Enough of sad and dark stories like overpriced parking buildings and traffic jams; let’s hear some good and happy stories for a change.
The prospect of the Philippines striking oil in commercial quantities within its undisputed territory brightened when a consortium led by the Philippine National Oil Co. Exploration Corp. (PNOC-EC) as operator started drilling for oil last May at the Baragatan Prospect in Service Contract 63, offshore of West Palawan, covering an area of 10,500 square kilometers.
The consortium includes PNOC-EC partners Nido Petroleum Philippines Pty Limited (a company listed in the Australian stock exchange) and Dragon Oil Plc (a publicly listed company based in the United Arab Emirates and listed in the London stock exchange).
International and local oil prospectors believe that the project has high chances of success.
In a report to the Australian Securities Exchange, Nido Petroleum said the prospect has an estimated oil-in-place of 676 million barrels with an upside potential of 977 million barrels. Recoverable oil volumes are estimated to be 115 million barrels with a potential of 116 million barrels or more.
If the consortium is successful in fully exploiting the oil resources in Service Contract 63, it is estimated that it could supply roughly 10 percent of the Philippines’ crude oil consumption. This will result in huge savings in our foreign exchange reserves, lower our energy costs, and greatly boost our industrial, agricultural, commercial and social
PNOC owns a 40-percent stake in Service Contract 63, with Dragon Oil holding another 40 percent, and Nido Petroleum 20 percent. The state-owned company is the designated operator.
A new jack up rig has been installed in the area to conduct exploratory drilling. The process is expected to be completed by the end of the year.
In a report to President Aquino, PNOC-EC head Mel Lopez, a former mayor of Manila, said the drilling is expected to cost the consortium about $22 million. Per the terms of the agreement with its partners, PNOC-EC is carried without any cost to the Philippines.
“Should we succeed in this phase of the exploration,” Lopez said, “we expect to make a few more exploratory and validation drilling activities before we can commercially draw from this prospect.”
Lopez reported that based on a rough estimate, another $100 million would be needed before oil can be drawn commercially from the prospect.
“Oil and gas exploration is a very costly and high-risk venture,” Lopez said. “Not many of our big companies will have the appetite to
enter such … an endeavor. It is essential therefore that the government, through PNOC-EC, continue to spearhead oil and gas exploration in our territory.”
The Philippines is located in a region with identical geological characteristics as oil- and gas-rich countries such as Brunei, Indonesia and Malaysia, Lopez pointed out.
“The only difference between us and them is the lack of oil and gas exploration activities in our own country,” he said. “Since 1896, the Philippines has drilled a total of not more than 600 wells. In comparison, our neighbors have drilled more than that in a period of just one or two years.”
According to the Department of Energy, it is estimated that as of 2005, there were 8,895 billion barrels of oil and gas reserves in the Philippines, as well as 28.531 trillion cubic feet of gas, and 165 million barrels of condensate (gas oil, naphtha and other relatively light hydrocarbons which are used as feedstock for oil refining and other petrochemical industries).
Of the estimated total oil, gas and condensate resources, only some 11 percent (973 million barrels have been discovered in place) are already considered reserves.
An estimated 89 percent (7,922 billion barrels) of total oil and gas reserves are still undiscovered, and only 32 percent (2,848 billion barrels) have been mapped. There are an estimated 168 million barrels of oil, 3.841 trillion cubic feet of gas, and 109 million barrels of condensate in discovered resources.
The Spanish government in the Philippines first noted the presence of oil in the province of Cebu in 1888. In 1896, the British trading firm Smith, Bell and Company drilled a 1,200-foot well in Toledo, Cebu. But the drilling stopped in 1896, when the Philippine Revolution against Spain broke out.
According to records of the Asiatic Petroleum Company, the Standard Oil Company started prospecting for oil in the Philippines in 1905, shortly after the United States took possession of the Philippines from Spain after its victory in the Spanish-American war of 1898.
The Richmond Petroleum Company, a subsidiary of Standard Oil, leased an area in the Bondoc Peninsula in Southern Luzon and drilled a well of approximately 1,300 feet, but subsequently abandoned it because of cave-in problems. Three wells later, the company failed to discover oil in commercial quantities.