Deep-water hydrocarbon exploration in the Philippines

Deep-water drilling in the Philippines began in 1979 and ten wells were drilled over the next three years. The primary targets were Miocene reef limestones, which were found not only to be well developed in the geologic column but also to attain considerable size. Proven oil production from Miocene reefs in shelf waters off Northwest Palawan have encouraged explorationists to focus on the adjacent deep-water areas. The hydrocarbon potential of offshore areas deeper than 200 m was manifested by a commercial oil discovery and a noncommercial gas discovery in Lower Miocene turbidite sands and a gas discovery in Lower Miocene reefal limestone off Northwest Palawan. The Galoc oil discovery in a water depth of 1055 ft is scheduled for development beginning in late 1983 and oil production is programmed to start during the first quarter of 1985. The Galoc development/production scheme calls for an Early Production System (EPS) consisting of a floating production facility (FPF) and subsea well completions. Institutional incentives have been developed by the Philippine government to encourage deep-water exploration. The incentives include a longer exploration period, cross-recovery of exploration expenses, depreciation of tangible exploration costs over a five-year period, and up to two-thirds reimbursement on loan interest for financing development and production.