The Department of Energy (DOE) yesterday issued two draft circulars, one on policies governing the extraction of hydrogen fuel in the country and the other on rules on the awarding of petroleum service contracts (PSCs).
The first draft circular wants to include the exploration, development and utilization of native hydrogen in energy sources governed by Presidential Decree 87 (PD 87) or the Oil Exploration and Development Act of 1972 as amended and implemented under the rules, regulations, issuances and procedures issued by the DOE relevant to the conduct of petroleum exploration, utilization and development.
The DOE defines native hydrogen as the natural occurrence of hydrogen gas in geologic formations.
The agency added under PD 87, the government may directly explore for and produce indigenous petroleum or indirectly undertake the same under service contracts.
The DOE said in the draft circular, PD 87 provides that any mineral oil hydrocarbon gas, bitumen, asphalt, mineral gas and all other similar or naturally associated substances are considered petroleum, with the exception of coal, peat, bituminous shale or other stratified mineral fuel deposits.
The agency added since native hydrogen gas occurs naturally in geological formations and can be associated with methane and other hydrocarbon gases, it can be considered as a mineral gas and may be governed by the said law.
The DOE is crafting the circular to “accelerate the exploration, development and utilization of native hydrogen to contribute to the country’s energy security, create jobs and generate wealth.”
The DOE sees the potential of hydrogen in co-firing natural gas to make the latter’s combustion cleaner.
Meanwhile, the other draft circular of the DOE aims to improve current guidelines in the awarding of PSCs.
The agency noted the need to adopt a new strategy that will allow for the development and production of confirmed petroleum reserves in consideration of the intensive capital requirements and the needed technical expertise to carry out the necessary work program.
The DOE also said in the circular there is a need to implement “a judicious and cost-effective way to optimize the development and utilization of confirmed petroleum resources to avoid stranded petroleum reserves which will result in substantial losses to the Philippine government.”
Key changes being pushed by the DOE include a provision that gives operators of PSCs with producible petroleum reserves beyond the remaining production term the option to apply for a new PSC through direct negotiation provided that the application be made prior to the expiration of the remaining production term.
