Oil discovered in south Cebu

CEBU, Philippines - There is oil in the Province of Cebu!

Australian firm Gas2Grid Limited, through its website, announced that the Department of Energy (DOE) has recognized the oil exploration in central Cebu as an oil discovery, as well as the energy department's extension of the firm's service contract for one year.

The recognition of the oil discovery opens the possibilities of the province having a commercial oil field.

"The Company advises that the Philippine Department of Energy (DOE) has formally recognized Malolos-1 as an oil discovery and approved an extension of SC (Service Contract) 44 in order to conduct oil production with the aim of establishing a commercial oil field," the foreign oil producing firm said in a statement posted via www.gas2grid.com.

Local energy officials, however, have not received the official report from their head office.

DOE- 7 Regional Director Antonio Labios said he will reserve his comment and assessment on the discovery until he gets hold of the official report from their head office.

"Yes, there is drilling in Malolos, Carcar. But we do not have yet the official report so I will reserve my comment on the matter," Labios told The Freeman.

The Service Contract (SC) 44 extension, the Gas2Grid statement continued, will take effect January 28 and will last for 12 months.

SC 44 was issued in 2004.

The terms of the contract provides that the project covers 750 square kilometers of central Cebu, covering portions of Carcar City, Aloguinsan, Pinamungajan, Toledo City, Naga City, Barili, Dumanjug, Ronda, Alcantara, Moalboal and Sibonga.

Malolos-1, which tested positive for oil production from two separate sandstone intervals, runs at the boundary of Carcar City and Aloguinsan town.

The potential oil volume spotted in the Malolos oil field, based on Gas2Grid's initial assessment, was described as "contingent resource" and ranges between a "low estimate" of 4 million barrels and a "high estimate" of 42 million barrels with the "best estimate" of 12 million barrels of "total oil in place."

With the extension of the contract, the company intends to conduct oil production testing for a longer period in order to establish its commerciality.

Furthermore, Gas2Grid believes that the longer testing period, which is estimated to cost US$500,000 to US$1 million, will allow the firm to have an independent expert certify and convert the "contingent" resource of oil into "proven, probable, and possible oil reserves."

Meanwhile, Cebu Governor Hilario Davide III expressed caution about the oil discovery, saying there were objections before by some sectors when oil explorations in Cebu were first proposed, because of environmental concerns.

"If there's going to be any exploration, moagi man gyud na sa probinsiya  tingale. We will also ask from the stakeholders for their views," Davide told reporters yesterday.

The governor said he would like to know the benefits that the province and its people can get from the project, such as employment generation.

Gas2Grid earlier announced that once the oil exploration is successful, the government will get 60 percent of the total revenues while 40 percent will go to the company.

Aloguinsan Mayor Augustus Caesar Moreno, during the early stages of the exploration, said that there were a lot of attempts to drill in their place since the 1960s but these have failed.

"Maybe this is the time Aloguinsan will be fortunate," Moreno said, adding that since the exploration has started, it already has created economic activities among the locals in the area.—  with Gregg M. Rubio/QSB (FREEMAN)