In Alegria, Southern Cebu: 28M barrels of oil found

CEBU, Philippines — Alegria, a fourth-income class town with about 25,000 people located 120 kilometers south of Cebu City, has been found to be hosting commercial quantities of natural gas and oil resources, the Department of Energy said on Tuesday.

An estimated 27.93 million barrels of oil were jointly discovered beneath Alegria’s soil by the DOE and service contractor China International Mining Petroleum Company Ltd. (CIMP), the department said in a statement.

Of the total amount, a conservative estimate of about 3.35 million barrels or 12 percent may be recovered for production. (1 barrel = 42 gallons)

For natural gas, about 9.42 billion cubic feet in reserves were found, with a recoverable resource estimated at 6.6 billion cubic feet or about 70 percent of the total natural gas in place.

“What ‘oil’ means is petroleum crude oil while natural gas pertains to methane that can be used to generate electricity,” acting DOE-7 director Saul Gonzales told The FREEMAN.

Bloomberg data yesterday showed that the price of crude oil in the international market ranged from $60 to $65 per barrel. Natural gas prices were playing somewhere around $2.74 per MBTU.

MBTU, according to energyvortex.com, stands for one million British thermal units, occasionally used as a standard unit of measurement for natural gas and provides a convenient basis for comparing the energy content of various grades of natural gas and other fuels.

One cubic foot of natural gas produces approximately 1,000 BTUs, which means that 1,000 cubic feet of gas is comparable to 1 MBTU.

The DOE’s pronounce-ment came after a recent ceremonial signing of the Joint Declaration of Commerciality (JDC) between the agency and CIMP in Manila.

The declaration was signed by DOE Secretary Alfonso Cusi and CIMP Co. Ltd. chairman Lam Nam, and witnessed by DOE undersecretary Donato Marcos and CIMP Co. Ltd. chief executive officer Eric Lai.

CIMP has embarked in oil exploration activities in the southern Cebu town, particularly in Barangay Monteller, where the deposits were found.

The service contractor began its exploration and drilling activities on the oil field in 2009 by virtue of Petroleum Service Contract No. 49, which covers Alegria.

Seven years later, in 2016, the DOE and CIMP Co. Ltd. jointly established that the oil field contained commercial quantities of natural gas upon discovery of oil accumulation in the adjacent hydrocarbon traps within the Alegria underground area.

Based on the development plan crafted after the initial testing, the natural gas and oil production on the field may last until 2037.

The JDC outlined the roles and responsibilities of CIMP Co. Ltd., particularly its compliance with all conditions stated in the approved Plan of Development on December 19, 2017.

Economic booster

When sought for comment, Gonzales was quick to welcome the development.

“This is good news. This will surely create economic activity within the area, in Cebu, in the Visayas and in the entire country as well,” he said.

Alegria Mayor Verna Magallon agreed with Gonzales, saying the discovery is a potential economic booster for her town, a fourth-class municipality with high poverty index.

She said the development will offer jobs to residents and give an alternative income source to the town, which relies heavily on agriculture and tourism.

Magallon shared that under a separate contract to be forged with the winning service provider for the oil production, 60 percent of the revenues will go to the Philippine government while the remaining 40 percent will go to the contractor.

The government’s share will be further shared by the national, provincial, municipal governments, and host barangay unit.

The town’s share in the revenues can then be used to increase the municipal budget for different programs and projects, said Magallon.

Monteller is an upland barangay in Alegria. CIMP has drilled in six areas during the exploration phase.

Gonzales explained that the discovery of commercial quantities of the oil and natural gas “is a good start activity before the actual extraction.”

“Once the extraction begins, which we do not know yet when, this will create business and employment within the area. Unya makatabang pud ni sa atong oil supply,” he said.

Minding the impact

Gonzales further said the service contractor still has to get clearances and permits from the different government agencies, such as the DOE and the Department of Environment and Natural Resources, before extraction and further exploration can commence.

This early, though, Magallon has assured the people, especially environmentalists, that the municipal government in partnership with the DOE is “strictly monitoring” the drilling site to guarantee that environmental regulations are being met.

“Naa ni sa upland barangay ang site, dili near sa Tañon Strait,” she clarified.

If production plans push through, Engr. Jesus Rey Cavalida, the municipal planning engineer, said it will be the “first time” for the town to produce and sell oil.

Explorations, he added, have been made in the 1970s but it is only now that proof has been found that commercial quantities of oil and gas indeed exist in the area.

Cavalida said proper impact assessment has been made to ensure that the environment won’t be damaged by the ongoing exploration and future production operations.  — Lorraine Mitzi A. Ambrad