he Galoc oil well located
offshore of Northwest Palawan is finally in commercial run, producing 17,000 to
20,000 barrels of crude day. The output represents 6 percent of the country’s
oil requirement. So it is certainly to be hoped that more Galocs are developed
soon.
We are not, however, holding our breath. For while Galoc is
indeed a significant step toward easing the country’s dependence on imported
crude, it is also sorry reminder of the failure to follow through on previous
efforts to hunt for local oil deposits.
Galoc was discovered in the late 1970s soon after the oil
strikes in Nido and Cadlao in the same general area. It was, however, deemed to
be commercially non-viable at that time. It was only a few years back when crude
was selling above $50 a barrel that tapping Galoc with its "small" reserves of
three to five million barrels became profitable. Thus the decision of the Nido
consortium to spend $120 million to put the well into commercial production.
Nido and Cadlao, by the way, were producing a combined output
of 20,000 a barrels a day when they came on stream early in the 1980s. Because
of the foreign exchange that subsequently hit the country, a decision was made
to ramp up production to 40,000 barrels a day. This resulted in water intrusion
into the oil column and those wells completely dried up around 1992.
So why has there been no new oil strikes for almost three
decades since the discovery of the Northwest Palawan oilfield? Incidentally,
Malampaya, which is the country’s lone natural gas production facility, is also
located within the same area.
The short answer is that nobody is drilling. For comparison,
there were up to six to eight exploratory drillings a year in the 1970s.
(A few years back, the Palace announced a natural gas strike
in Tarlac. It turned out the drilling was conducted at the Victoria site which
Amoco had discovered a long time ago, but abandoned because the reserves were
not of commercial quantity.)
That’s the puzzle. The old explanation was that the wells so
far discovered in the country were of the reefal type. Such oil-bearing
structures are small relative to domes. Oil exploration companies, therefore,
would prefer to gamble for bigger stakes.
But as Galoc has shown, money can be made tapping even small
reserves of three to five million barrels.
So what gives? Frankly, we don’t know and we doubt energy officials know
either.
