DOE to bid out Benham areas for oil, gas projects

By Neil Jerome C. Morales, The Philippine Star

Posted at Sep 11 2012 07:49 AM | Updated as of Sep 11 2012 07:28 PM

MANILA, Philippines – The Department of Energy (DOE) is looking to bid out portions of the 13-million-hectare Benham Rise in the eastern Luzon Seaboard for oil and gas exploration projects next year.

But the DOE will first have to secure seismic survey data to encourage investors, an official said.

The DOE, along with other government agencies, is also fasttracking the permitting process for other petroleum projects as the Philippines is largely underexplored compared with its Southeast Asian neighbors.

“Now that [Benham Rise] is ours, it might be a good time to acquire seismic data,” DOE Undersecretary Jose Layug, Jr. said in a briefing.

“It would be nice to do it alongside Philippine Energy Contracting Round (PECR) 5,” he added.

In April, the 13-million-hectare continental shelf off the east coast of Luzon, near the provinces of Aurora and Isabela, was declared by the United Nations as part of Philippine territory.

The area, which is also known as Benham Plateau, is a deepwater fishing ground for deepwater fish like bluefin tuna. It is also believed to be rich in natural gas and manganese nodules.

In 2008, the Philippines filed the claim in the area, which is an extinct volcanic ridge.

However, the DOE needs preliminary data assessing the resources in the Benham Rise.

“For us to be able to offer those areas for PECR, we need data,” Layug said.

Environment Secretary Ramon Paje earlier said the Benham Rise might contain mineral and gas deposits like those in the Reed Bank in the disputed West Philippine Sea.

In the PECR 4 that offered 15 oil and petroleum areas, the DOE received 20 bids for 11 areas. All four areas that failed to secure bids lacked seismic data, Layug said.

Specifically, four firms are interested to conduct seismic surveys in the eastern side of the country, Layug said.

The DOE previously allowed Western Geco International Ltd. to conduct a $3-million seismic study in 2002, Digicon Berhad in 1992 and Singapore-based Petroleum Geoservices Asia Pacific Ltd. in 1996.

Geophysical surveys like seismic studies can indicate features in the oil and petroleum reservoir. However, the DOE lacks funds and financial resources to conduct the surveys on its own.

Through the seismic data, a company can propose how many wells they plan to drill to measure resources.

On a larger scale, the DOE and other government agencies are continuously implementing reforms identified by the Philippine Upstream Petroleum Task Force that was created by Executive Order 60 last year.

“We have a lot of key agencies here because based on what we have seen is when we look at all permits needed to be secured if you’re going to conduct exploration activity, at least 200. If you are a foreign investor, you have to secure 200 permits so we try to streamline,” Layug said.

The permitting process usually takes one year to obtain, which the task force expects to cut by half by the end of the year, he said.

Prior to exploration projects, companies need to secure numerous environmental, national and local permits.

Layug said the Philippines is competing with its neighbors in securing capital for exploration purposes.

Other efforts of the government include local and international roadshows and efficiency in managing service contracts.

To date, there are 27 service service contracts in the Philippines involving Shell Philippines Exploration, Nido and BHP Billiton. However, only the Malampaya and Galoc oil fields are in regular production.

The DOE is pursuing energy independence and sustainability through the development of indigenous energy resources like coal, petroleum and natural gas.