Gov’t mulls more crude production from Malampaya

The Department of Energy (DOE) is seriously studying the possibility of extracting more crude oil from the Malampaya field in northwest Palawan for domestic use amid a looming global oil crisis.

"Although the oil produced from Malampaya is not sufficient enough to cover for all our petroleum needs, we might consider looking at it as one of the options to ease the burden of the rising world crude prices," Energy Undersecretary J.V. Emmanuel de Dios said.

The government is using the natural gas from Malampaya to power up not only generating plants but also compressed natural gas (CNG)-run buses.

Aside from these, the energy official said the DOE is currently exploring all alternative sources of energy especially those from renewable energy sources such as wind, solar and geothermal.

Shell Petroleum Exploration B.V. (SPEX), the main operator of the $4.5-billion Malampaya oil development project, has been continuing its efforts to drill more oil in the field.

SPEX is planning to drill five to six more oil wells within the area, known as Service Contract No. 38.

Since the start of its operations in 1989, SPEX had drilled 11 wells. Of these, only five wells are producing natural gas and oil. The company spends about $30 million to develop one oil well.

SPEX said the oil rim could have total oil recoverable reserves of 25 million barrels and 25 trillion cubic feet of potential gas reserves.

In 2002, SPEX decided to push through with the drilling of extended wells in a nearby oil field close to the natural gas project. The extended well tests were concluded in May 2002.

However, SPEX encountered some legal issues with regard to selling its petroleum/crude produce in the Philippines. In the meantime, it was able to sell the barrels of oil that were produced from the Malampaya field to Singapore and Korea.

At present, MNCs (multinational corporations) are disallowed to process or refine and sell crude produced in the Philippines. SPEX is the upstream oil development arm of the Royal Dutch Shell Group.

Shell country chairman Edgar Chua said this existing law hampers the ability of local oil firms to source their products here. Shell is a sister firm of SPEX.

"The thing is, if we can utilize local crude resources and we’re allowed by the law, then we don’t have to import as much," he said.

Chua said local laws offer no flexibility when it involves refineries. "Our only choice is to sell abroad any oil we can source. We can process or mix it, but only if it is imported."