Oil & gas found in the Philippines: What you need to know
‘Hottest’ exploration areas, new drilling projects approved
Highlights
- New in-land fields and sea basins get OK to drill for hydrocarbons from Energy Department.
- Country’s hydrocarbon fuel self-sufficiency remains a pipe dream; though it’s not a question of if, but when.
- $26.3 trillion worth of oil & gas deposits to be explored both offshore and onshore, according to one study.
Manila: Is there oil and gas in the Philippines? Quick answer: Yes. There’s plenty to go around. Probably more than enough to cover domestic needs, with more left for export. That’s what one study shows.
A number of prospective places across the length and breadth of the country has proven the presence of fossil fuel deposits. Why are they not being drilled? They are. But the number of wells is few and far between. Here's why:
Onshore, offshore
The country has proven the presence of commercial quantities of hydrocarbons in its territory, both onshore and offshore. The industry, however, is under-explored and under-funded. One reason: security.
Since the 1970s, only a few wells had been drilled, supplying a small chunk of the domestic oil and gas demand for its 110 million inhabitants.
Total domestic production of petroleum and other liquids was 37,000 barrels per day (b/d), compared to country’s daily consumption of 474,000 b/d, according to the Department of Energy (DoE).
Some of the gas wells, too, are reported to be running dry “soon” — 2027 in the case for the Malampaya, according to Department of Energy (DoE) Secretary Alfonso Cusi.
For a quick idea of Philippine oil and gas prospects, consider these:
Fact 1:
The Philippines is said to be “sitting” on a gold mine of untapped hydrocarbons estimated to worth $26.3 trillion, according to a recent study. This is a largely unproven claim, but one that’s worth noting.
Fact 2:
Some of the oil and gas is found in the disputed Spratly chain of islands, where active oil fields are now supplying the rest of the country; other prospective deposits are believed to be found inland and offshore waters including those in the northern province Cagayan, Ragay Gulf in Bicol, offshore Mindoro, the new Palawan block, northern Cebu and the Cotabato Basin.
Fact 3:
In 2018, an estimated 27.93 million barrels of in-land oil was discovered in Alegria, Cebu by the DOE and service contractor China International Mining Petroleum Co. Ltd. (CIMP), with an estimated 3.35 million barrels of recoverable oil (12% of the total). An estimated 9.42 billion cubic feet of natural gas reserves were found, with up to 6.6 billion cubic feet of recoverable gas, about 70% of the total estimated gas reserves.
Fact 4:
The Liguasan Marsh, which covers 2,200 hectares straddling the provinces of Cotabato, Maguindanao and Sultan Kudarat, is estimated to hold 3.4 trillion cubic feet (TCF) of natural gas and 4.8 billion barrels (BBL) of crude oil.
Earlier this month (March 7, 2022), the DOE has given the green light to SK Liguasan Oil and Gas Corp. (SKLOGC), a Mindanao-based exploration firm, to develop “Area 9” of the Cotabato Basin.
Fact 5:
The Malampaya gas well, 50km west of Palawan island has produced a total of 1.94 trillion of standard cubic feet (Tcf) of gas (as of end-2017) and 75.0 million barrels of associated natural-gas condensate (also called natural gas liquids), a low-density mixture of hydrocarbon liquids present as gaseous components in the raw natural gas produced from gas fields. It supplies five power plants in Luzon, the country's largest island, with a combined capacity of 3,200 megawatts.
Fact 6:
Other potentially huge fields had been earmarked within the country’s “undisputed” territories — such as Sulu Sea and parts of the Celebes Sea, in the vast seas off southern Philippines.
Recent crude oil prices spikes on heightened supply risk concerns have spooked Filipino consumers, forcing the government to fuel activate a subsidy scheme. Crude futures for May delivery stood at $107.91 per barrel, close to nine-year highs.
There’s no question the country needs to harness new sources of domestically-produced energy sources, including hydrocarbons, nuclear and other renewables.
The remaining 15% was imported from ASEAN countries, Australia, Taiwan and South Korea.
Security challenge
Currently, the problem is a huge one. In a word: Security. As part of his research work at the Command and Staff College of the Philippine Air Force (Villamor Air, Pasay City), Brig. Gen. Eldon G. Nemenzo, conducted research with data culled from official and the most authoritative industry sources.
His initial estimate of the amount of oil reserves in the country is quite startling: about $26.3 trillion worth of hydrocarbons at 2018 prices. Nemenzo is a Filipino fighter jet pilot and former deputy commander of the 3rd Air Division of the Philippine Air Force (PAF) based in Zamboanga City.
In an interview with the Philippine News Agency (PNA) in 2018, Gen. Nemenzo cited the vast oil reserves of the Philippines in various parts of the archipelago, specifically the Reed Bank — the largest of them all — and the Mischief Reef in the Spratly Islands called by the Philippines as the Kalayaan Island Group (KIG), as well as the other basins.
The United States Energy Information Administration (EIA) contested this claim, estimating almost no oil and less than 100 billion cubic feet of natural gas exists in fields near the Spratly Islands.
“The Philippines is like a blind beggar sitting on a mountain of gold. Within the country’s 200-mile Exclusive Economic Zone (EEZ) are potential recoverable hydrocarbon deposits worth an estimated US$ 26.3 trillion. More than enough to lift the country from the centuries long morass of poverty and underdevelopment,” Nemenzo told the agency."
Nemenzo supported his claims with data from other sources, including the the USGS and China’s Ministry of Geology and Mineral Resources. The latter estimated crude oil deposits in the Spratlys to reach 17.1 billion barrels.
Why is the Spratlys important?
The Spratly Islands are important for both economic and strategic reasons.
- It holds potentially significant, though still unexplored, reserves of oil and natural gas.
- It is one of the busiest areas of commercial shipping traffic.
- It is a productive area for world fishing.
- Surrounding countries would get an extended continental shelf if their claims were recognised.
“Hot new” exploration area: Sulu, Cotabato, Celebes basins
In 2011, the Hydrocarbons Technology industry journal named the Philippines as a “hot new area” for oil exploration, alongside Argentina. It identified four areas of interest in the Asian country — Spratly Islands, Sulu Sea, Celebes Sea and Philippine Sea.
Some of the “biggest untapped petroleum resources” in the country is believed to be in the unexplored areas under the BARMM.
It cites a study made by Ishak Mastura of the IAG Development Consulting Inc., who identified two of the most highly-prospective petroleum sedimentary basins — Sulu Sea and major portions of Cotabato.
For its part, the Philippines’ DoE has stated that the offshore Sulu Sea Basin has a potential 203 million barrels of oil equivalent (MMBOE), while the land-based Cotabato Basin has a potential 159 MMBOE.
Cotabato gas deposits
Already, there’s a confirmed 29 billion cubic feet (BCF) of gas already discovered in the Philippines’ Cotabato Basin, which comes under the BARMM. Unlike the Spratlys, these two areas — Sulu Sea and Cotabato Basins — belong to an undisputed part of the Philippine territory.
There are other potential exploration areas in the Visayas, Bicol and Northern Luzon regions too.
It covers the maritime tri-boundary area of the Philippines, Malaysia and Indonesia.
Before 2016, kidnap-for-ransom cases on land was common in the region. They were carried out by the notorious Abu Sayyaf Group (ASG), a terror group that later allied with Daesh (ISIS).
On March 26, 2016, the first abduction of crew from ship was reported. A series of abduction of crew incidents were reported in the area in 2016, 2017, 2018 and 2019.
Many of the people living in its coastal communities are poor and their communities under-developed, ripe for resentments and insurgency.
Extraction of gold, copper and nickel, among others, is a key pillar of the mining industry in the archipelagic country. But existing laws are skewed against the locals.
In mineral-rich regions, the nearby communities are left no better than before, having to sometimes deal with toxic waste long after mining companies have left and their environment turned into a wasteland.