The Energy Department approved the transfer of an 80-percent stake in Iriga geothermal service contract from Basic Energy Corp. to local company Desco Inc.
“Yes, it’s already approved,” said Arnel Fronda, division chief of the Energy Department’s geothermal energy management division.
Basic Energy signed the deed of assignment to Desco for an 80-percent stake in the Iriga service contract in January, subject to regulatory approvals.
Basic Energy will own the remaining 20 percent in the service contract.
“Basic received the DOE letter on Nov. 8. Desco will gain an 80-percent stake and Basic will retain 20 percent. In exchange, Basic will be fully carried in all activities leading to the drilling of the first well,” Basic Energy senior vice president Anthony Cuaycong said.
Under the approved terms, Desco will undertake for and on behalf of the consortium the geophysical activities, including the conduct of a magneto-telluric survey, and all other steps required to bring the project to drilling.
“The move allows Basic to concentrate resources on Mabini, as well as on the pursuit of projects with faster turnaround times and nearer-term revenue streams,” Cuaycong said.
The department awarded Iriga geothermal service contract No. 2013-02-043 to Basic Energy on Feb. 26, 2013.
Desco’s entry following an extensive review underscores its bullishness on the project. Desco will complete the pre-drilling activities in accordance with the work program previously approved by the department.
Desco will also cover the total cost of drilling the first well, with Basic Energy fully carried.
For succeeding work, including the drilling of more wells and the construction of a production facility, costs will be shared pro rata between Basic Energy and Desco.
The Iriga, Camarines Sur geothermal area is bounded in the north by the Isarog geothermal block of PNOC Renewables Corp.
The areal landscape is dominated by Mount Asog, a stratovolcano southwest of Lake Buhi.
Basic Energy and Desco believe the project holds great potential in light of its close proximity to the Tiwi geothermal service contract of AP Renewables Inc. (formerly Chevron), which currently covers an installed capacity of 275 megawatts.