The Department of Energy (DoE) announced the start of exploration for hydrocarbons in the South Sulu Sea under DoE’s Service Contract 56 (SC-56) with the arrival Friday of the drill rig, West Aquarius.

The SC-56 contractors are ExxonMobil Exploration and Production Philippines B.V. [ExxonMobil], Mitra Energy (Philippines SC-56) Limited [Mitra] and BHP Billiton (International Exploration Pty Ltd) [BHP Billiton]. ExxonMobil is the operator of SC-56.

The DoE said West Aquarius, a semi-submersible rig designed to operate in the water depths of up to 3,000 meters and drill up to a maximum depth of approximately 10,000 meters, leaves Indonesia for the South Sulu Sea project.

The deep water exploration well, Dabakan – 1 will be drilled in 1,800 meters of water, a record for the Philippines.

Similar to other exploration projects, discovering gas and oil under the SC-56 is very challenging with uncertain results.

The DoE said it is very pleased to have ExxonMobil, the world's largest publicly traded international oil and gas company, and BHP Billiton, the world’s largest integrated resources company, recognize the potential of the Philippines oil and gas sector and bring their technical and financial strengths to bear on this complex project.

SC-56 is 900 kilometers southwest from Manila, 200 kilometers northwest from the Bongao Municipality and 65 kilometers from the Municipality of Mapun in the Province of Tawi-Tawi in the Autonomous Region in Muslim Mindanao (ARMM).

Service Contract 56 in the South Sulu Sea is expected to have a potential reserve of 750 million barrels oil—enough to cover the country’s daily consumption of 275,000 barrels per day in seven years.

This estimate was made by Exxon Mobil Corporation, the world’s largest oil and gas exploration company, which is the operator of SC-56.

“If we are successful here it would provide enough petroleum products for seven years. In other words, it’s enough to supply us with our current requirement for seven years,” Energy Secretary Angelo Reyes said.

Exxon managing director Ian Fischer said they will be investing $100 million for the initial phase of the drilling activity which will take 60-90 days starting next week.

Fischer said that should they prove potential reserve in the area, they would infuse another $100 million to support drilling of another well in SC 56.

Exxon Mobil is bringing in the West Aquarius drill rig to drill in South Sulu Sea starting this coming week. It will arrive in the Philippine territory on Sunday and should be onsite on Thursday.

DoE SC-56 is part of the Philippine government’s efforts to encourage investments in the energy sector leading to energy security for the country.

The exploration phase will be undertaken at no cost to the Philippines, with all risk borne by the contractors, ExxonMobil, Mitra and BHP Billiton.

Energy Secretary Angelo T. Reyes is enthusiastic about the project and in his statement said that “this is a very good indicator that the climate in the Philippines is conducive to more investments. With the entry of ExxonMobil, this will entice more foreign companies to invest in the upstream oil industry.”

ExxonMobil is committed to conducting operations in a way that protects the environment and takes into account the safety and social aspects of its host communities, wherever it operates around the world.

All necessary permits and documents to drill and explore for natural gas and oil under SC-56 have been secured by the contractors. (JAL)