By Mario Casayuran
With the flow of gas from the Malampaya gas fields expected to begin depleting in 2022, the Senate energy committee today called on the private sector to undertake gas and oil drilling activities in the Philippine archipelago.
Senator Sherwin Gatchalian, committee chairman, made the call after conducting a Senate public hearing on his resolution on the need for a Philippine Downstream Natural Gas Industry Policy to enact appropriate legislation for its development and regulation in light of the Malampaya franchise exploration expiration in 2024.
The Malampaya gas field or Malampaya-Camago field is located offshore, 65 kilometers northwest of Palawan. Following successful appraisal of the Malampaya field in the 1990s, the first gas flowed in September 2001.
The field was developed and is currently being operated by Shell Philippines Exploration B. V. (SPEX), under the Royal Dutch Shell; with joint partners – Chevron Malampaya LLC and Philippine National Oil Company (PNOC) Exploration Corporation.
Malampaya is benefiting the Philippines in countless ways, including reducing oil imports, assuring a more stable supply of energy and a cleaner source of power, and meeting up to 30 percent of Luzon’s energy requirements. Its operation in the power stations’ full capacity of 2,700 megawatts (MWs) is displacing an estimate of some 1.35 million kilograms of carbon dioxide per hour–a cleaner and more sustainable process, as compared to energy generation using coal or fuel oil.
Although the PNOC has a drilling or exploration arm, the Philippines requires private investors to do this because the risk is high, Gatchalian told the Manila Bulletin.
‘’In order for the government not to take risks, the private proponents are encouraged to undertake the exploration and exploitation of oil and gas. Malampaya is a highly private endeavor, the government is getting 60 percent of the proceeds from Malampaya so nakikita natin na sila ang nag-take ng risks pero nakinabang tayo,’’ he explained. (The private sector (Shell) took the risks and the government is benefiting from such an arrangement.)
‘’I am encouraging private development exploitation of oil and gas. Malampaya is purely a private endeavor,’’ he added.
Reuben S. Lista, PNOC president and CEO, attended the public hearing.
‘’Makikita natin by 2022.may depletion na. So from 2020-2022, dapat full blast na yung construction (hopefully the construction phase would by then be in full blast) and approving contract of natural gas terminals. No drilling is needed. This is 100-percent importation. Potential sources from Australia and the US,’’ he said.
‘’The price will depend because natural gas is more expensive than coal. If we import natural gas, we might see an increase of electricity. We will wait for DOE (Department of Energy) to submit their computation to us and business models so the public will know if there is an increase in prices and if there is supply, it should be reasonable,’’ he explained.
Gatchalian heard testimonies that the DOE would probably approve a proponent to develop the terminal and other facilities by the end of the year.
‘’Hopefully by 2020, we’re already at ground breaking and earth movement level for a natural gas facility. There will be no bidding, They will just issue a notice to proceed. Meaning, the proponents will submit to DOE the requirements and once they approve the proponents, they can start building the terminal and the facility. We are looking at the year 2020,’’ he added.
The outcome of the public hearing, according to Gatchalian, is ‘’that we can see that there is an urgent need to replace Malampaya as soon as possible because by 2020, we will see significant amount of depletion in terms of production of natural gas in this country.’’
“Clearly, we need stability in the industry. We need clear details on the issue of regulation. The question is who will regulate the downstream gas industry?’’ he asked.
Gatchalian expressed hopes to make a decision on this issue after conducting more public hearings.