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Will the geology profession end up Jurassic like the dinosaur?
By Fernando Penarroyo
Fernando “Ronnie” Penarroyo is the Managing Partner of Puno and Penarroyo Law Offices (www.punopenalaw.com). He specializes in Energy and Resources Law, Project Finance and Business Development.
I have had the honor of being elected as President of the Geological Society of the Philippines (“GSP”), the only accredited professional organization for geology professionals by the Professional Regulations Commission (“PRC”) of the Philippines. Prior to becoming a member of the bar, I was a practicing geologist working as a petroleum explorationist at the Department of Energy.
Members of the geologic profession have excelled both locally and globally in the resources industry including the mineral, petroleum and energy industries. Filipino geologists have also propelled the country to become the world’s number two producer of geothermal energy. However, their contributions to society have gone beyond the usual course of resource development.
The successful claim by the Philippine Government on the Benham Rise as an extension of the Philippines’ continental shelf can be attributed to the work and collaboration done by a team, which included scientists and experts from the University of the Philippines – National Institute of Geological Sciences (“UPNIGS”). Using seismic and magnetic data, and other geological information, experts from UP-NIGS assisted the Department of Foreign Affairs in the submission of the requirements for claiming the extended continental shelf (“ECS”) areas for the Philippines.
Geologists also occupy top technical positions as seismologists and volcanologists at the Philippine Institute of Volcanology and Seismology (“PHIVOLCS”). PHIVOLCS operates and maintains a network of 93 seismic stations spread across the Philippines.
Data from these seismic stations are used to determine the locations of earthquakes, as well as the characteristics of the earthquakes generated. Aside from monitoring the occurrences of earthquakes and volcanic eruptions, PHIVOLCS also provides the public with information on hazards analyses and assessments. During the eruption of Mt. Pinatubo in 1991, PHIVOLCS worked with other government agencies in mitigating the damaging effects of the eruption saving numerous lives in the process.
Filipino geologists are also responsible for Project NOAH (“Nationwide Operational Assessment of Hazards”), an initiative of the Department of Science and Technology (“DOST”) to respond to the call for a more accurate, integrated, and responsive disaster prevention and mitigation system, especially in high-risk areas throughout the Philippines.
Project NOAH harnesses technologies and management services for disaster risk reduction activities offered by the DOST, in partnership with UP-NIGS and the UP College of Engineering.
Realizing that the Philippines has a wealth of geoscientific information and expertise to share among its regional peers, the GSP has initiated the country’s hosting the 2020 Regional Congress on Geology, Mineral Resources and Energy in SE Asia (“GeoSEA 2020”).
The Congress held every two years, will be an excellent opportunity among Southeast Asian region (“ASEAN”) countries for scientific and technical information exchange, and to advance geoscience in multidisciplinary fields in the petroleum, mining and energy industries. GeoSEA 2020 will be a communication forum among the geoscientists’ associations in ASEAN. Six countries are currently members of this forum: Indonesia, Malaysia, Myanmar, the Philippines, Thailand and Vietnam.
Collaborative discussions will be done about the management of earth resources and sharing of information on geoscientist certification/registration. The GSP can contribute its experience in its partnership with the Philippine Stock Exchange in implementing the Philippine Mineral Reporting Code (“PMRC”).
PMRC sets out minimum standards, recommendations and guidelines for Public Reporting in the Philippines of Exploration Results, Mineral Resources and Ore Reserves. The GSP will play a vital role in the conference organization and this is only the third time that the Philippines will hold this important scientific event.
The geology profession has been featured as one of the highest paying jobs in the Philippines based on the March 2017 issue of Labor Market Trends, a Bureau of Local Employment publication. The report cited the latest published results of the Occupation Wages Survey, a nationwide biennial survey conducted by the Philippine Statistics Authority (“PSA”).
Engineering geologists concerned with the detailed technical analysis of earth material and the risk assessment of geological hazards occupy the second highest paying occupation while in sixth place are geologists in the field of mining.
The reference for the top 10 high-paying occupations is the latest published results of the 2014 Occupation Wages Survey conducted by the PSA, which generates statistics for wage and salary administration and for wage determination in collective bargaining negotiations.
Bleak Outlook for the Resources Industry
My assumption as GSP President came at a tumultuous time as the country’s mineral developers are under public scrutiny for alleged environmental destruction and violations of social justice.
Never in the history of resource development has the geologic profession been under siege. It seems that with recent global and domestic issues facing the resources industry, professional opportunities and advancement for Filipino geoscientists are becoming few and far in-between.
Recently the global mineral industry is reeling from a low demand for bulk commodities, which combined with a production slowdown, resulted in low metal prices.
The local mining industry has just concluded a debilitating battle with Department of Environment and Natural Resources (“DENR”) Secretary-designate Regina Paz L. Lopez following the latter’s closure of twenty-three (23) and suspension of five (5) mining operations last 02 February 2017.
Later that same month Lopez suspended seventy-five (75) Mineral Production Sharing Agreements currently in exploration and pre-production stage. Lopez also issued a questionable order banning open pit mining operations in the country.
Previously, Lopez has been at odds on how the Mining Industry Coordinating Council (“MICC”), co-chaired by the DENR and the Department of Finance (“DOF”), will conduct a separate review of the DENR audit, which led to the closure and suspensions.
Lopez also expressed apprehensions on the composition and objectivity of the review team with the involvement of certain personalities in the technical working groups, which Lopez claimed have had previous affiliations with the mining industry.
Lopez also complained on the way Executive Secretary Salvador Medialdea has been sitting on the resolution of appeals filed by affected miners with the Office of the President. With the filing of the appeals, the miners were able to continue with their operations despite Lopez’s closure and suspension orders.
Lopez was also upset by Medialdea’s overturning her recent directives on imposing a “P2-million per hectare trust fund for farmers affected by destructive mining” as a precondition to the shipment of stockpiles from mining areas and issuance of export permits to mining companies.
Lopez’s vocal disagreements with her fellow cabinet members and her liberal interpretation of her discretionary powers as DENR Secretary were apparently the reasons behind her failure to get the nod of the powerful bicameral Commission on Appointments (“CA”) on her confirmation as DENR Secretary.
The sheer number of oppositors to her confirmation who have filed their formal opposition on grounds of grave abuse of authority, ignorance of the law, and graft was unprecedented. She was also scored by certain sectors on the way she conducted herself during the intense interrogation about her qualifications, family’s business interest and alleged non-transparent selection of officials and consultants.
It was expected that Lopez attributed her non-confirmation to the fact that some members of the CA succumbed to the “mining lobby” despite popular sentiment favoring her environmental advocacy. With Lopez’s rejection, President Duterte will have to find a suitable replacement for Lopez but at this point the mining industry continues to hang in the balance because of the uncertainty brought about by the Lopez brouhaha.
Global energy investments are also trying to recover from a sharp fall in upstream oil and gas capital spending. Petroleum companies have recently cut back on exploration to reduce costs as oil prices fell from over US$100 a barrel to roughly US$50 a barrel because of the glut coming from new discoveries and recovery technologies.
Philippine petroleum exploration outlook is not rosy either. Unless new fields are discovered and developed, production in Northwest Palawan is expected to cease in 2027 when the Malampaya reserves are depleted. Some service contracts are under force majeure because of the contractors’ inability to access their areas due to the Philippines’ ongoing maritime dispute with China over the West Philippine Sea.
On the other hand, some service contractors have filed for technical moratorium status as commercial studies indicated that under prevailing current oil prices, development of their discoveries is not economically feasible.
Other mineral and energy development activities are still hampered by the tedious and unpredictable permitting process particularly with respect to environmental compliance certificates, indigenous peoples, local governments and rights of way.
Threats from Outside and Within
The ASEAN economic integration in 2015 has opened the ASEAN member states’ economies to the free movement of services and skilled labor by requiring ASEAN member states to facilitate the issuance of visas and employment passes for ASEAN professionals engaged in cross-border trade and investment related activities. Obviously, opening the profession to foreigners does not sit well with Filipino geologists especially now with the diminished employment opportunities in the local resources industry.
Paragraph 2 of Section 14, Article XII of the 1987 Constitution provides that, save in cases prescribed by law, the practice of all professions shall be limited to Filipino citizens.
By limiting the practice of professions to Filipinos, the Constitution effectively shielded the market from a possible influx of professionals from other countries.
However, except for cases allowed by law, the Constitution empowered Congress to enact laws allowing foreigners to work in the Philippines under certain conditions. Several legal issues will arise particularly the local accreditation of professional licenses acquired abroad.
Administrative rules may have to be issued to accommodate professionals who obtained their professional licenses outside the Philippines. Additional laws and DOLE issuances also may be required to clarify the rights and obligations of foreign geologists in the Philippines if ever they can practice in the Philippines.
Certain scope in the practice of the geologic profession is also under threat by certain proposed provisions of legislative bills in relation to the “Mining Engineering Profession Law.” Previous versions of the bill in relation to mining engineers’ scope of practice were found to infringe on the practice of the geology profession particularly on the “calculation, estimation and certification of mineral/ore resources, subterranean or groundwater reserves, and energy reserves.”
Geologists argued that these are specialized areas of geology, which are outside the domain of the mining engineering practice and neither in the curriculum for B.S. Mining Engineering nor in the subject areas covered in the licensing examinations for mining engineers by the Professional Regulations Commission.
In the latest version of the bill, the Philippine Mineral Reporting Code (“PMRC”), the product of the concerted efforts of professional societies, the Philippine Stock Exchange, and Securities and Exchange Commission, is revoked giving the Mining Engineering Board the sole power to formulate the technical standards for mineral resources reporting.
Under the proposed bill, the title of competent person (“CP”) is also removed and it is the Board of Mining Engineering that issues certificates of specialization. Under the PMRC, the respective accredited professional organizations are involved in the recognition of CPs.
Golden Age of Infrastructure and the Need for Engineering Geologists
While geologists working in the resources industry face an ominous future, the Philippines’ “golden age of infrastructure” could be the silver lining that the profession needs to substitute for the diminishing opportunities in the resources sector. With the much-anticipated boom on infrastructure projects, what’s in it for the geological profession?
In the April edition of the World Economic Outlook report, the International Monetary Fund kept its 6.8% forecast for gross domestic product (“GDP”) growth this year, and announced an even higher estimate of 6.9% for 2018. The GDP growth is attributed to the government’s ambitious spending plans particularly on infrastructure supported by a tax reform program.
Likewise, the World Bank projected 6.9% GDP growth while the Asian Development Bank forecasted 6.4% this year. These projections are not far off from the government’s 6.5 to 7.5% growth goal for 2017 making the Philippines among Asia’s fastest-growing economies.
Sustaining the country’s high GDP growth projections is dependent on the Duterte administration’s ability to accelerate spending on large-scale public infrastructure projects through an expansionary fiscal policy.
International credit raters have flagged rising political uncertainty brought about by Duterte’s rhetoric and the maritime issues in the South China Sea as key risks to the Philippines’ growth story.
Fortunately, investors have learned to look through Duterte’s tough talk and disregard the political noise as not serious enough to affect the feasibility of various infrastructure projects.
While Duterte seemed to be focused on his “peace and order” agenda, his technocrats are laying down the plans for the economy with the help of generous investments and official development assistance in the infrastructure sector from China and Japan.
Big-ticket projects covering transportation, water resources, energy, and information communication technology are either for implementation or in the pipeline.
The Department of Budget and Management (“DBM”) plans to spend as much as P9 trillion on public infrastructure projects over the next six years, in line with the Duterte administration’s commitment to raise the share of infrastructure to 7.1% of the local economy by 2022 from a 5.4% ratio programmed for this year.
The total infrastructure budget is projected to grow from P861 billion in 2017 to P1.832 trillion by 2022, or from 5.4 to 7.1 percent of GDP.
DBM Secretary Benjamin Diokno expects infrastructure funding will come from incremental revenues that will be raised from the first package of the DOF-proposed Comprehensive Tax Reform Program (“CTRP”) amount to P163 billion in 2018.
The CTRP seeks to lower personal income tax rates, broaden the Value Added Tax (“VAT”) base, and increase the excise taxes on oil products and automobiles.
A broader VAT base will level the playing field and reduce massive leakages, while higher excise taxes on oil products and automobiles will improve the progressivity of the tax system as richer households consume far more of these products.
The optimistic view is that the geology profession is expected to get a shot in the arm with the boom in infrastructure projects. Engineering geologists will be heavily involved in the investigation of foundations for all types of major structures, such as bridges, power plants, airports, large buildings, and seaports.
They are also needed to evaluate geologic conditions along tunnels, pipelines, canals, railways, and highway routes. In addition, the services of engineering geologists will be crucial in the evaluation of geologic hazards such as landslides, faults and earthquakes.
The scope of engineering geology practice has grown beyond its connection to civil engineering works as geologists now closely work with land-use planners, environmental specialists, architects, public policy makers, insurance and forensic investigators, and property owners providing them with vital geologic information for construction decision-making.
Geologists’ Role in the Promotion of Science
It is now a reality that geology is clearly related to government governance and economic policy in light of the recent events in the resources industry. Unfortunately, in many sectors of our society access to scientific information is minimal or even non-existent.
Scientific inquiry has been replaced by sleek media campaigns pandering to emotions and fear. Science has been conveniently set aside to give way to sensationalism and motherhood and apple pie statements like “social justice”.
By gaining a greater understanding of the geologic processes and the risks and potential rewards involved with resources development and infrastructure development, government policy-makers can make educated decisions in good governance.
At the same time, the people can truly understand the pressing issues based on the knowledge we in the geology profession can impart to the public.
Public policy must not depend on the whims and caprices of certain government bureaucrats who for all intents and purpose may have not enough formal training in science.
It must depend to a large extent on scientific facts and evidence based on extensive data gathering, processing and interpretation, not on slogans and pie in the sky expectations.
Science must be a used as an instrument in determining whether due process has been exercised. Science must be used in upholding the sanctity of contracts. The geology profession can and must have a big role in a nation’s existence.
The geology profession should advocate for the use of the scientific method to assist government regulators in coming up with policies that are scientifically based and with respect for the rule of law.
The Filipino geologists should exert efforts to bring the battle for science from the field and laboratories to government policy-making institutions. The geology profession will remain as relevant as ever!