On the 9th of October, 2008, the Philippines started to extract oil once more from its own borders via the activation of 1 of two wells in the Galoc oil field off the coast of Palawan. The Galoc field is estimated to have 10 million barrels of reserve, based on an assessment in 2006 for a 2 well development. The second oil well is expected to start production soon.
They will extract about 17~20,000 barrels of oil per day, meeting 6% of the Philippines 350,000 barrel per day oil requirement. The Galoc Oil field was discovered in 1981 but due to current cost of extraction and the price of oil in the world market then, was not deemed feasible for tapping.
I was watching the local news channel ramping up to the weekend on reports on the Galoc Oil field and public reaction to the news. A lot were happy but there was a majority of skepticism on the part of the public with regards to who will really benefit from the oil. Much of the sentiment is to whether the profits will really trickle down to lowly citizen since royalties goes to the government and this government’s record for graft is not really keeping the public at ease.
According to the DOE however, there is a requirement that the oil must be sold to the local refiners first so that the public can benefit from the low price of their own oil. Roberto Kanapi, spokesman for Shell, said in a tv interview that oil companies will have to test first whether they are capable of refining the oil from the Galoc oil field for local consumption.
I read on an earlier report on the news, that Oil from the field would be sold at market price. Had they not run into production and drilling delays, the consortium could have benefited from the $150/barrel price that was plaguing the market a couple of months back. Now with the effects of the credit crunch in effect, the price of oil has dropped under $100 as doubts as to the world oil demand being sustained because of the financial crisis.
My take on the much delayed Galoc Oil field and other Oil drilling’s is that this should not stop us from moving towards renewable energy sources such as biofuels, wind, solar, geothermal and hydro because given the capacity of those oil reserves, they won’t last our generation and aren’t that friendly to the environment. Our oil production could be likened to plasma for a patient bleeding energy, its good while its there but its just temporary.
Some interesting FAQ’s on the Galoc Oil Field:
Where is the Galoc Field?
The Galoc Field is located in 290m of water to the west of the northern tip of Palawan, and about 50kms west of Culion Island, Republic of the Philippines.
Who is the Operator of the Galoc Field? What is the relationship between the DOE and the Operator?
Galoc Production Company (GPC) was formed in mid 2005 with the primary objective of developing the Galoc Field. GPC concluded a Farm-In Agreement with the Service Contract 14C Galoc Sub Block (SC-14C) consortium in August 2005.
This was followed by an approval from the DOE of GPC as Operator of SC-14C. As Operator, GPC is responsible for the operations undertaken on behalf of the joint venture partners of SC14-C.
This includes engineering, planning, budgeting and operation of field using internationally accepted industry standards, and reporting to the DOE. GPC is also responsible, in conjunction with the DOE, for liaison with other stakeholders and public announcements.
What is the oil quality?
Oil from the Galoc Field is a light medium crude oil with API gravity of 36.1o with 1.7% sulphur quantity. It has a high yield of light ends, such as gasoline, and has been named Palawan Light.
What is the production capacity of the FPSO? What are its specifications?
The production capacity of the FPSO, Rubicon Intrepid, is 25,000 barrels per day. It has a capacity to store 400,000 barrels of oil and is located in the field using a combination of dynamic positioning assistance and a mooring system which allow it to disconnect and sail away to safety during bad weather conditions.
What are the estimated reserves?
Predicting reserves in an oil field over a mile underground invariably leads to a wide range in results. Initial estimates by an independent auditor in June 2006 gave a range of 5 to 14mmbbls with 9mmbbls most likely.
The reserves will be reassessed once sufficient production data is available; meanwhile data obtained during drilling of the wells indicate that the reserves will be revised upwards. This re-assessment of reserves will be once again undertaken by an independent reserves auditor.
What rate will the wells produce at? What is the expected life of the current development?
The two new development wells were produced for a short time earlier this year to clean up the well bores in anticipation of production. The rates and pressure data collected at this time indicate the wells will produce at an initial rate of about 20,000bopd. Given current reserves and production rate estimates, the current development is expected to last between 3 to 5 years.
What is the extent of the subsea equipment installed? Will it affect marine life?
Equipment on the seabed includes valves at the wellheads (”Christmas tree”), a manifold to connect the two wells together into one flowline ( “Riser Base”) and a gravity mooring base. Equipment above the seabed includes the mooring and riser system that connects the seabed equipment to the FPSO. This equipment is all within a 500m radius and will have minimal impact to marine life.
How significant will production from Galoc Field be to oil demand in the Philippines?
Production of 20,000 bbl/day is approximately 6% of Philippine consumption of around 300,000 bbl/day.
Who are involved in the SC-14C Galoc Joint Venture?
Involved in the Galoc Joint Venture are 2 foreign companies, Galoc Production Company (58.3%) and Nido Petroleum Philippines Pty Ltd (22.3%), and 5 Filipino companies, Oriental Petroleum and Minerals Corporation (7.6%), The Philodrill Corporation (7.0%), Forum Energy Philippines Corporation (2.3%), Alcorn Gold Resources Corporation (1.5%) and PetroEnergy Resources Corporation (1.0%).
What activities are there at the field?
There is an Extended Production Test being undertaken to establish the quantity of oil that can be recovered from the field in a commercially viable manner, this quantity being termed Reserves.
Operations in the field will be controlled from the FPSO with the seabed equipment remotely operated. Crude oil will be offloaded to a tanker which will connect to the FPSO once there is quantity stored on the FPSO. This will occur on a regular basis, nominally for 30 hours every 15 days.
A support boat will also operate in the field when not engaged in transporting supplies to and from the onshore supply base at Batangas. The 30-man crew for the FPSO will be transferred to and from the FPSO by helicopter operating from Manila.
Category: Oil, Oil Price
