Dont we offer sufficiently
generous incentives? Or is the policy environment simply inhospitable to oil
exploration?
That was welcome news, the
announcement that Galoc oilfield will come on-stream next week with an output of
17,500 barrels a day. The Galoc output will raise the countrys total oil output
to 40,000 a day, representing 10 percent of consumption.
While domestic production will not ease current woes because
the price of the output from these fields is pegged to global crude, it will
help stanch the flow of foreign exchange. By the estimate of Energy Secretary
Angie Reyes, local oil will save the country $1.6 billion.
That said, our elation that Galoc is now on-stream is
tempered by the realization that the countrys oil exploration program appears to
have been suspended in stasis the last 30 years.
Galoc was a late 1970s discovery. It came with that bunch of
oil strikes in Nino, Cadlao, Matinloc and Linapacan. Nido started with an output
of 20,000 barrels a day. A decision was reached, however, to push output to
40,000 because of the seeming endless crude oil price spiral at that time. Water
seeped into the wells and output thereafter sharply declined.
If we are not mistaken, Nido and Matinloc continue to pump
out about 25,000 barrels a day. Cadlao possibly can be brought on-stream as
early as this year. Linapacan is also being developed for commercial extraction.
Reyes has good reason to be confident that the 40,000 barrel output can be
sharply increased in a couple of years.
As we said earlier Nido, Matinloc, Cadlao and Linapacan were
old discoveries. They were formerly considered marginally commercial. It was the
crude price surge in the last five years that made extraction of oil from these
wells commercially viable.
Our question remains: Why is it that no new oil strikes have
been made all these years?
We have the deposits. The offshore area in northwestern
Palawan is a proven oil producer. The fields are indeed small. Most of the
discoveries are in reefal structures, not the gigantic domes of Texas or the
Middle East. But these small fields can now be profitably exploited with crude
at over $130 a barrel.
There are scores of potential oil-bearing structures in the
archipelago long identified by previous seismic surveys. It is a matter of
drilling holes and determining whether these structures contain oil or not. The
1970s ratio was 13 to 14 dry holes to one oil strike. These were so-so ratios at
the time but are now pretty good odds given the cost of drilling against
potential returns.
So why is the PNOC-Exploration Co. not doing extensive
drilling? Why is it that we cannot attract more wildcatters?
Dont we offer sufficiently generous incentives? Or is the policy environment
simply inhospitable to oil exploration? These questions need to be addressed for
us to become a significant oil producer.
