Main Topics: Field Development Planning Petroleum Fiscal Systems Economic Incentives for Gas Flaring Reduction Development Options for Sulu Sea Region Resource Persons: Mr. Tore Bjordal Mr. Stig Svalheim 4 th Philippine PPM Workshop Participants: Cambodia (3) Thailand (2) China (3) Vietnam (2) Indonesia (2) PNOC (5) Korea (2) DOE (10) Malaysia (2)

5 Expert Visit Short Course on Sequence Stratigraphic Analysis Jan 2005, Manila Petronas Mr. Robert Wong Hin Fatt Mr. Othman Ali Mahmud DOE (13) and PNOC-EC (2) Philippine PPM Workshop Accomplishments The main objectives of this case study will be to address the geological uncertainties of the nominated frontier area, to evaluate the appropriate incentives to attract companies to explore in such an area and an evaluation of the potential impacts on the Philippine society, both locally and as a nation.

6 Philippine PPM Workshop Challenges Data requirements and availability Resource Assessment Development Options Economic Analysis Resource Management Strategies Licensing, Contractual and Fiscal Conditions Philippine PPM Workshop Benefits Data Resources Development and Marketing Strategies Economic Applications

7 PPM Plans and Programs Expert Visit Reservoir Management Natural Gas Management 5 th PPM Workshop 1 st Qtr of 2006 Promotion Dissemination Seminar 1 st Qtr of 2006 Project Report Participation in other Case Studies China Case Study (3WS) June 2005 Indonesian Case Study (3WS) July 2005 Cambodian Case Study (5WS) 29 Aug 2 Sept 2005

8 Gas Field Development Gas Fields in the Philippines Power Generation Malampaya Ilijan,, Sta Rita, San Lorenzo (2700 MW) San Antonio Echague, Cagayan (3 MW) Libertad (proposed) Bogo, Cebu (1.75 MW) Transportation CNG Stations Mother station (Batangas) Bus Transport 200 buses (target) CNG Buses Ashok Leyland OEM Demo Bus under the DOE-Ashok Leyland Cooperation Daewoo Repowered CNG Demo Bus under the DOE-NGVI, Inc. Cooperation

9 CNG Vehicles Diesel-fueled Isuzu Hi-Lander vehicle converted to a dedicated (100%) natural gas. Converted PNOC-EDC Shuttle Bus to Bi-Fuel (100% Natural Gas or Gasoline) PNOC-Petronas Malaysia ENVIRO Teksi 2000 OEM Converted DOE Nissan Patrol Vehicle to Bi-Fuel (100% Natural Gas or Gasoline) Converted DOE Shuttle Bus to a Dedicated (100%) Natural Gas Vehicle OFFSHORE FIELD DECOMISSIONING OR CESSATION ARRANGEMENT

10 Abandonment and Decommissioning Abandonment Plan Ownership of Platform Abandonment Cost Abandonment and Decommissioning (New Model Service Contract) Section 7. h Include in the Overall Development Program,, submitted to the DEPARTMENT for approval, a provision for abandonment and payment of abandonment costs.. It shall provide that beginning on the Date of Commencement of Commercial Production the estimated abandonment and decommissioning cost of the Oil Fields and/or Gas Fields in the Contract Area shall be determined (with annual reviews and adjustments thereafter) and accrued and recovered annually as a Operating Expenses over the productive life of the Oil Fields and/or Gas Fields. In this regard, the CONTRACTOR shall be responsible in the proper abandonment and rehabilitation of all sites affected ed by its Petroleum Operations.. For this purpose, CONTRACTOR shall establish and maintain a sinking fund in the form of deposit account within one (1) year after the commencement of commercial oil or gas production.

11 Abandonment and Decommissioning (New Model Service Contract) Section 15.3 The DEPARTMENT shall have ownership of any cost recovered assets and materials, equipment and facilities which it elects to retain after the termination of this Contract. However, all other materials, equipment and facilities which the DEPARTMENT does not elect to retain shall be removed and disposed by the CONTRACTOR within one (1) year after the termination of this Contract, or within the period agreed by the Parties. THANK YOU