NIDO Petroleum Philippines Pty. Ltd. plans to drill new wells at the Cadlao oil field, located offshore west of Palawan province in the Philippines, in an exploration and appraisal campaign that could cost as much as $100 million (P6.3 billion) if the project advances to full development.

"The project aims to support the Philippine Energy Plan 2020-2040, which calls for the resumption of indigenous oil and gas exploration activities in offshore northwest Palawan to achieve energy independence," the company said in a document submitted to the Department of Environment and Natural Resources (DENR).

Under the plan, the operator will drill the Cadlao-4 well to assess the field's oil potential. Should the results support commercial development, Nido Petroleum may drill one to three additional wells, with drilling costs estimated at $18 million to $25 million per well. A full four-well program at those per-well costs would run $72 million to $100 million, absorbing most or all of the projected budget. Production would begin only after exploration and appraisal activities confirm commercially recoverable hydrocarbon resources, the company said.

Nido Petroleum is part of a consortium that also includes Forum Energy Philippines Corp., The Philodrill Corp., Oriental Petroleum and Minerals Corp., Alcorn Petroleum and Minerals Corp., and PNOC Exploration Corp. Forum Energy Philippines Corp. is a wholly owned unit of Forum Energy Ltd., in which PXP Energy Corp. holds an effective 98.08% interest, giving PXP an indirect stake in the Cadlao project.

The Department of Energy awarded the consortium Service Contract 91 (SC 91) in April after it applied for a development and production petroleum service contract to replace the expired Service Contract 6B. SC 91 covers approximately 103,000 hectares in the northwest Palawan basin and contains the Cadlao and Bonita discoveries, along with more than 20 identified prospects and leads.

"Each target well in the shallow water portion of SC 91 is estimated to hold 1 to 50 million barrels of oil," Nido Petroleum said.

The Philippine Energy Plan targets the drilling of at least seven oil prospects and six gas fields, and seeks to produce 116 million barrels of oil by 2040. The Cadlao field was discovered in 1977 and produced approximately 11 million barrels of oil between 1981 and 1991. The field has not produced since, so the planned campaign would amount to redeveloping a known producer rather than testing a fresh prospect.

Public scoping for the project is scheduled for Nov. 18-19 as part of the environmental impact assessment process, an early step in the review that will help shape the project's regulatory path. The near-term markers to watch are the outcome of that assessment and, later, the Cadlao-4 results, which will determine whether any follow-up wells are drilled.

— Sheldeen Joy Talavera, BusinessWorld (original article)