Petroleum Resources Development Division

Energy Resource Development Bureau

17 October 2016
I. Fundamentals of Petroleum Geology
II. Exploration Geophysics
III. Petroleum Engineering
IV. Petroleum Exploration, Development
and Production in the Philippines
 Pre-requisite in Petroleum Geology
 Origin of Petroleum
 Petroleum System Components
 Hydrocarbon Formation and
Accumulation
 Geological Mapping and Sampling
Petroleum Geology – refers to the specific set of
geological disciplines that deals with the study of origin,
occurrence, movement, accumulation, and exploration of
hydrocarbon fuels. (*Wikipedia)
 Chemistry (Geochemistry) – mineralogical composition
of rocks and pore-fluid chemistry
 Physics (Geophysics) – structures involved in trapping
and data gathering in wells
 Biology (Biochemistry, Paleontology) – transformation of
plants & animals into hydrocarbons and fossil life
 What is Petroleum?
From the Latin words:
• Petra means “rock”
• Oleum means “oil”
Essentially made up of carbon (C) and hydrogen (H)
At normal temperatures may be in the form of:
• liquid (crude oil)
• gas (natural gas)
• solid (tar and bitumen)
Characteristics
 Color: green, yellow, black or brown
 Sulfur content:
• Sweet crude oil – with little sulfur content
 Ex. Oil produced from Matinloc and Cadlao
• Sour crude oil – with high sulfur content
Composition by weight
Element Percent range
Carbon 83 to 85%
Hydrogen 10 to 14%
Nitrogen 0.1 to 2%
Oxygen 0.05 to 1.5%
Sulfur 0.05 to 6.0%
Metals < 0.1%
Organic Theory
 Hydrocarbon were derived from the geochemical
conversion of organic matter and material in time
through the agents of temperature and pressure
 Origin of Petroleum
Terrestrial source:
gas-prone

Marine source:
oil-prone

Stage 1 Stage 2
Deposition of plant and animal Burial, pressure and temperature
remains (marine or terrestrial) changes (HC Kitchen & Maturity)

IA Nicolas Presentation DOE (2005)

 Origin of Petroleum

Pay zone

Stage 3 Stage 4
Migration: controlled by lithology, Entrapment (timing) and accumulation
structure in reservoir rock (porous and
permeable)
IA Nicolas Presentation DOE (2005)
Petroleum System – a concept that encompasses all of
the disparate elements and processes of petroleum
geology. (*AAPG Wiki)

Elements of a Petroleum System (*CCOP)

1. Source Rocks (shale, marl, carbonate) – sedimentary rock

containing organic material, which under heat, time, and
pressure was transformed to liquid or gaseous hydrocarbons.
2. Migration – movement of generated hydrocarbons from the
source rock to the reservoir rock in a trap through conduits.
3. Reservoir Rocks (sandstone, limestone/dolomite, fractured
rocks) – any rock that has sufficient porosity and permeability
to permit the storage and accumulation of crude oil or
natural gas under adequate trap conditions, and to yield the
hydrocarbons at satisfactory flow rate upon production.
Elements of a Petroleum System (cont’n. )
4. Cap Rocks/Seals (chalks, shale, clays, etc.) – an impervious
or impermeable bed capping the reservoir rocks in a trap.
5. Trap – any barrier to upward movement of oil and gas,
allowing either or both to accumulate.
6. Timing – relationship between the time of trap formation
and time of hydrocarbon generation and migration.
PETROLEUM SYSTEM
 Is a stratigraphic interval that contains organic
material that generates hydrocarbons when buried
within the subsurface at certain thermal condition.
 Fine-grained rocks, usually dark in color because of
its organic content
Ex. Shale, Siltstone, Claystone, Carbonate and Coal
 Total Organic Carbon (TOC) - the amount of organic
carbon in a geological formation, particularly
the source rock for a petroleum play.
 Shale - ave. TOC 2.2%
 Calcareous Shale - ave. TOC 1.9%
 Carbonate - ave. TOC 0.7%
 Coal - high TOC
• Immature Coal - 60-62%
• Partly Mature Coal - 70%
• Mature Coal - 80%
• Anthracite - 90%
 <0.5 % TOC
• Lean to poor source rock
• Oxidized facies with poor kerogen quality
 0.5 to 1.0 % TOC
• Fair source rock
 1.0 to 2.0 % TOC
• Moderate source rock
 2.0 to 5.0 % TOC
• Good source Rock
 >5.0 % TOC
• Excellent / very good / rich source rock
 Is the expulsion of the generated hydrocarbon (oil and
gas) out of the source rock through permeable zones or
carrier beds towards a suitable reservoir and trap.
• Primary – from source rocks to
reservoir
• Secondary Migration – movement
of petroleum through porous and
permeable layers to the trap.
 Lateral – carrier beds
 Vertical - faults
• Tertiary Migration – movement of
petroleum from one trap to another or
to a seep.
 Is a porous and permeable rock unit capable of storing
& containing hydrocarbons coming from the source
rocks. Example: Limestone and Sandstone
• Porosity (φ) – amount of available pore spaces in the
rock

• Permeability (k) – interconnectivity of pore spaces;

allows communication of fluids for migration
 Porous Rock
Porosity (φ) – ranges from 20% – 50%

 Oil/Gas in the pores

 Mobility of Oil/Gas
Permeability (K) – 10 mD to >1000 mD (mD to
exceptional)
 Φ and k Measurement
 Porosity
• Directly from core sample
• Indirectly using wireline
logs
 Density log
 Sonic / acoustic log
 Neutron log
 Permeability Source: SCAL, Inc.

• Directly from core samples

 Sandstone
• 25% to 40% primary φ

Source: Offshore Technology

 Limestone / Dolomite / Chalk

• 10% to 50% primary φ

Source: Statoil
 Is a rock geometry or structure
capable of confining hydrocarbon
 Types of Trap (Mechanism)
• Structural
• Stratigraphic
• Combination
 Structural - accumulate oil and gas due to their
general shape or configuration

 Stratigraphic - more subtle, and owe their origin to

abrupt changes in the composition and other
characteristics of sedimentary rocks

 Combination - In nature, we may also find

combinations of these trapping mechanisms,
sometimes giving rise to multiple target horizons at
a single prospect location.
 Structural traps – anticlines, folds, fault or extensional
structures
 Stratigraphic traps – reef build up, stacked sand bars,
stacked sand channels, mud or salt diapir
 Trap
Thecausing
Faulting configuration of a rock body or layer of rocks that constrains
Malampaya
the movement
reservoir breaks of fluids within the reservoir

footwall

hanging
wall

East
Kalimantan, 3D data NW Palawan (2002)
Indonesia
 Impermeable rock unit capable of holding back trap
column of hydrocarbon. Ex. Shale, Evaporite, Dense carbonate
 Shale (65%)
• Dominant seal
 Evaporites (33%)
• Efficient seal
Source: CCSroadmap

• Often seals of carbonate reservoirs

 Dense carbonates (2%)
 Proper timing in the development
of:
• Source rock and oil generation
• Available reservoir rock
• Trap and seal (cap rock) in place
during oil migration and accumulation
Hydrocarbon or Petroleum – an organic
compound consisting entirely of hydrogen and
carbon. (*Wikipedia)

Petroleum – (from Latin word petra “rock” +

oleum “oil”) is a naturally occurring, yellow-to-
black liquid found in geological formations
beneath the Earth’s surface (*Wikipedia)
Kerogen – the fraction of sedimentary organic
constituent of sedimentary rocks that is insoluble
in the usual organic solvents.
Typical
Predominant HC
Type Composition Hydrogen depositional
potential
environment
I Oil prone Algae Abundant Lacustrine
II Oil and gas prone Herbaceous Moderate Marine
III Gas prone Woody (coaly) Small Terrestrial
IV Neither (mostly vitrinite) or inert None Terrestrial(?)
material
Source: AAPG Wiki
Hydrocarbon Formation &
Accumulation
 Density difference among oil, gas and water.
• Natural gas – lightest
• Water – heaviest
• Oil – accumulate in between water and natural gas
 Initial exploration activity to determine
lithology, geologic structures, and
other pertinent geologic information.
This includes collection of rock, soil,
hydrocarbon samples for
corresponding laboratory analyses.
 Source: Gemoc

Source: Peleolithics
 Exploration Geophysics
 Geophysical Methods
 Onshore Seismic Survey
 Offshore Seismic Survey
 Seismic Data Processing
 Seismic Data Interpretation
 Reserves Computation
Exploration Geophysics – an applied branch of
geophysics, which uses physical methods (such as
seismic, gravitational, magnetic, electrical and
electromagnetic) at the surface of the Earth to
measure the physical properties of the subsurface.
- It is most often used to detect or infer the presence
and position of economically useful geological
deposits, such as ore minerals, fossil fuels and other
hydrocarbons; geothermal; and groundwater
reservoirs.
*Source: Wikipedia
 Geophysical Methods
1. Magnetic and Gravity – used to determine the
geometry and depth of covered geological
structures including uplifts, subsiding basins, faults,
folds, igneous intrusions and salt diapirs due to their
unique density and magnetic susceptibility
signatures compared to the surrounding rocks.
2. Seismic – used to map the subsurface distribution of
stratigraphy and its structure which can be used to
delineate potential hydrocarbon accumulations.
*Source: Wikipedia
  Seismic Survey – a technique similar to an ultrasound that is
used to develop images of the rock layers below ground.(*MRCSP)
 Types of Seismic Survey*
a. 2D – reflection seismic surveying both the sound source and the
sound detectors (numbering up to a hundred or more per
shot) are moved along a straight line.
b. 3D – reflection seismic surveying the sound detectors (numbering
up to a thousand or more) are spread out over an area and
the sound source is moved from location to location through
the area.
c. 4D – reflection seismic surveying the exact repetition of a 3D
survey at two or more time intervals. The primary application
of 4D is mapping the movement of fluid interfaces in
producing oil and gas reservoirs.
*U.S. Energy Information Administration
Onshore Seismic Survey
Shot holes are drilled to penetrate the
weathered zone.

 An explosive charge, usually dynamite, is

loaded into the shot holes and detonated,
sending sound waves into the sub-strata which
are variably reflected back to the surface.
Onshore Seismic Survey

Sound waves reflected from the sub-surface are

picked up by an array of geophones which are
laid out on the ground along a seismic line and
connected to recording instruments through a
seismic cable.
 Onshore Seismic Survey
Onshore Seismic Data Acquisition
 Offshore Seismic Survey
 Marine seismic vessels tow arrays of air guns, the seismic
source and streamers containing hydrophones a few meters
below the surface of the water.
 The tail buoy helps the crew locate the end of the streamers.
 Offshore Seismic Survey
An energy pulse (from an air explosion or an
electrical discharge) is sent to the
subsurface layers and reflected waves are
picked up by hydrophones contained in a
streamer being towed by the survey vessel.
 Offshore Seismic Survey
 The air guns are activated periodically, such as every 25 m (about
10 seconds), and the resulting sound wave travels into the Earth
and is reflected back by the underlying rock layers to a
hydrophone and relayed to the recording vessel.
 Offshore Seismic Data Acquisition
 Equipment Required
airgun configuration
configuration
(source)

Acoustic (compass)

gun array Acoustic

(compass)
Seismic Boat

Streamer cable

streamer
Hydrophone (receiver)

onboard processing
Hydrophone (receiver) & monitoring
Schlumberger (2004)
Source: Ocean JSU Source: Geoexpro
SEISMIC DATA PROCESSING
 The goal of geophysical data
processing is to increase the signal to
noise ratio.

 Noise is also recorded during data

acquisition due to the environment,
instrumentation and other factors.

 The processing outputs are used by

geophysicists or explorationists in their
interpretation work; paper plots for
manual interpretation or digital data
for workstation interpretation.
Processed Seismic Section (2D)
Seismic cross-section (NW Palawan)
seafloor

2.0 s

3.0 s

Subsurface geology
SEISMIC DATA INTERPRETATION
NW SE

2 sec.

2 km
5
 Interpreted Seismic Section

Source: PETRONAS 1999 The Petroleum Geology and Resources of Malaysia

PETRONAS 1999, The Petroleum Geology and Resources of Malayasia
Correlated Seismic Section

Well

Logs
 695000
685000

705000

725000
715000

735000
1240000

1230000

PROSPECT

1220000

REGIONAL DEPTH MAP

TOP NIDO LIMESTONE

Source:Nido Petroleum (2003)

 RESERVES = A x H x  x Shc x Rf
FVF
where:
A = area
H = height
 = porosity
Shc = (1-Sw)
Shc = hc saturation ; Sw = water saturation
Rf = recovery factor
FVF = formation volume factor
 Petroleum Engineering & related disciplines
 Reservoir Engineering: Reservoir Rock & Fluid
Properties
 Drilling Engineering: Exploration Drilling
 Development Planning
 Petroleum Economics
 Production Engineering
 Health, Safety, Security & Environment Concerns
Petroleum Engineering – a field of engineering concerned
with the activities related to the production of hydrocarbons,
which can be either crude oil or natural gas. (Source: Wikipedia)
Petroleum Engineering requires a good knowledge of other
related disciplines:
• Geophysics
• Petroleum Geology
• Drilling Engineering*
• Reservoir Engineering*
• Well Engineering
• Production Engineering*
• Economics*
 Reservoir Engineering – a branch of petroleum engineering
that applies scientific principles to the drainage problems
arising during the development and production of oil and gas
reservoirs so as to obtain a high economic recovery.
 Drilling Engineering – a subset of petroleum engineering
responsible for the design and implementation of procedures
to drill wells as safely and economically as possible.
 Petroleum Production Engineering - a subset of petroleum
engineering that deals with design and selection of subsurface
equipment to produce oil and gas well fluids.
*(Source: Wikipedia)
Reservoir Rock Properties
• Porosity
• Permeability
• Types of Reservoir
• Types of Reservoir Drive Mechanism
 Porosity - % or fraction of void to the bulk volume of a
material (5-30%)
• Factors affecting porosity:
 Grain Size – well rounded sediments has no effect
 Sorting – well sorted, high porosity
 Grain Shape – irregular shape, high porosity
• Primary – porosity due to sedimentation
• Secondary – porosity after sedimentation process
(fracturing and recrystallization)
Permeability – measure of the ease with which
fluids can flow through a rock.
• Depends on how well the pore spaces within
the rock are interconnected
• Unit of measure is darcy, after a French
Scientist, Henry Philibert Gaspard Darcy (1856)
 Types of Petroleum Reservoir
• Oil Reservoir – it contains mainly of oil or without free gas (gas cap)
• Gas Reservoir – mainly gas
 Petroleum Reservoirs are classified in five (5) fluid
categories
• Dry Gas and Wet Gas – consist mainly of light and intermediate
hydrocarbons (N2, CO2, H2S, C1 to C2)
• Gas Condensate – contains significant amount of C5 + components
• Volatile Oil – GOR is about 2,500 scf/STB, FVF - 3
• Black Oil – lower GOR
 Composition (in mol %) of several reservoir fluids
Component or
Dry Gas Wet Gas Condensate Volatile Oil Black Oil
Property
CO2 0.10 1.41 2.37 1.82 0.02
N2 2.07 0.25 0.31 0.24 0.34
C1 86.12 92.46 73.19 57.60 34.62
C2 5.91 3.18 7.80 7.35 4.11
C3 3.58 1.01 3.55 4.21 1.01
i C4 1.72 0.28 0.71 0.74 0.76
n C4 — 0.24 1.45 2.07 0.49
i C5 0.50 0.13 0.64 0.53 0.43
n C5 — 0.08 0.68 0.95 0.21
C6s — 0.14 1.09 1.92 1.16
C7+ — 0.82 8.21 22.57 56.40
GOR (SCF/STB) ∞ 69,000 5,965 1,465 320
OGR
(STB/MMSCF) 0 15 165 680 3,125
γAPI — 65.00 48.50 36.70 23.60
γ7+ — 0.750 0.816 0.864 0.920
Source: AAPG Wiki
 Recovery Method
• Primary – using the natural energy of the
reservoir as a drive
• Secondary – aided or driven by the injection of
water or gas from the surface
• Tertiary or EOR – techniques applied to reservoirs
in order to improve flagging production
• Infill Recovery – drilling cheap production holes
between existing wells to ensure that the whole
reservoir has been fully depleted of its oil.
 Drive Mechanism (Primary Recovery) –
natural energy of the reservoir used to
transport hydrocarbons towards and out of
the production wells
 Types of Drive Mechanism
• Solution Gas Drive
• Gas Cap Drive
• Water Drive
• Gravity Drainage
• Combination or Mixed Drive
 Gas Cap Drive Water Drive

Solution Gas Drive Combination or Mixed Drive

 Secondary Recovery – (35% recovery of OOIP from
primary and secondary)
• Water Flooding – injection of water at the base of
reservoir to maintain pressure and displace oil towards the
wells
• Gas Injection – same as water flooding to maintain gas cap
pressure
 Tertiary Recovery or Enhance Oil Recovery –
most expensive
• Thermal – uses heat to improve oil recovery by
reducing the viscosity of heavy oils and vaporizing
lighter oils. Most efficient EOR
• Chemical – uses chemicals (polymers) added to
water in the injected fluid of a waterflood.
• Miscible Gas – uses a fluid that is miscible with
the oil. CO2, N2, HC gases
 Reservoir Fluid Properties
• Formation Volume Factor
• Solution Gas-Oil-Ratio
• Liquid Specific Gravity
• API Specific Gravity
• Gas Specific Gravity
• Bubble Point Pressure
• Saturated Dew Point Pressure
 Reservoir Fluid Properties
• Bubble Point Pressure – the pressure at which gas
begins to break out of an under saturated oil and form a free
gas phase in the matrix or a gas cap.
• Solution Gas-Oil-Ratio - the amount of gas dissolved in
the stock tank oil when brought to a specific pressure and
temperature. Denoted mathematically as Rs (SCF/STB).
• Formation Volume Factor - the ratio of a phase volume
(water, oil, gas, or gas plus oil) at reservoir conditions,
relative to the volume of a surface phase (water, oil, or gas)
at standard conditions resulting when the reservoir material
is brought to the surface. Denoted mathematically as
Bw(bbl/STB), B0 (bbl/STB), Bg (ft3/SCF), and Bt (bbl/STB).
 Oil Fluid Properties
• Oil Viscosity – measure of the resistance to flow exerted
by the oil, gas, water. Unit of measure is in Centipoises (cp)
• Density/Specific Gravity - the ratio of density of any
liquid measured at standard conditions (usually 14.7 psia and
60 °T) to the density of pure water at the same standard
conditions. Denoted mathematically as γo (where water = 1).
Another common measure of oil specific gravity, defined by
γAPI = (141.5/γO) –131.5, with units in °API.
• Compressibility – relative change in fluid volume per unit
change in pressure
• Salinity – the amount of dissolved salts in water
 Types of Well
 Well Classification
 Rig Types (Offshore / Onshore)
 Drilling Operations
 Data Gathering
 Type of Wells
 Wildcat Well – a well in a previously undrilled area.
 Exploratory Well – a wildcat or well in a new area with
unknown producing potential.
 Appraisal Well – additional well drilled after discovery
to confirm the size of the hydrocarbon deposit.
 Confirmation or Delineation Well – a secondary well,
after the discovery well, drilled to help determine field
extent, volume and production rate.
 Conformation Well – well or wells drilled to prove the
formation or resources discovered in the initial or
discovery well.
 Type of Wells
 Development Well –drilled after the discovery and
appraisal wells to develop the hydrocarbon production
potential of the field.
 Production Well – a well that produces hydrocarbon in
commercial quantities.
 Injection Well – a well either specifically drilled, or more
likely, a poor producer that is converted to inject fluids
to stabilize the decline in pressure on a producing zone.
 Stratigraphic Well – a well drilled to determine the
stratigraphy of an area.
 Well Classification
 Vertical Well –
drilled vertically into
the subsurface
 Deviated Well -
intentionally drilled at
an angle from the
vertical (>10)
 Horizontal Well –
drilled by deviation
drilling and tracks the
dip of a subsurface
reservoir (80 - >90)
Source: Fangree
 Jack-up – for water
depth of < 350 ft.

Source: COSL

Source: Seadrill

Semi-Submersible – for
water depth of about 6,000 ft.

Drillship - for water

depth of 13,000 ft.
Source: Maersk Drilling
  Land Rig

Source: DESCO Rig 30 Source: Petroleum Engineering

Drilling Mud/Fluid - a mud/fluid that is circulated in the well
during drilling.
Uses:
• Clean the rock fragments from beneath
the bit and carry them to the surface
• Exert sufficient hydrostatic pressure
against subsurface formations to prevent
formation fluids from flowing into the well
• Keep the newly drilled borehole open until
steel casing can be cemented in the hole
Source: Nodigequipment
• Cool and lubricate the rotating drill string
and bit.
 Drilling Operations: Casing
Uses:
• Run and cemented to keep the
hole open
• To stabilize the sides of the well
• To prevent fluids from zones other
than the producing zones from
entering the well
Type of Casing:
• Conductor Casing
• Intermediate Casing
• Production Casing or Liner

Source: Oil & Gas Journal

 Drilling Operations:
Cementing
Cementing – the
process of mixing a
slurry of cement,
cement additives
and water, and
pumping it down
through casing to
critical points in the
annulus around the
casing or in the
open-hole below the
casing string.
Source: Bauchemie Tum
 Drilling Operations:
Cementing
 Uses & Functions of Cementing:
 Cements are used universally in well completion operations to
fill the annular space between the casing and the open hole.

 The principal functions of the primary cementing process are:

• To bond and support the casing
• To restrict fluid movement between formation
• To protect the casing from corrosion
• To protect the casing from shock loads when drilling deeper
• To seal off lost circulation of thief zones
 Data Gathering: Coring
 An operation where a cylindrical
rock sample is taken from the
hole
 Types include conventional,
diamond, wireline or sidewall
coring
 Usually taken from pay zones or
zones of interest (expensive!)
 Uses:
• in the evaluation of the well
• to test the porosity and permeability
• for post engineering studies
Source: Baker Hughes
important in reservoir analysis
Data Gathering: Wireline Logging
 The evaluation of a well Gamma Ray Resistivity Porosities

using a sonde run into a

Neutron
Porosity
____________

well on a wireline. Used to

60 ρυ 0
_____________
_____________ _ Density Porosity
____________

gather data on the 20 API 120 0.2 ohm-m 20 60 ρυ

formation encountered in
the hole.
 Data include:
• formation or reservoir thickness
• hydrocarbon presence
• petrophysical properties
• porosity Source: Baker Hughes

Source: Geoline
 Data Gathering: Mud Logging
 Determination of the
presence of hydrocarbon
through the continuous
recording, monitoring,
analysis and evaluation of the
rock cuttings and gas or oil
that evolves from the hole.
 Mudlog – the record and
evaluation of gas & oil shows,
lithology of formation drilled,
and drilling parameters in a
well.

Source: Continental Labs.

 Process of shooting holes or
perforations in casing or liner,
cement, and producing formation
to complete or re-complete a well.

Source: Offshore Engineer

 Uses:
• To determine the ability of a formation to produce
reservoir fluids.
• To provide information about formation permeability,
extent of wellbore damage or stimulation, reservoir
pressure, and reservoir boundaries.
 Types:
• Pressure Build-up Test
• Pressure Drawdown Test
• Isochronal Test
• Modified Isochronal Test
• Interference Test
• Drill Stem Test (DST)
 Types of Well Testing
• Pressure Build-up Test - conducted by producing a well at constant rate for some
time, shutting the well in, allowing the pressure to build-up in the well bore, and
recording the pressure in the well bore as a function of time.

• Pressure Drawdown Test - conducted by producing a well, starting ideally with

uniform pressure in the reservoir. Rate and pressure are recorded as functions of
time. A well (or reservoir) which is static, stable and shut-in is opened to flow at a
constant rate and the bottom hole pressure is monitored with time.

• Isochronal Test - conducted by flowing a well at a fixed rate, then shutting it in until
the pressure builds up to an unchanging value. The well is flowed at a second rate for
the same length of time, followed by another shut-in. If possible, the final flow
period should be long enough to achieve stabilized flow. In obtaining data in this
testing program, it is essential to record flowing bottom-hole pressure, as a function
of time at each flow rate.
 Types of Well Testing
• Modified Isochronal Test - shut-in periods of the same duration as the flow
periods are used, and the final shut-in BHP before the beginning of a new flow
period is used as an approximation to average pressure in the test analysis
procedure.

• Interference Test - conducted by producing from or injecting into at least one well
(the active well) and by observing the pressure response in at least one other well
(the observation well). It monitors pressure changes at a distance from the well that
produced the initial transient.
• Drill Stem Test (DST) - basically, a DST is a
temporary completion of a well. The DST tool is
an arrangement of packers and valves placed on
the end of the drillpipe. This arrangement can be
used to isolate a zone of interest and to let it
produce into the drillpipe or drill stem. A fluid
sample is obtained in the test, thus, the test can
tell us the types of fluids the well will produce if it
is completed in the tested formation. Source: AAPG
 Criteria for Development
• Reservoir Development Plan (Drive Mechanism, Maximum
Production Rate, Recovery Factor, Depletion Options)
• Production Profile (Number of wells, Production Period,
Lead Time, Plateau Production before decline, Decline
Rate, Production Rate per well, Cut-off Rate)
• Drilling Operations (Rig Types, Well Classification)
• Completion Design (Open-hole Completion, Perforated
Completion, Multi-zone Completion / Zone Isolations)
 Process and Field Facilities
• Deepwater Development Systems (FPSO, FPS, SPAR)
• Field Facilities (CGS, FPSO, WHP, FSU, OGP)
• Pipelines (Routing, Landfall Sites)

 Development Options
• Deepwater Oil and/or Gas Discovery
• Shallower Oil and Gas Discovery

 Other Considerations
• Market (Domestic Refinery, Exported)
  Development Wells
• Producer
• Injector
 Well Completion

Source: Offshore Engineer

Development Concept of Malampaya
Natural Gas-to-Power Project
Galoc Field Development Concept
Libertad Gas Field Development
Concept
 Cash Flow / Net Cash Flow
 CAPEX / OPEX (US$ MM)
 Oil and Gas Price ($/bbl or $/cu.ft. or BTU)
 Economic Indicators
• Net Present Value (NPV)
• Internal Rate of Return (IRR)
• Payback
• Expected Monetary Value (EMV)
 Total Government Take / Company Take
 Cash Flow – incomings & outgoings of cash, representing the
operating activities of an organization.
 Net Cash Flow - is the difference between a company’s cash
inflows and outflows in a given period.
 CAPEX (US$ MM) – expenses incurred to buy fixed assets or to
add to the value of an existing fixed asset with a useful life extending
beyond the taxable year.
 OPEX (US$ MM) - ongoing cost for running a product, business, or
system.
 Oil and Gas Price – express in US$/bbl or US$ per cubic feet or
MMBTU (SI Unit)
 Economic Indicators
• Net Present Value (NPV) – the sum of the Present Values
of incoming & outgoing cash flows over a period of time
• Internal Rate of Return (IRR) – measure and compare
the profitability of investments.
• Payback – period of time required for the return of an
investment.
• Expected Monetary Value (EMV) – total of weighted
outcomes associated with a decision.

 Total Government Take / Company Take – the

revenue shared after deductions
 Petroleum Economics
Paramaters UNIT 2015 2016 2017 2018 2019 2020 2021 2022

Production MMbbls 1.784 1.531 0.628 0.377 0.259 0.193 0.154

Oil Price $/bbl 97.80 97.54 95.85 93.02 91.85 93.33 93.52 93.70
Gross Revenue MM$ 174.01 146.75 58.42 34.63 24.17 18.05 14.43

CAPEX US$MM 7.533 69.957

CAPEX Depreciated
15.5 15.5 15.5 15.5 15.5
(Straight Line)
OPEX US$MM 35.69 45.38 45.38 33.67 21.96 21.96 10.98
FPIA US$MM 13.05 11.01 4.38 2.60 1.81 1.35 1.08
Cost Recovery US$MM 64.24 71.89 65.27 51.77 39.27 23.31 12.06
Net Revenue MM$ 109.77 74.86 -6.85 -17.14 -15.10 -5.26 2.37
(70% recovery) 44.97 63.81 53.76 47.74 31.52 24.07 7.68

Government Share MM$ 65.86 44.91 -4.11 -10.28 -9.06 -3.16 1.42
Company Share MM$ 43.91 29.94 -2.74 -6.86 -6.04 -2.11 0.95

Net Cash Flow -7.533 55.32 90.36 8.65 -1.64 0.40 -5.26 2.37
  Subsea Systems
• Wellhead
• Christmas Tree
• Manifold
• Flowlines, Umbilicals Source: Pinterest

Deepwater Subsea
Manifold

Source: Cameron

Subsea
Wellhead

Source: Offshore Technology

Christmas Tree Source: Cameron Source: Cameron

 Onshore Wellhead

Source: Oceanpm

Source: Petroleum Engineering

 Offshore Production
Platform FPSO

Source: Nautic Expo

Oil Tanker Offshore Production Platforms

Sources: Offshore Engineer & Petroleum Engineering

Source: USA Today
 Role of the Department of Energy
 Sedimentary Basins of the Philippines
 Exploration History
 Milestones in the Philippine Petroleum Industry
 Petroleum Service Contract
 Petroleum Historical Production
 Oil and Gas Fields in the Philippines
 Fiscal Regime/System
 Philippine Energy Contracting Round (PECR)
 formulates and implements government
policies, plans, programs and regulations
relating to the exploration, development
and production of indigenous petroleum
resources
 through the Petroleum Resources
Development Division (PRDD) of the
Energy Resource Development Bureau
(ERDB)
 A depression formed by tectonic processes,
flanked by topographically high areas that shed
thin detritus into thin depression
 Areas where petroleum can be found
 Sedimentary Basins
of the Philippines
1. Ilocos Trough
1 2 2. Cagayan Basin
3. West Luzon Basin
3 4 4. Central Luzon Basin
5
WEST PHILIPPINE 5. Bicol Shelf
SEA
6. Northwest Palawan Basin
6 9 7. Mindoro-Cuyo Platform
7 8
8. West Masbate-Iloilo Basin
11 9. Southeast Luzon Basin
10
13 10. Visayan Basin
12 11. Recto Bank Basin
16
14
15 12. Southwest Palawan Basin
13. East Palawan Basin
14. Sulu Sea Basin
15. Cotabato Basin
16. Agusan-Davao Basin
Exploration History
 Toledo-1
• 1st recorded petroleum well, 1896
• drilled in Cebu by Smith & Bell

 Pag-asa-1
• 1st well drilled offshore, 1971
Pag-asa - 1
• Drilled by Oriental Petroleum

 Over 573 wells drilled until

2014, ~38 discovery wells
 Over 533,222 line-kms of 2D
and 21,311 sq-km of 3D seismic Toledo-1
data were acquired from 1941
to2014.
Milestones in Philippine San Antonio
~ 4 BCF

Petroleum Industry
Nido (1976) NW Palawan
• 1st commercial oil production ~ 42 MMBL
~ 2,800 BCF
• started production February 1979

West Linapacan
• 1st deepwater oilfield development
• started production May 1992

San Antonio (1984)

• 1st commercial gas production
• started production March 1994
Malampaya (1992)
• birth of the Phil. gas industry
• 1st gas delivery in October 2001
• 1st commercial gas sales January2002
 22 Active Service Contracts
• 3 SCs recommended in PECR-5
• 6 in onshore areas
• 16 in offshore areas
• 7 years initial exploration
period divided into number of
sub-phases, extendible for 3
years
• 25 years production stage
• 50 years maximum number of
years
• 7 under production stage
• 15 under exploration phase
Petroleum Historical Production
 Carbonate Reservoirs
• Nido (1979 - 2015) = 19.17 MMBO
• Cadlao (1981 - 1991) = 11.23 MMBO
• Matinloc (1982-1991, 1995-2015) = 12.44 MMBO
• Tara (1987 - 1990) = 0.22 MMBO
• North Matinloc (1988 - 1991, 1998-2000) = 2.26 MMBO
• West Linapacan (1992 - 1996) = 8.53 MMBO
• San Antonio (1994 - 2008) = 3.54 BCFG
• Libertad (2012- 2015) = 0.20 BCFG
• Malampaya (2001 - 2015) = 1,663 BCFG
66.97 MMBC & 1.93 MMBO
 Clastic Reservoir
• Galoc (1988, 2008 - 2015) = 17.16 MMBO
 Oil Fields
Galoc (SC-14C1) 1988 (EPT) & 2008-2014
Current Operator: Galoc Production Company
Total Oil Produced: 17.16 MMBO
Oil Produced (1988): 0.38 MMBO
Oil Produced (2008-2015): 16.78 MMBO
Production Rate: `5,000 BOPD

Cadlao (SC-6) 1981-1991

Current Operator:
West Linapacan (SC14-C2)
Total Oil Produced: 11.24 MMBO
1992-1996
Current Operator: The Philodrill
Corporation
Total Oil Produced: 8.53 MMBO
Matinloc Complex (SC-14B)
1982-2015
Current Operator: The Philodrill Corporation
Total Oil Produced: 12.44 MMBO (Matinloc)
0.221 MMBO (Tara)
2.26 MMBO (North Matinloc)
Production Rate: 190 BOPD (Matinloc)
23 BOPD (North Matinloc)

Nido (SC-14A) 1979-2015

Current Operator: Philodrill Corporation
Total Oil Produced: 19.17 MMBO
Production Rate: 217 BOPD
 Gas Fields

Malampaya (SC-38) (2001-2015) San Antonio (SC-37) (1994-2008)

Current Operator: SPEX Current Operator: PNOC-EC
Total Gas Produced: 1.66 TCF Total Gas Produced: 3.5 BCF
Condensate Produced: 66.97 MMbbls (Depleted)
(producing)
Production Rate: 357 MMSCFPD (Gas) Libertad Gas Field
11,432 BCPD (2012-2015)
Total Gas Produced: 0.200 BCF
(producing)
Production Rate: 0.1 MMCFPD
Nido Production Facilities
Matinloc Production Facilities
Galoc Production Facilities
Malampaya Concrete Gravity Structure
(CGS) installed in June 2000
 Malampaya Shallow
Water Platform (SWP)
installed in March 2001

Malampaya Depletion
Compression Platform
(DCP) connected by a
bridge to SWP installed
in 2015
 The Philippine Petroleum Fiscal
Regime
4,000-11,000 sq km (offshore);
Contract Area
500-7,500 sq km (onshore)
7 yrs. exploration + 3 yrs. extension +
Contract Term
25 yrs. production + 15 yrs. extension
Signature Bonus Minimum of US$ 50,000
Production Bonuses US$ 300,000 to US$ 2 Million
Corporate Income
Tax rate: 35% - paid out of Government share
Tax
Cost oil limit: maximum of 70% of gross income;
Cost Recovery Limit
Capital expenditures depreciated over 5 to 10 yrs.
Production Sharing
Government share: 60% / Company Share: 40%
(% of net income)
Filipino Participation FPIA from 1.5% to 7.5% of gross proceeds with at least
Incentive Allowance 15% Filipino participation

State Participation None

 Service Contract Production
Sharing Scheme
$ 100.00 Gross Proceeds
7.50 less FPIA (to Contractor)
70.00 less Cost Recovery (to Contractor)
22.50 Net Proceeds

$ 13.50 60% Government Share

$ 9.00 40% Contractor's Share
 Petroleum Contracting Round (PCR-1)
(2003)
• Offers a more systematic approach in
promoting exploration & development of the
country’s petroleum resources
• Facilitate the establishment of the most
effective exploration strategy
• 46 blocks were offered in the prospective
basins of West Palawan and Sulu Sea.
 History of Philippine Energy
Contracting Rounds

Key Elements PECR 1 PECR 2 PECR 3 PECR 4 PECR 5

5 Aug 2003 31 Aug 2005 31 Aug 2006 30 June 2011 9 May 2014

Areas Offered 46 blocks 4 9 15 11

Proposal Accepted
1 6 15 21 4

Companies
39 –Prequalified
Participated 1 4 10 3
16 – Bidded
Service Contract 1
Awarded (composed of 4 7 3 3
2 blocks)
Generated PECR
Income (PhP) 413, 760 2, 389, 872 5, 865, 504 25, 257, 500
 The success of petroleum exploration in the
country can be attained by:
• using the right tools,
• applying new technology available,
• providing additional incentive/s for explorationists,
• support of LGUs and populace
DAGHANG SALAMAT
…MABUHAY!!!