Nido Petroleum, the Australian unit of Sacgasco Limited, will be injecting $72 million for its two petroleum blocks in the Northwest Palawan basin that are scheduled for drilling activities next year.

According to Energy Undersecretary Alessandro O. Sales, the company’s local subsidiary – Nido Petroleum Philippines Pty. Ltd. -- will be drilling an appraisal well at the Cadlao field which is under Service Contract 6B and that will cost $16 million. Another well would have to be drilled at its other Service Contract (SC) 54 in Northwest Palawan for the same budget of $16 million.

At the Cadlao petroleum block, the energy official emphasized that additional $40 million will have to be pumped in for extended production test. This is to ensure that when they drill it, "They will test the flow rate for a period of time to determine how to optimize future production and determine the more appropriate way in installing the permanent production facilities.”

On the timeline of the drilling, the energy official qualified that “the schedule can be firmed up by the time that the contract with the drilling rig is executed – but the target remains to be to drill by the first half.”

“When they come here next year with the drilling rig, they will actually be drilling two wells – there will be one well in Cadlao, which will be the appraisal well; but Nido Petroleum is also our service contract holder in another service contract – this is service contract 54, also located in Northwest Palawan.”

At Service Contract 54, in particular, he indicated that Nido Petroleum will “drill an exploration well to test a concept on the Nido Reef play – that area is proximal to the old Nido field which shut down in 2019, so we’re looking very, very closely at the exploration well that they’re going to drill as well in this service contract - because it could actually open up new ideas and new concepts in Northwest Palawan.”

Sales, nevertheless, asserted that the go-signal given to Nido Petroleum is still at "site survey phase". This forms part of the initial activity to be carried out prior to the targeted drilling of a well in the offshore area.

“Principally, what it does is make sure that the seabed where the drilling rig will position itself is going to be safe,” he explained, adding that the warranted health, safety and environmental permits for such activities had already been granted by the Department of Environment and Natural Resources (DENR) and the Palawan Council for Sustainable Development (PCSD).

“I’d like to stress that when we do these activities, environmental permits have to be cleared – so these are principally two agencies – the DENR where we have to get the environmental clearance from them; and the Palawan Council for Sustainable Development, since this activity is going to be undertaken in offshore northwest Palawan,” he said.

The DOE official similarly conveyed that with regard to the drilling rig itself, they have at present two options: they are looking at either going to be a drilling rig coming out of refurbishment in Vietnam; or they’re looking to use jackup rigs. "But the principal decision here will be more on economics – which one would be cheaper to operate,” he said.

Sales stated that for the other requirements on the scheduled exploration and production (E&P) activities at Nido Petroleum’s service contracts, the materials needed, such as casing and tubulars, have already been procured by the operator. These equipment are currently in storage in Batam Island of Singapore and Indonesia. "Things are moving forward according to schedule," he said.

He further said “there are other considerations with regard to issuing contracts and finalizing contracts for the different services and equipment that will be onboarded on the rig,” stressing that these were already similarly finalized by Nido Petroleum.

And when the petroleum blocks would yield ‘commercial discovery’ potential, additional permits and clearances would have to be secured from both the PCSD and DENR.

“When Cadlao field moves into permanent production, additional clearances will have to be taken, this will now include the ECC - the environmental compliance certificate from the DENR; and additional clearance from the Palawan Council for Sustainable Development; the SAP (the Sustainable Action Plan), so in terms of those things, we try to operate always in a safe and environmentally friendly procedure,” he stressed.