Before opening its offshore areas to oil and gas exploration, the Dominican Republic plans to create a domestic oil and gas regulator, relying in part on advice from the Alberta Energy Regulator (AER). The announcement was made earlier this month, October 2014 by Energy Minister Pelegrin Castillo who was in Calgary for talks with AER executives.
Castillo says the country’s highest priority is to push forward exploration for hydrocarbons, both on and offshore. Castillo said in Canada that the Ministry is relying on the Canadian entity to help create the framework and laws needed to effectively manage oil and gas activity.
Today, the DR has no oil or gas production and imports 140,000 bbls of refined products per day, costing some US$5 billion a year, Castillo told the Daily Oil Bulletin of Canada in an interview.
The country wants to follow in the footsteps of neighboring Cuba that has already taken steps to open their offshore waters to oil and gas activity.
“We are working in order to [make up] for lost time,” said Castillo. “In the last 25 years, we have lost a lot of time and opportunities. That’s why we expect to move soon. At the end of next year, we could be in a [situation to announce] a call for oil companies to bid [on offshore oil and gas rights].”
At the same time, before any mineral rights are posted, Castillo acknowledged that his government must pass a law in the Dominican Congress that will spell out a national oil and gas policy and create a regulatory framework to govern exploration and production, both on and offshore, he said in the interview.
The legal framework would establish the rights and terms between the companies and the government and would be introduced at the end of this year or at the beginning of next to Congress.
Castillo rates his government’s chances of passing the new law as very good. His party, the National Progressive Force (Fuerza Nacional Progresista), is part of a coalition government made up of several parties. The coalition led by President Danilo Medina Sanchez has governed since 2004 and holds the majority in both the Dominican Congress and Senate.
The country’s need for oil and gas makes the matter a special priority, and one that transcends party politics, said Castillo.
He said that while previous governments have granted offshore oil and gas concessions, the process was not an open tender. The ultimate result has been that no oil and gas has ever been found on a commercial scale, either offshore or onshore. Still, he maintains that certain geological structures are quite attractive and merit further exploration.
Three areas have been identified. Ocoa Bay, an area of shallow water ranging from 50 meters to not more than 300 meters in depth, he said. For years, the bay’s coastline has been known for oil seepages, according to Castillo.
Another priority is the area off the coast of San Pedro de Macoris, which is also known for seepage, although of gas, not oil. Gas seepage in the area has been detected at depths of 1,400 meters, roughly 40 to 60 miles off the coast. A third prospective offshore area lies between Montecristi and Puerto Plata, in the north, and it too will be a priority for the government, Castillo said.
Castillo offered no firm timeline for when oil and gas rights might be posted, beyond indicating that it could occur as early as 2015 or else in 2016, the year his government’s mandate runs out.
Yet, Castillo states that it does not actually matter who will win the next election or who will be governing [then], because this as a state policy is not expected to change.
The offshore environment for the Dominican Republic may be affected by disputes over territorial waters. Currently, the DR has offshore border disputes with three nations: the Netherlands, over the border between the Dominican Republic and Curacao, which is part of the Dutch Antilles. The DR also disputes its offshore border with Puerto Rico, subject to negotiations with the United States. Finally, the country disputes its border with the Turks and Caicos Islands, which are part of the United Kingdom, and subject to future negotiation.
http://www.dailyoilbulletin.com/article/2014/10/9/dominican-republic-taps-aer-setting-regulator/