A COUPLE of weeks ago, on Jan. 15 to be specific, this paper’s daily editorial took the government and the consortium that operates the Malampaya gas field to task for their evident reluctance to provide any updates about the outcome of the nearly $1-billion exploration project being undertaken there. The SC 38 Consortium, led by Prime Energy Resources Development B.V. in partnership with UC38, PNOC Exploration Corp. and Prime Oil and Gas Inc., had convinced the government in February last year to grant a 15-year extension up to 2039 on the Service Contract (SC) 38 that covers the Malampaya field on the back of the promised investment in three new exploration wells, which were started immediately and were supposed to be finished by October or November.
When October and November passed without comment from either the Prime Energy consortium or the Department of Energy, the assumption was that what everyone with some expertise — particularly the field’s former operator, Shell Exploration B.V. — already thought, that the Malampaya field is almost exhausted and there is no new gas to find there was probably correct. However, as the Jan. 15 editorial pointed out, the contract holder and the DOE had an obligation to disclose the status of the project, good or bad, as the natural gas resources are public assets, and their state has a profound impact on energy policy and planning — and consumer electricity bills — for the foreseeable future.
That editorial was published on Thursday, Jan. 15, and exactly four days later, on Monday, Jan. 19, President Ferdinand Marcos Jr. triumphantly announced that one of the wells had made a “major discovery” of new gas, the first in more than a decade, about 5 kilometers from the existing Malampaya platform.
I will not be convinced that the timing of that announcement was at all coincidental. However, let’s move on.
Marcos hailed the discovery as giving “fresh momentum to our efforts to secure a stable and reliable energy supply for the country,” and went on to say that based on the initial testing that indicated a flow rate of 60 million cubic feet (MCF) per day, “this indicates that the well has the potential to produce even more, confirming it is a high-productivity resource comparable to the original Malampaya wells.” That conclusion is quite the optimistic stretch, and I’m not sure where the president got that one, because subsequent analyzes of the reported find have been rather more down-to-earth.
I am not in the habit of promoting the work of our competitors, but there is a worthy exception in this case. Myrna Velasco over at The Manila Bulletin has been following this story closely and has written a couple of extremely detailed technical explanations of what is happening out there northwest of Palawan, especially her column from Monday, Jan. 26. It is excellent and informative reading, but Myrna is kind of a big nerd, so it might be hard for the average person to follow, if his need to know how energy works doesn’t extend past whether or not the light comes on when he flips the switch.
Here is a perhaps more user-friendly explanation. The new gas find has an estimated 98 billion cubic feet (BCF) of reserves, which is a substantial amount to be sure, and everyone who was rather certain it did not exist, myself included, is happy to have been wrong about that. The amount of gas found and its proximity to the existing Malampaya complex suggests, however, that it is not really a “new” discovery, but rather a heretofore undiscovered pocket of the existing reservoir. Whether there is more or not is essentially unknowable at this point — President Marcos should have probably not said otherwise in his announcement — because the recent discovery simply highlights that even after a great deal of sophisticated geological analysis is carried out, the only surefire way to determine if there is gas to be found or not is to punch a hole in the Earth and see if anything comes out.
Even though there is an estimated 98 BCF in reserves beneath the new well, that does not mean that every drop of that can be harvested. The recovery rate for gas wells of the “original gas in place” varies greatly depending on conditions; Malampaya’s recovery rate is actually on the high side, about 80 percent. Thus, if we use that figure as a thumbnail — which I believe most other recent analyzes have, although I am not entirely certain of that — and assume that the 60 MCF per day production rate already given is a reasonable estimate, then the new find extends the life of the Malampaya field by about three-and-a-half years. In other words, instead of running out at the end of this year, it will continue to supply gas until about mid-2030, about 30 percent longer than originally expected.
As everyone has observed, gas is gas, and an additional amount of it in any volume is welcome. However, here is another indicator of why no one should get too excited about this latest “major discovery.” Natural gas has to be liquified for transport by ship or pipeline, and so the unit of measure changes from cubic feet to metric tons. One metric ton of liquefied natural gas (LNG) is approximately equal to 48,000 gaseous cubic feet, so the 60 MCF/day the new gas well could produce is 1,250 metric tons of LNG per day. That sounds like a lot, but the country’s biggest gas plant, the 1,200-megawatt Ilijan plant in Batangas, uses 3,072 metric tons of gas per day at full capacity.
At best, the new Malampaya supply makes a dent in the Philippines’ imported fuel needs, but it does not actually do that much to “secure a stable and reliable energy supply for the country.” Every little bit helps, of course, but it is important not to make more of it than what it is.
ben.kritz@manilatimes.net
Bluesky: @benkritz.bsky.social
