Oil and gas – the lifeline of our economy

By: Engr. Edgar Mana-ay

Much has been said about phasing out of petroleum products, which fuels our moving equipment, because of the pollution to the environment, especially carbon dioxide (CO2) that kuno causes global warming. The lure of non-carbon energy sources to fuel the economy of the nation is very attractive to the less knowledgeable and innocent sector of our society.

Even our very educated brethren in Negros are bragging that they will continue to exist as a COAL-FREE island (just like oil and gas, coal is also a carbon-based fossil energy source in solid form) when in truth and in fact, a third of its power sources (70 to 100 megawatts) come from COAL-FIRED POWER PLANTS in Iloilo and Cebu transmitted via an island power grid.

If they are true to their belief that coal destroys the environment, why should not the Negrense shut out electric power it receives from coal plants and we will see what will happen to them!

Take note that 100 MW from a coal-fired power plant powers the economy of Metro Iloilo. Oil, gas, and coal are hydrocarbon fossil energy sources which we cannot do away with for at least the next hundred years when, hopefully, other clean sources of energy are discovered.

From deposits underground, crude oil is converted to diesel, gasoline, jet fuel (a very refined form of kerosene) to fuel moving equipment such as trucks, cars, jeeps, ships, and planes; and also for stationary equipment like standby power units in malls and commercial buildings, water pumps in agriculture, and many more.

Natural gas converted to LNG (liquefied natural gas, 100% from Malampaya) provides 40% of the fuel for electric power plants in Luzon using a gas turbine generator set up and LPG (liquefied petroleum gas) processed in the refinery from imported crude, is mainly used for cooking and also occasionally for cars and trucks throughout the country.

It is estimated that of the total energy consumption of the country, HALF goes to power plants to produce electricity of which only 10% is imported in the form of coal.

The other HALF of energy consumption, which are all liquid fuels that power our moving and stationary equipment, is 95% imported!

In 2016, the Philippines imported about 230,000 barrels (1 bbl = 158 liters) A DAY of crude and finished petroleum products such as diesel, gasoline, etc. while producing only about 20,000 bbl/day of crude from our very few and dwindling offshore oil wells in Palawan plus condensate from the Malampaya gas field which will be exhausted in four years’ time.

Condensate in a gas well is a gasoline-like liquid portion of the gas coming out also termed as straight-run gasoline, these will still be treated in the refinery before it can be sold as gasoline fuel.

Philippine import records show that in 2018, we imported raw and finished petroleum products worth $5.2 BILLION! That is equivalent to an import expenditure of P7.8 BILLION PER DAY!

No country in the world that imports more than 40% of its energy requirements can rise above the poverty level. Ours is about 55% energy import considering that we have Semirara for coal and Malampaya for natural gas.

If we have to progress and lift our people from the misery of poverty, the rule of thumb is that energy imports should not exceed 30% of the country’s total energy requirements. The P7.8 billion per day energy imports literally bleeds our economy.

Of course, we are not like Middle East countries that are literally floating on oil resources. In the case of U.S. energy, abundance is not only in oil but also in coal, natural gas, and recently discovered oil shale in West Texas. These are gigantic oil and gas deposit mixed and trapped in a compacted silt and clay soil horizon and can be extracted by a new and revolutionary method called hydraulic fracturing or fracking.

For those conversant and expert on our energy resources, is it possible to limit our import to only 30% of our total energy requirement? Bear in mind that Malampaya natural gas will be gone in 4 years time and that would even raise our total imports from the present 55% level to maybe 70% level!

UNLESS we drill and exploit the oil and gas deposit from Recto or Reed bank, we will continueto depend on imported fuel. BUT can we do it NOW?

According to the lap dogs of the President, DU30 was misinterpreted when he said during his SONA that China was in POSSESSION of the disputed waters in West Philippine Sea.

Rather it should be: China is in POSITION in the disputed waters, so it would be difficult to drive them out by our miniscule Coast Guards. They have the POSITIONAL advantage right now and they have the equipment (a mighty navy) to enforce their POSITION.

No amount of “merry go round semantics” or “gobbledygook” or nonsense mumbo jumbo can justify the passive attitude or cowardice of DU30 in pursuing NOW the drilling of oil and gas at Recto Bank.

Forum Energy, which has the contract rights to drill at Service Contract (SC) 72 that covers the Recto Bank, is just waiting for the government signal to send its oil drill rig in the area.

President Duterte, please give the order NOW and we will see if bully China will destroy the oil rig with its cannon.

For if they do, what will apply is Article IV of the Mutual Defense Treaty with the U.S. which says: “US military will intervene if any foreign power attacks the Philippine armed forces, public vessels or aircrafts in the South China Sea (SCS) and West Philippine Sea (WPS)”.

I quote again the Persian proverb: “He who wants the rose must not be afraid of the thorn”.