--Award of Well Engineering, Procurement and Construction contract to Advanced Well Technologies
--Approval of the Phase 1 Plan of Development by Philippines Department of Energy
--Receipt of the Environmental Compliance Certificate from Philippines Department of Environment and Natural Resources
--Gaffney, Cline and Associates certification of reserves for Nido
--Endorsements received from the Palawan Provincial Government and NW Palawan communities
--Award of the drill rig contract for the drill ship 'Energy Searcher'
--Vitol award the FPSO contract to Rubicon Offshore for the 'Rubicon Intrepid' tanker and its conversion. The Galoc Joint Venture is currently negotiating a sublease agreement with Vitol for this FPSO
--Completion of development area seabed survey
In addition, the Operator (the Galoc Production Company) has advised that it anticipates awarding the contract for installation of subsea equipment and the mooring and riser systems in late-1Q 2007 and that it is finalizing procurement of long-lead items (such as casing and tubulars). Also, the subsea trees are now enroute to the refurbishment base and refurbishment of the subsea trees will commence in early 2007, prior to their delivery to the field. Prefabrication work has also commenced on the process equipment.
Nido Deputy Managing Director, Joanne Williams said "Nido is very pleased with the progress of the Galoc development. All of the formal project approvals for the project have been received, the major equipment contracts are now in place and several significant milestones have been achieved during 2006. Nido continues to work closely with the Operator and the development drilling is expected to commence in Q3 2007, with first oil production scheduled approximately 4-months later."
"In addition, we have engaged an independent oil marketing consultant to assist in the development of Nido's oil marketing and hedging policy."
The Galoc oil field is located approximately 65km north west of Palawan Island in the Philippines, in Service Contract SC14C (Galoc Sub Block) in 290m of water. The first phase of the Galoc development will comprise two subsea horizontal wells connected via a seabed flowline and riser system to the Floating, Production, Storage and Offloading Facility (FPSO) 'Rubicon Intrepid', which has 300,000 barrel storage capacity. Nido expects highly productive horizontal wells, with each initially capable of producing up to 15,000 bopd of 35° API oil. In order to maximize oil recovery, total field production rate will likely be controlled to an initial production plateau of approximately 17,500 bopd for 12 to 24 months.
This first development phase for Galoc entails an investment of US$86 million (including a 12.5% contingency) on behalf of the Joint Venture, of which Nido's 22.279% share will be US$19.2 million.
During 2006 Nido commissioned leading oil and gas industry reserves certifiers Gaffney, Cline and Associates (GCA) in Singapore to undertake an independent reserves certification of the Galoc oil field. Their review indicates that the first phase of the Galoc development has 1P (proven) reserves of 9.7 million barrels and 2P (proven + probable) reserves of 23.5 million barrels.
Field data gathered during drilling and the initial production will represent an important appraisal activity which will lead to an improved understanding of the field and any additional reserves potential. The development design has the flexibility to tieback additional wells to the FPSO. GCA has also estimated the 3P (proven + probable + possible) reserves for a possible two phase development are 41.9 million barrels (cumulative.)
Development of the Galoc oil field is particularly significant as it will be the first offshore oil field development undertaken in Philippine waters since West Linapacan A in 1992. The Galoc oil field will potentially double domestic oil production of the Philippines by adding 17,500 barrels of oil per day (bopd) in its first year of operation. The country currently consumes 338,000 bopd but produces only 23,000 bopd, which is equivalent to only 7% of total demand. With the Galoc production, local oil production will increase to 12% of total demand.
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