Oil in Alegria: A Boon of Economic Boom
Illustration by Christ Ian Palomares
A sudden economic boom is expected to be experienced by Alegria, a fourth-class municipality of Southern Cebu. Last May 18, 2018, President Rodrigo Duterte led the ceremonial valve opening of one of six wells in the first onshore oil production and exploration site in the country. The town is said to be abundant of oil and natural gas, a primary resource for power generation and transportation fuel.
Alegria, a municipality known for its pristine waterfalls and rivers, is one of the leaders of tourism in the province of Cebu. With the discovery of oil in the area, a shift from tourism to oil industry and power generation will be observed and a consequent increase in revenue will also be experienced.
Two months prior to the ceremonial opening, the Department of Energy (DOE) and the service contractor China International Mining Petroleum Company (CIMP) Limited signed the Joint Declaration of Commerciality over the Alegria oil fields. By their estimate, atotal area of 197, 000 hectares could potentially produce 7, 800 barrels of oil per month for 19 years. This production is projected to correspond to 82 million monthly revenue. The amount of oil extracted is still subject to increase with further expansions in the production site.
The oil industry has propelled the economies of our neighboring ASEAN countries such as Brunei, Indonesia and Malaysia. The local government unit of Alegria looks forward to the influx as they have already planned to use their share of revenue. Mayor Verna Magallon welcomed these opportunities for the improvement of healthcare services, electrification of remote regions of the municipality, additional social pension for senior citizens and persons with disabilities (PWD) as well as added budget for infrastructure.
Under Presidential Decree No. 87 otherwise known as the Oil Exploration and Development Act of 1971, 60 percent of the total revenue will go to the government and the remaining share will be given to the contractor. The 60 percent will be further allocated to the national government, province, municipality and host barangay.
Energy secretary Alfonso Cusi encouraged more investment in the indigenous oil and gas production of the country saying, “More oil exploration activities in our country will boost economic activities and generate jobs in our kababayan.”
However, the project has also met negative reactions from environmentalists. Oceana Philippones vice president Gloria Estenzo-Ramos, a lawyer by profession, is already moving to file legal actions against national agencies for allowing the oil and gas exploration in an ecologically critical location such as Alegria. She said that the proximity of the municipality to Tañon Strait requires stringent compliance and public participation. Mayor Magallon and Rey Cavallida, municipal planning engineer, clarified that the site is located upland as opposed to the claim of Ramos and that environmental regulations are constantly met.
In 2009, CIMP Ltd. had started the drilling and assessment operation by virtue of Petroleum Service Contract No. 49. It was only in 2016 that both DOE and CIMP declared that the Alegria oil field contained commercial quantities of natural gas.
CIMP, the foreign service contractor, holds the sole discretion whether the produce will be exported or be utilized for energy generation for local use. The National Grid Corporation had also expressed their interest for the construction of a power plant to directly feed energy to its grid.
The oil in Alegria is yet to be considered a boon. Whether the project reaps good or bad results, the municipality must be able to plan effectively so that an economic boom will still be assured in their favor.