THE Department of Energy (DOE) has approved the deed of assignment by listed Basic Energy Corp. (BEC) of an 80 percent stake in its Iriga geothermal service contract to local firm Desco Inc.
“Yes, it’s already approved,” Arnel Fronda, division chief of the department’s Geothermal Energy Management Division, said on Wednesday.
BEC signed the deed of assignment for Desco to take up 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 November 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,” Anthony Cuaycong, Basic Energy senior vice president, said.
Under the approved terms, Desco will be undertaking, for and on behalf of the consortium, 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,” the BEC official said.
The DOE awarded the Iriga Geothermal Service Contract No. 2013-02-043 to Basic Energy on February 26, 2013.
Desco will complete the pre-drilling endeavors in accordance with the work program previously approved by the department, and it 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 area landscape is dominated by Mount Asog, southwest of Lake Buhi in Southern Luzon.
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 (MW).
Basic Energy has five geothermal and four mini-hydro projects in the pipeline. It is also looking into three solar projects in line with its commitment to pursue renewable energy alternatives.