Upstream oil and gas activity in the Philippines has been gathering pace this year, with the Manila government launching a new licensing round to international bidding.

A new seismic shoot also been acquired that will provide valuable data on some of the blocks available.

The Philippines is offering 11 blocks to the international market under the 5th Philippine Energy Contracting Round (PECR5). The blocks are from a variety of regions, including a frontier area onshore along with shallow and deepwater areas.

Guillermo Ansay, chief of petroleum resources development division at the Philippines’ Department of Energy (DOE), said that his country has a stable fiscal system that he believed would be attractive to foreign operators.

The 11 blocks up for grabs are located mostly in Luzon. These are: Area 1 offshore southeast Luzon; Areas 2 and 3 in the Masbate-Iloilo area; areas 4 and 5 in northeast Palawan; Area 6 in southeast Palawan; Area 7 in West Palawan; and areas 8, 9, 10 and 11 in West Luzon. Of these, areas 7, 8, 9, 10 and 11 are in the West Philippine Sea.

Ansay highlighted some of the most attractive blocks in PECR5, including Area 2, which is an onshore block in the Iloilo Basin that is covered by existing seismic.

He also pointed out Area 1 in the Ragay Basin, which is a shallow-water development as well as deepwater frontier block Area 9 in the West Luzon Basin. Area 7 is also noteworthy, he added, because it holds a proven petroleum system in the Reed Bank play.

The Philippines is a relatively safe place for investors as the country has a set of fiscal terms that has not changed for 70 years as well as substantial domestic demand and existing large undeveloped fields, Ansay continued.

The bidding deadline for the 11 blocks is Feb. 27, 2015, and the government plans to award the blocks by the end of the first half of 2015.

However, one potential obstacle for winners of acreage in the West Philippine Sea is the ongoing territorial dispute with China. Philex Petroleum Corp. subsidiary Forum Energy, for example, has been having difficulty progressing with a drilling program for Service Contract 72 (SC 72) at the Recto Bank area in the West Philippine Sea.

Energy Secretary Carlos Jericho L. Petilla said the five areas on offer here lie within the Philippine Economic Zone and are near Luzon. If other countries like China protest, Petilla said the matter would likely be referred to the United Nations for resolution.

Seismic Survey

Australia’s Searcher Seismic and Norwegian partner SeaBird Exploration have completed the Pinatubo nonexclusive 2-D seismic survey in the West Luzon Basin offshore the Philippines.

The 3,510-km (2,181-mile) survey covered PECR5 areas 8, 9, 10 and 11 and “offers modern seismic data” over the West Luzon Basin. This is the first time a regular seismic grid has been recorded over this new frontier exploration province, Searcher said.

The survey covered the entire basin from the near-shore areas out to a water depth of nearly 4,000 m (13,123 ft). The Pinatubo long offset broadband seismic survey will provide operators with an “opportunity to evaluate the petroleum potential of this completely undrilled basin,” Searcher added.

Until now only limited seismic lines existed, most of which were recorded more than 30 years ago and did not image the prospective section of the basin.

“The current fore arc setting of the West Luzon Basin had previously raised a number of concerns regarding the hydrocarbon exploration potential of the area—resulting in almost no exploration activity. However, a review of the regional tectonics suggests that the area is related to the Mindoro Basin, where a proven petroleum system is present, and therefore a significant hydrocarbon potential may be in place,” said Odd Arne Larsen, director of Searcher.

“This new exploration model, combined with the new Pinatubo seismic data may provide a completely new understanding of the petroleum prospectivity in the Luzon Basin,” Larsen added.

Fast-track data will be available in December 2014 to allow for time to evaluate the blocks on offer under PECR5 before the Feb. 27 deadline.

SC6 Stake

Following arbitration, Australia’s Peak Oil & Gas now holds equity in SC6 Cadlao in the northwest Palawan Basin offshore the Philippines, which contains the Cadlao redevelopment project. The operator of SC6 Cadlao is Cadlao Development Company Ltd. (Cadco), formerly Blade Petroleum.

Peak now has a prospective stake of 25% in SC6 Cadlao “pursuant to the Cadlao farm-in agreement (FIA) and the right to earn a further 25% in SC6 Cadlao or, alternatively, to receive a cash payment of around US $6.3m, pursuant to the Cadlao FIA.”

Peak also has the right to acquire an aggregate 16.25% economic interest in SC6 Cadlao through its partial ownership of VenturOil Philippines and the related shareholder agreement.

Malolos-1 Progress

The Malolos-1 well operations in the Malolos oil field in SC 44 in Cebu continues with a “daily cycle of wellhead pressure buildup followed by gas flaring and wellhead pressure reduction which has been associated with some oil production,” Gas2Grid said.

Malolos-1 swabbing operations were suspended after sufficient production data was gathered to support an application to the DOE to continue operations within SC 44 to establish the best completion technology and fully appraise the oil field.

During the summer, the Malolos-1 well was shut-in overnight resulting in the wellhead pressure building up to between 100 psi and 220 psi. The pressure buildup is associated with an increase in oil and natural gas in the tubing. The gas was flared daily to lower the wellhead pressure to zero and then shut-in again overnight. The gas is being sourced from solution within the oil, which has now flowed to surface under natural pressure.

Gas2Grid recently met with officials from the DOE and separately submitted an application, under the terms of SC 44, for a further period in order to determine the best completion technology to be applied to well completions during field appraisal and development, which will involve seismic acquisition followed by drilling. The company will also seek a farminee to fund field appraisal and development.