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Philippines Case Study Philippines Case Study Sulu Sea and East Sulu Sea and East Palawan Palawan Basins Basins Petroleum Policy & Management (PPM) Project Petroleum Policy & Management (PPM) Project Coordinating Committee for Coordinating Committee for Geoscience Programmes Geoscience Programmes in East and Southeast Asia in East and Southeast Asia (CCOP) (CCOP) Dissemination Seminar Dissemination Seminar Redentor Redentor D. Pascual D. Pascual Department of Energy Department of Energy Petroleum Resources Development Division Petroleum Resources Development Division 12 May 2006 12 May 2006 Manila, Philippines Manila, Philippines OUTLINE OUTLINE PPM Project Team PPM Project Team Sulu Sea Basin Case Study Sulu Sea Basin Case Study Project Activities Project Activities Results of Resource Assessment Results of Resource Assessment Results of Economic Analysis Results of Economic Analysis Field Development Options Field Development Options Resource Management Strategies Resource Management Strategies Licensing Strategies Licensing Strategies Recommendations Recommendations CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

PHILIPPINE CASE STUDY SULU SEA and EAST PALAWAN BASINS€¦ ·  · 2006-07-26Philippines Case Study Sulu Sea and East Palawan Basins Petroleum Policy ... Surabaya PHILIPPINES Pacific

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Philippines Case StudyPhilippines Case StudySulu Sea and East Sulu Sea and East PalawanPalawan BasinsBasins

Petroleum Policy & Management (PPM) Project Petroleum Policy & Management (PPM) Project Coordinating Committee for Coordinating Committee for Geoscience Programmes Geoscience Programmes

in East and Southeast Asia in East and Southeast Asia (CCOP)(CCOP)

Dissemination SeminarDissemination Seminar

RedentorRedentor D. PascualD. PascualDepartment of EnergyDepartment of Energy

Petroleum Resources Development DivisionPetroleum Resources Development Division12 May 200612 May 2006

Manila, PhilippinesManila, Philippines

OUTLINEOUTLINE

PPM Project TeamPPM Project TeamSulu Sea Basin Case StudySulu Sea Basin Case StudyProject ActivitiesProject ActivitiesResults of Resource AssessmentResults of Resource AssessmentResults of Economic AnalysisResults of Economic AnalysisField Development OptionsField Development OptionsResource Management StrategiesResource Management StrategiesLicensing StrategiesLicensing StrategiesRecommendationsRecommendations

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

2

Philippine Case Study TeamPhilippine Case Study Team

National ProjectNational ProjectCoordination Coordination CommitteeCommitteeRamon Allan V. Ramon Allan V. OcaOcaIsmaelIsmael U. U. OcampoOcampo

National CoordinatorsNational CoordinatorsGuillermo H. Guillermo H. AnsayAnsayRedentorRedentor D. PascualD. Pascual

Technical TeamTechnical TeamArlene Y. A. Arlene Y. A. MagbanuaMagbanuaEdmundoEdmundo B. B. GuazonGuazonRolando Z. MoralesRolando Z. MoralesJed B. Jed B. AragonesAragonesNeil O. Neil O. PesaPesaAndres O. Andres O. PangilinanPangilinanDemujinDemujin F. F. AntipordaAntipordaIsabel A. B. NicolasIsabel A. B. Nicolas

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

PPM Project Duration: July 2002 to July 2006PPM Project Duration: July 2002 to July 2006

Sulu Sea Basin Case StudySulu Sea Basin Case Study

BORNEO

SULU SEA

PANAY

MIN

DA

NA

O

1000m200m

1000m

20

0m

1000m

200m

1000m200m

REED BANK

PALAWAN

Section Line

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

3

Sulu Sea Basin Case StudySulu Sea Basin Case Study

0

8

4

East Palawan Basin Sulu Sea Basin

Balabac Tawi-TawiNW SECagayan

RidgeBancauan Sandakan

Plio-Pleistocene

Middle to Late MiocenePaleocene-Early Miocene

Sulu Sea BasinSulu Sea Basin

SubSub--basin: basin: SandakanSandakan

Area: 115,000 sq km Area: 115,000 sq km

Max. sediment fill: 6 kmMax. sediment fill: 6 km

East East PalawanPalawan BasinBasin

SubSub--basins: basins: BalabacBalabac & & BancauanBancauan

Area: 92,000 sq kmArea: 92,000 sq km

Max. sediment fill: 3.5 kmMax. sediment fill: 3.5 kmCCOP-PPM Project Dissemination Seminar

DOE-PRDD 12 May 2006

Project ActivitiesProject Activities

WorkshopsWorkshops

Expert VisitsExpert Visits

SeminarsSeminars

MeetingsMeetings

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

4

WORKSHOPSWORKSHOPSWorkshop / Workshop /

DateDate TOPICTOPIC

11stst WS / WS / 13 13 –– 18 Mar 200318 Mar 2003

Introduction of the PPM Project, General Overview Introduction of the PPM Project, General Overview of the Case Study Basin, Upstream Petroleum of the Case Study Basin, Upstream Petroleum Activities in the Philippines, and Resource Activities in the Philippines, and Resource Assessment Activities by the DOEAssessment Activities by the DOE

22ndnd WS / WS / 22 22 –– 27 Jan 200427 Jan 2004

Petroleum Prospect & Play AnalysisPetroleum Prospect & Play Analysis

33rdrd WS / WS / 25 25 –– 30 Aug 30 Aug

20042004

Petroleum Exploration Economics and Economic Petroleum Exploration Economics and Economic ModellingModelling

44thth WS / WS / 14 14 –– 19 Mar 200519 Mar 2005

Development and Production SolutionsDevelopment and Production Solutions

55thth WS / WS / 14 14 –– 18 Mar 200618 Mar 2006

Exploration Strategies & Attracting Investments for Exploration Strategies & Attracting Investments for Exploration in the Frontier BasinExploration in the Frontier Basin

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

1st WS 1st WS –– March 13March 13--18, 200318, 2003 2nd WS 2nd WS –– January 22January 22--27, 200427, 2004

3rd WS 3rd WS –– August 25August 25--30, 200430, 2004 4th WS 4th WS –– March 14March 14--19, 200519, 2005

5th WS 5th WS –– March 14March 14--18, 200618, 2006

WorkshopsWorkshops

5

EXPERT VISITSEXPERT VISITSDateDate TopicTopic Resource Person/sResource Person/s

2222--23 May 23 May 20032003

Petroleum Economics and FullPetroleum Economics and Full--cycle Economic Evaluationcycle Economic Evaluation

Dr. AlfredDr. Alfred KjemperudKjemperud –– The The Bridge Group, NorwayBridge Group, Norway

1414--15 Sep 15 Sep 20032003

Application of Organic Application of Organic Geochemistry to Source Rock Geochemistry to Source Rock Appraisal & Hydrocarbon Appraisal & Hydrocarbon CharacteristicsCharacteristics

Ms.Ms. Supaporn PisuthaSupaporn Pisutha--ArnondArnond ––PTTEP, ThailandPTTEP, Thailand

1717--21 Jan 21 Jan 20042004

Sequence Sequence StratigraphicStratigraphic AnalysisAnalysis Mr. Robert WongMr. Robert Wong Hin FattHin Fatt & & Mr.Mr. OthmanOthman AliAli MahmudMahmud ––PETRONAS, MalaysiaPETRONAS, Malaysia

24 Nov 200524 Nov 2005 Natural Gas Management Natural Gas Management –– the the role of the Governmentrole of the Government

Dr. AllenDr. Allen BeaslyBeasly –– ASCOPE ASCOPE Gas CenterGas Center

77--10 Feb 10 Feb 20062006

Petroleum Reservoir Petroleum Reservoir Management Management –– the role of the the role of the GovernmentGovernment

Mr. JanMr. Jan BygdevollBygdevoll ––Norwegian Petroleum Norwegian Petroleum DirectorateDirectorate

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

1st EV – May 21-23, 2003 2nd EV – September 14-15, 2004

3rd EV – January 17-21, 2005 4th EV – November 24, 2005

5th EV – February 7-10, 2006

Expert VisitsExpert Visits

6

SeminarsSeminars

Kickoff SeminarKickoff SeminarBangkok, ThailandBangkok, ThailandSeptember 2002September 2002

2nd Seminar2nd SeminarPattayaPattaya, Thailand, ThailandSeptember 2003September 2003

3rd Seminar3rd SeminarChangmaiChangmai, Thailand, ThailandSeptember 2004September 2004

4th Seminar4th SeminarHuahinHuahin, Thailand, ThailandOctober 2005October 2005

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

Results of the PPM ProjectResults of the PPM Project

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

7

Objectives:Objectives:Address the geological uncertainties of the Address the geological uncertainties of the basinsbasins

Evaluate the appropriate incentives to attract Evaluate the appropriate incentives to attract companies to explorecompanies to explore

Evaluation of the potential impacts to the Evaluation of the potential impacts to the PhilippinesPhilippines

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

PPM Project PPM Project Sulu Sulu SeaSea--East East Palawan Palawan Basins Case StudyBasins Case Study

Expected ResultsExpected ResultsResource AssessmentResource Assessment

Possible Development OptionsPossible Development Options

Petroleum Policy MeasuresPetroleum Policy Measures

PPM Project PPM Project Sulu Sulu SeaSea--East East Palawan Palawan Basins Case StudyBasins Case Study

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

8

Resource AssessmentResource AssessmentOIL GAS

Prospects/ Million bbl Billion cf

Sulu Sea Leads (Mean) (Mean)Total resources 232 877Discovered Resources 0 0Undiscovered Resources 232 877

Hypothetical (Mapped) Resources 25 169 700

Speculative (Unmapped) Resources 63 177

East PalawanTotal resources 310 836Discovered Resources 0 0Undiscovered Resources 310 836

Hypothetical (Mapped) Resources 23 109 412

Speculative (Unmapped) Resources 201 424

Resource Class

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

Water ResourcesDepth (m) (Mean Values)

Oil (MMbbl) Gas (Bcf)

SS1 1000 93 251 10SS2 2200 259 1310 18SS3 2200 128 724 10SS4 1800 81 498 14SS5 2500 63 388 9SS6 2100 308 1733 8PE1 720 37 1719 7PE2 800 7 402 7PE3 1400 8 660 6

% RiskPROSPECT

Resource AssessmentResource Assessment

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

9

Economic AnalysisEconomic Analysis

Elements:Elements:Production ProfilesProduction ProfilesCost DataCost Data

CapexCapex, , OpexOpex, Sunk Cost, Sunk CostDiscount RatesDiscount RatesInflation RatesInflation RatesOil Price / Natural Gas PricesOil Price / Natural Gas Prices

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

Economic AnalysisEconomic Analysis

Economic Indicators:Economic Indicators:Net Present Value (NPV)Net Present Value (NPV)Internal Rate of Return (IRR)Internal Rate of Return (IRR)Payback or PayoutPayback or PayoutExpected Monetary Value (EMV) or Expected Monetary Value (EMV) or Expected Value (EV)Expected Value (EV)

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

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Economic AnalysisEconomic Analysis

Sulu Sea Basin East PalawanBasin

SS6 Prospect

SS2 Prospect

SS6 & SS2 Prospects EP1 Prospect

Resources 1,733 BCF 1,310 BCF 3,043 BCF 1,719 BCF

ProductionPeriod 21 years 21 years 21 years 21 years

NPV @ 12% $1,234 MM $731 MM $2,050 MM $1,218 MM

IRR 26% 20% 27% 26%

Payback 5 years 7 years 5 years 5 years

TGT $7,837 MM $5,962 MM $12,523 MM $7,776 MM

Parameters

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

Field Development OptionsField Development OptionsDevelopment and Management SchemeDevelopment and Management Scheme

DrillshipDrillship

SemiSemi--submersiblesubmersible

Drilling OperationsDrilling Operations

Perforated Casing Perforated Casing CompletionCompletion

Perforated Liner Perforated Liner CompletionCompletion

Well Completion DesignWell Completion Design

OpenOpen--hole hole CompletionCompletion

Screen & Liner Screen & Liner CompletionCompletion

Reservoir Reservoir Development PlanDevelopment Plan

OILOIL•• solutionsolution--gas drivegas drive

•• gas or water injection gas or water injection

GASGAS•• reinjectionreinjection

•• compressioncompression

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

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Field Development OptionsField Development Options

CGS WHP FSU

OGP

Process & Field FacilitiesProcess & Field Facilities

PipelinesPipelines

Balabac Island

Tawi-tawiIslands

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

Field Development OptionsField Development Options

Source: BHP Billiton (2004)

Deepwater Oil DiscoveryDeepwater Oil Discovery Deepwater Gas DiscoveryDeepwater Gas DiscoverySource: Minerals Management System

Source: Malampaya Oil Rim

Oil and Gas Discovery & ProductionOil and Gas Discovery & Production

Source: Minerals Management System

Shallower DiscoveriesShallower Discoveries

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Field Development OptionsField Development Options

Palawan

Sabah

BalabacIsland

Tawi-tawi

Sulu

MindanaoCagayan de Tawi-tawi

Basilan

Onshore Gas Plant (OGP))

Onshore Gas Plant

(OGP))

Concrete Gravity

Structure (CGS)

Area for Development

Pipelines

Floating Production Storage & Off-loading

(FPSO)SULU SEA

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

Marketing OptionsMarketing OptionsOil Oil -- locally refined or exportedlocally refined or exportedGas Gas -- for power generation or for transportationfor power generation or for transportationTrans ASEAN Gas PipelineTrans ASEAN Gas Pipeline

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

Indian Ocean

Asamera CorridorBlocks fields

Minas / Durioil Fields

MYANMAR

THAILAND

LAOS

Bangkok

CAMBODIA

CHINA

VIETNAM

South China SeaLuzon

TAIWAN

SingaporeBatam

Jakarta

MALAYSIA

BRUNEI

INDONESIA

SABAH

Samarinda

Surabaya

PHILIPPINES

Pacific Ocean

NatunaSea

0 250Km

500

3-4

10 6-8

28SARAWAK

46

Existing or u/c Gas PipelineExisting or u/c Gas Pipeline

Proposed ASEAN Gas GridProposed ASEAN Gas Grid

Gas Reserves Gas Reserves TcfTcf

Legend:Legend:

13

Resource Management Resource Management StrategiesStrategies

Resources (Oil and Gas)Resources (Oil and Gas)

Oil Companies (what kind?)Oil Companies (what kind?)

PromotionPromotion

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

Candidate Oil CompaniesCandidate Oil Companies

Already presentAlready presentBuyers of Philippine DataBuyers of Philippine DataPresent in Present in neighbouring neighbouring countriescountriesPast association with the PhilippinesPast association with the PhilippinesWith interest in similar projects elsewhereWith interest in similar projects elsewhereHave a strategy & portfolio where a Philippine Have a strategy & portfolio where a Philippine project would fit inproject would fit in

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

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PromotionPromotionTop 10 questions about entering the Sulu SeaTop 10 questions about entering the Sulu Sea--East East

PalawanPalawan Basins (asked by the Board Members)Basins (asked by the Board Members)

1. The Sulu Sea1. The Sulu Sea-- East East PalawanPalawan Basin, are you @X%&# insane?Basin, are you @X%&# insane?2. What will our shareholders think?2. What will our shareholders think?3. What3. What’’s the potential?s the potential?4. How much will it cost?4. How much will it cost?5. What are the lease terms?5. What are the lease terms?6. Who6. Who’’s going to work it?s going to work it?7. Can you get the data, cheaply?7. Can you get the data, cheaply?8. We are not going to operate are we?8. We are not going to operate are we?9. You will get partner and sell down, right?9. You will get partner and sell down, right?10. Is it easy to deal with the DOE?10. Is it easy to deal with the DOE?

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

Source: Norwegian Petroleum DirectorateSource: Norwegian Petroleum Directorate

Licensing Strategies / Licensing Strategies / Contracting RoundsContracting Rounds

Campaign Campaign materials?materials?

Where to go?Where to go?

What to do?What to do?

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

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RecommendationsRecommendationsChanges in the Fiscal System (?)Changes in the Fiscal System (?)-- decrease in minimum acreagedecrease in minimum acreage-- increase in % of FPIAincrease in % of FPIA

Exploration RiskExploration Risk-- comprehensive study of frontier basincomprehensive study of frontier basin-- encourage acquisition of new data i.e. multiencourage acquisition of new data i.e. multi--client client surveys due to low amount of existing datasurveys due to low amount of existing data

Access to DataAccess to Data-- liberal access to data by exploration companiesliberal access to data by exploration companies-- decrease cost of datadecrease cost of data

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

Digital DataDigital Data-- conversion of existing data into digital formatconversion of existing data into digital format-- easy use and access by companieseasy use and access by companies

Progressive IncentivesProgressive Incentives-- modify signature bonus according to basinmodify signature bonus according to basin’’s s prospectivityprospectivity-- lower % of SC area relinquishmentlower % of SC area relinquishment

PromotionPromotion-- prepare & disseminate promotional materialsprepare & disseminate promotional materials

RecommendationsRecommendations

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

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CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

Contracting RoundContracting Round-- foster healthy competition among companiesfoster healthy competition among companies-- conducted at least every 2 yearsconducted at least every 2 years

PNOCPNOC--EC / PETRONAS Joint StudyEC / PETRONAS Joint Study-- to fully evaluate potential of the basinto fully evaluate potential of the basin-- advantage: national oil companies in their respective advantage: national oil companies in their respective countriescountries-- ongoing DANIDA Project in CCOP: made initial steps ongoing DANIDA Project in CCOP: made initial steps but with obvious constraintsbut with obvious constraints

RecommendationsRecommendations

MaramingMaraming SalamatSalamat Po !Po !

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

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MEAN Water Reservoir Resources

GRVDepth (m) Depth (m) (Mean Values)

(km2-m) Oil (MMbbl) Gas (Bcf)

SS1 1457 1000 1575 93 251 10SS2 4543 2200 2600 259 1310 18SS3 2473 2200 2700 128 724 10SS4 1515 1800 3000 81 498 14SS5 1200 2500 3000 63 388 9SS6 5658 2100 2800 308 1733 8PE1 6328 720 1720 37 1719 7PE2 1191 800 2050 7 402 7PE3 1609 1400 2920 8 660 6

% RiskPROSPECT

Resource AssessmentResource Assessment

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

Supply Demand ProfileSupply Demand ProfileMindanao, 2005 Mindanao, 2005 –– 20142014

MW

0

500

1000

1500

2000

2500

3000

Req'd Cap Add. 150 100 100 50 50 50 50 100 50 150Committed 75 0 210 0 0 0 0 0 0 0

Existing 1515 1566 1681 1681 1681 1681 1681 1681 1681 1681

Peak Demand 1,371 1,458 1,535 1,615 1,697 1,784 1,883 2,001 2,124 2,256

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mindanao Coal 200Transfer of PB 101, 103 & 104

Additional Capacity Needed

18

Licensing, Contractual Licensing, Contractual and Fiscal Conditionsand Fiscal Conditions

Contracting Contracting RoundsRounds

Marginal FieldsMarginal Fields

CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

?

Oil CompaniesOil CompaniesCompaniesCompanies

MajorsMajors Micro Micro capcap

NOCNOC Super Super MajorsMajors

Mid Mid capcap

Small Small CapCap

Lukoil

Yukos

Saudi Aramco

INOC

KPC

PDV

Source: Norwegian Petroleum DirectorateSource: Norwegian Petroleum Directorate CCOP-PPM Project Dissemination Seminar DOE-PRDD 12 May 2006

~ 70% ownership of petroleum

activities in their home countries

Large reserves & production; frequent mergers; access to

latest technology & R&D

Lesser amount of reserves &

production compared with super majors

Diversified group of companies; some has

deepwater / HTHP experience; tail-end

producers

Drill in previously drilled acreage; better for mature area exploration

Participants not operators; financial

strength?; Would likely farm-out acreage

before they drill a well or sell out prospects