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Firm to start drilling for oil in Cebu

/ 11:00 AM September 02, 2012

An Australian firm will start exploratory drilling for oil and gas in  Carcar City and Aloguinsan town starting mid-September.

Gas2Grid Limited (G2G) is ready to transport the on-shore oil rig, Rig 2, from  San Fernando town in southern Cebu to Jacob 1 and Gumamela – the drilling areas in Carcar City.

After Carcar City, the next area to drill will be Ilang well in Aloguinsan town in western Cebu.


Rig 2,  an 800 horsepower facility which can drill to a depth of 2,750 meters, arrived in Cebu from Taiwan in mid-June.

Reports  submitted to the Department of Energy said the  potential of Jacob 1 in Carcar City is 50 million barrels of stocked oil barrels.

“The Department of Energy looks at  resource potentials in the  area where they would drill the well. We don’t say it’s  proven until we drill   and find the oil or gas. We’re not sure how much is there,” said DOE Undersecretary Jose Layug Jr.

“Cebu is lucky, because there appears to be a lot of resource potentials in the Cebu region. That is why we continue to look for investors, hoping that they would find oil and natural gas potentials,” said Layug.

Under the Oil Exploration and Development Act of 1972, the DOE  can  enter into a service contract with an investor to conduct  these explorations.

If investors don’t find  any gas or oil, they can’t charge the government for their expenses.

“That is the major risk of the investors. However if they do find oil and gas and  start producing so they earn gross revenues, they now deduct their expenses from the gross revenue, and then from the net revenue income, the government gets 60 percent  while the investors get 40 percent,” said Layug.

If the venture is  successful, the  service contract or exploration contract converts into a commercial one.


The 25-year service contract  can be extended for 25 years.

After the seven year exploration if they start producing, that’s when they reach commercial production stage. When they start producing, that’s when we start earning revenues, Layug explained.

The  DOE assured that the drilling would not create hazards in  the environment.

He said the exploration area is limited.

“We make sure they comply wilt all the environmental requirements not just from the DOE but also from the Department of Environment and Natural Resources and other government agencies,”  said Mark Munns, Gas2Grid superintendent.

According to the G2G, on-shore drilling program costs about $7 million. /Correspondent Joy Quito

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