philippine natural gas: industry overview
TRANSCRIPT
Philippines Natural Gas Industry Overview
2015
Philippine Natural Gas Industry
OVERVIEW
The Malampaya Gas to Power Project is the most significant industrial investment in the Philippine natural gas industry. It paved the way for the birth of the country’s natural gas industry and provides a supply of clean and environmental friendly fuel. However, since this is the only operational source of natural gas in the country it’s not really enough to meet the demand of energy in the country. This type of energy is only available in Luzon hence significant development for the industry must be made.
Given that the natural gas industry is still a new industry in the country, to further develop this industry the country must have policy stability provided by the legal system of the government. The government shouldn’t keep changing our policies but they should provide a good business environment for the different and possible investors of the industry who would look for other possible reserves and build infrastructures. The government must also ensure peace and order both domestically and internationally. They should protect the existing and possible reserves from potential threats. Aside from this, they must also encourage investment from abroad to ensure the viability of the natural gas industry in the country. Importing liquefied natural gas must be encouraged in the short – run while the reserves of natural gas are still limited. As the Philippines import liquefied natural gas from other countries, the government must encourage exploration and extraction of natural gas during the process. With the expansion of the natural gas industry, paved by the Malampaya deepwater gas to power project, the Philippines will be able to acquire a place in the Trans-ASEAN Gas Pipeline (TAGP). The Malampaya offshore field is relatively near to Sabah in Malaysia which was said to have around 6-8 TCF. Although it is a no market area, it is a potential linkage to the pipeline. With the increasing demand of natural gas in the global market, various foreign companies have renewed their interest in investing in the industry. The success of the Malampaya project has gained the investors assurance of a feasible venture. Besides this, the rising prices of crude oil have put the natural gas as the alternative fuel. In order participate in the export and import markets of natural gas, the government should create venues that would encourage participation from investors for gas exploration, diminish regulatory risks for long term investments and enhance competition with other alternative fuels.
The importation of LNG may act as the quickest way to meet the increasing gas demand and energy sustainability of the country. However, it is the Malamapaya
venture that will pave the way for the incorporation of the Philippines as a player in the Trans-ASEAN pipeline. PHILIPPINE NATURAL GAS SECTOR
Natural gas resources in the Philippines total 25.7 - 39.5 trillion cubic feet (Tcf), of which 3.4 - 5.4 Tcf are discovered recoverable reserves. They are classified into four types, namely: oil and gas, coal gas, water-associated gas (includes marsh gas), and inorganic gas. The major deposits are oil-gas types including Camago-Malampaya in NW Palawan offshore area, San Antonio in Cagayan Valley and Libertad in Cebu.
The current Philippine gas industry development initiative is anchored on the Camago-Malampaya deposit which is estimated to support the operation of 3,000 MW gas-fired power plants for over 20 years with its 2.5-3.2 Tcf maximum recoverable reserves. Commissioning of these plants is programmed by 2002. Gas-fired power plants programmed beyond 2002 require additional gas discoveries or importation of LNG. Conversion of the Bataan Nuclear Power Plant to a 1,500 MW gas-fired plant has been offered on the expectation of more recoverable gas reserves to be delienated shortly. Assurance of gas supply for the Philippines, including those for non-power uses, are, however optimistically provided by the LNG option and the Trans-ASEAN Gas Pipeline Project.
Opportunities for investment are wide open under strong government commitment for a private-sector led natural gas industry development from upstream to downstream. The establishment of a nationwide gas infrastructure is expected to work towards maximizing the gas potential of the country through extensive exploration, coupled with development of natural gas markets sparked by a galloping economic growth.
I. INTRODUCTION
Petroleum exploration in the Philippines, from its inception in the 1890's until late in the 1980's, regarded gas as an unwanted associate of oil. It was only in the early 1990's when natural gas was given serious consideration, largely because of the discovery of the Camago-Malampaya deposit in offshore West Palawan. In 1994, the government-owned Philippine National Oil Company established the first gas-fired power plant utilizing the small gas deposit discovered in late 1950's onshore Cagayan Valley, Northern Luzon. This 3 MW plant demonstrated the practicability of utilizing natural gas for power. Hence, the long term Philippine Energy Plan (PEP), drafted in 1994, accorded a substantial share for natural gas in power development. Enough
assurance are now in place for the first large-scale gas-fired power plants in the country to be installed by 2002. By 2005 this would increase to 4500 MW.
II. NATURAL GAS RESOURCES IN THE PHILIPPINES
a. Classification
Natural gas deposits in the Philippines may be classified into four types, namely: oil gas, coal gas, water-associated gas and inorganic gas.
Oil gas deposits are gaseous hydrocarbon accumulations evolved in association with liquid hydrocarbons or oil. The other deposit types, on the other hand, are mainly methane accumulations in association with coal, water and inorganic materials, as the case maybe. Water-associated gas includes "marsh gas" which is generated during the decay of vegetable matter in bogs and swamps at the early stage of petrification. The gas is usually dissolved in water along with other elements of economic importance such as iodine. Inorganic gas is formed through inorganic processes such as hydrothermal processes, contact metamorphism and serpentinization.
b. Quantitative assessment
Using McKelvey's (1973) mineral resource assessment scheme, natural gas resources in the Philippines are classified in this paper into "Discovered" and "Undiscovered". "Discovered natural gas resources" refer to those that have been adequately delineated by seismic and other means and measured by drill-stem test in at least one hole per closure. On the other hand, "Undiscovered natural gas resources" are those that have been estimated by various means but not measured by drill stem test, although reached by a drill hole.
Essentially, quantitative estimates reported as reserve, recoverable reserve and gas-in-place generally fall within the category of "Discovered". Reported potential reserve, target reserve, resource potential and untested recoverable reserves are in the category of "Undiscovered".
However, the commerciality of a gas discovery is established when field reserves is confirmed with confidence and the conditions for gas utilization and marketing is defined for the life of the field.
Table 2 lists the quantified natural gas deposits and prospects in the Philippines and their corresponding estimates in trillion cubic feet (TCF). The total natural gas
resources in the Philippines thus stand at 25.7 -39.5 Tcf of which 3.4-5.4 TCF is discovered recoverable reserve.
c. Description of major deposits
1. Camago - Malampaya Gas Deposit
Petroleum exploration in Northwest Palawan started in 1971 with the drilling of Pag-asa 1 which proved unsuccessful. After a series of disappointment wells in the area, Nido-1 well made the first significant oil discovery. Destacado A-1X and San Martin were drilled in 1982 and encountered gas columns in the carbonate reservoir. Although they flowed gas to the surface they were declared sub-commercial. The Octon well was tested for gas but was also sub-commercial.
In 1989, the thick column of gas and condensate in the Camago-1 was drilled at a water depth of 2,365 feet. This discovery renewed interest in the area and led to the giant Malampaya-1 in 1991 a water depth of 2,746 feet. A total of five (5) wells have been drilled in the Camago-Malampaya Field delineating an estimated recoverable reserve of 2.5 - 3.2 TCF of gas. The Camago-Malampaya gas contains about 90% methane (DeGolyer and Macnaughton, 1996) and its heating value is viable as power plant fuel. However being a wet gas, it also contains small amounts of heavier hydrocarbons such as ethane and propane. Other gas prospects in the vicinity were to be drilled by late 1997.
2. San Antonio Gas Deposit
The San Antonio gas deposit in Cagayan Valley was first drilled as Ipil -1 in 1958. Subsequent drilling of three more wells to delineate the gas deposit failed to encounter any hydrocarbon, and the area was abandoned. In May 1980, the San Antonio-1 well confimed the 1958 discovery. The well flowed up to 11.4 million cubic feet gas (MMSCFG) per day of gas reserves were volumetrically estimated at 0.0063 to 0.010 TCF of gas-in-place which was still uneconomic at the time.
A seismic survey was done in 1981 to further evaluate the gas deposit. This resulted in the extension of the reservoir thereby increasing the estimated reserves to 0.024 TCF of recoverable gas. A reservoir evaluation was conducted in May 1989 leading to the identification of three gas reservoirs and justifying the drilling of San Antonio-2 well. This well encountered technical problems and was plugged and abandoned. San Antonio 1A was subsequently drilled and this confirmed an extension of the gas deposit. Today, the San Antonio gas field is currently producing at an
average rate of 1 MMSCFG per day supplying the power requirement of a 3MW power plant in Echague, Isabela.
3. Libertad Gas Deposit
The Libertad deposit is one of the several prospects and leads in Northern Cebu. Exploration in this region started in 1958, drilling 21 wells in the Libertad area. The first well that flowed sub-commercial gas was Libertad-13. This was retested in September 1993 and flowed at a rate in excess of 2.5 MMCFG per day. With the successful testing of this well, four (4) of which only Libertad 95-1 flowed gas at an estimated rate of 6 yo 8 MMSCFG per day. Small scale commercial production of the Libertad gas field now seems viable with the demonstrated success of the 3 MW San Antonio gas-fired power plant in Isabela.
4. Other Gas Resources
4.1 Iloilo Basin
Oil exploration in the Iloilo Basin started in 1953 with the drilling of the Oton-1 well. This encountered oil and gas shows. Drilling of eight (8) more wells followed from 959 to 1980. Five (5) of these wells encountered gas and water from the Upper Miocene to Pliocene strata.
In 1981, a study was conducted on the potential of the Iloilo gas, considering its similarity to the Kyosui-sei-gasu (water-associated gas) deposit in Japan which formed in Late Cenozoic marine deposits. The brine on the other hand, is kept from flowing out or kept from being flushed by meteoric water in an enclosed structure. The study confirmed a high methane content in formation brine with iodine.
4.2 Central Luzon Basin
Exploration effort in the Central Luzon Basin was punctuated in 1979 by a minor gas flow from Victoria-1, an onshore well located in Tarlac. In 1995 a well was drilled in Manila Bay, a prospect area well was drilled in Manila Bay, a prospect area well within the Central Luzon Basin. This well tested positive for gas and showed a fairly thick limestone reservoir. Geophysical data shows other structures favorable for petroleum accumulation in the basin. These prospects are being targeted by three exploration consortia for drilling within 1997 and 1998.
III. GAS INDUSTRY DEVELOPMENT PLAN
a. Camago-Malampaya gas development
Primary energy consumption from 1984 to 1996 increased at an average rate of about 6.5% per year. Liquid fuel provided 80% of the total consumption; hydropower and geothermal power provided 15%; and solid fuels provided the rest. This fuel mix will be drastically changed with the development of the Camago-Malampaya gas field in order to ensure the attainment of energy self sufficiency of 40% under the Philippine Energy Plan 1996-2025 (PEP 1996). The plan ensures the setting up of the initial gas infrastructure, especially the required 500 km undersea pipeline. The natural gas produced is allocated for about 3,000 MW installed capacity by 2002.
The development program includes: (a) drilling of production wells, (b) setting up production platform, and (c) construction of the 500-kilometer undersea pipeline. Production will yield 400 to 500 MMSCFG per day, plus substantial quantities of oil and condensate. The production system will include a facility to separate the oil, the condensate, and production water from the gas, after which the dry gas will be piped all the way to users. The current plan calls for a 24" undersea pipeline all the way to Luzon.
b. Gas-fired power plant development
To develop the market for natural gas in the country, the government has prioritized 3,000 MW for gas-fired power capacity development beginning 2001. The National Power Corporation (NPC) and the MERALCO group of Companies will each have 1,500 MW. NPC has recently awarded, through bidding to Korea Electric Power Corporation (KEPCO) a BOT contract for the construction of the gas-fired power plants with total capacity of 1,200 MW at Ilijan, Batangas.
On the other hand, Meralco has assigned First Gas Holdings Corporation, a joint venture company between First Gas Holdings (MERALCO Group Member) and British Gas Corporation, to put up gas-fired power plants, starting with a 990 MW greenfield plant at Sta.Rita, Batangas to be commissioned in 1989/1999. This will be followed by a 510 MW plant in the CALABARZON area.
In addition, the 620-MW Bataan Nuclear Power Plant has also been programmed by government for conversion into a 1,500 MW gas-fired power plant by 2005. In this regard, the Pilipinas Shell-Occidental Petroleum (Shell-Oxy) joint venture has offered to implement the conversion to a 1,500 MW plant using the Malampaya-Camago deposit
and other deposits the joint venture expects to delineate shortly within its service contract area in NW Palawan.
Beyond 2015, a 2,000 MW gas-fired power generating capacity expansion is programmed for Mindanao, possibly in Zamboanga (PEP, 1996). Possible gas discoveries in Sulu Sea are being eyed for this expansion.
c. LNG Option
Realizing the limitations of discovered natural gas resources in the country and the time it would take for the development of these resources, the government encourages the importation of LNG. First Gas Holdings may opt for LNG at the initial phase of its 990 MW plant at Sta. Rita, Batangas so that it can be commissioned in 1998/99.
To complement indigenous gas supply, the Department of Energy encourages the use of imported LNG which may be competitive in combine cycle gas turbines and if ever with Camago-Malampaya gas.
d. Development of natural gas market for other uses
The Philippine government also encourages the development of other uses of natural gas. Thus, the Philippine Energy Plan projects substantial gas markets for industries (cement, food, and steel) beyond 2005 especially for the industrial centers in Luzon (CALABARZON) and Mindanao (Iligan-Cagayan de Oro).
Natural gas can also be used as feedstock for chemical industries. The Camago-Malampaya gas contains low quality cracker feedstock making it unsuitable for ethylene plant. The development of the gas market for these industries will be contingent on the discovery of gas with suitable gas composition such as higher ethane and heavier hydrocarbon contents.
Between 2010 and 2020, the plan projects the household sector as a major gas market. Approximately 400,000 commercial/residential customers are expected in Metro Manila, Batangas and Cavite in Luzon; and Cagayan de Oro areas in Mindanao. Use of natural gas for the transport sector is also envisioned to be a major market in Luzon. Compressed natural gas is threfore projected to be made available in Luzon by 2010.
e. Trans-ASEAN gas pipeline
The plan for a Trans-ASEAN gas pipeline is viewed by the Philippine government as an assurance that the gas infrastructure being planned will not run short of natural gas supply over the long-term. The scheduled phasing of the Trans-ASEAN pipeline development, as proposed in the recently concluded feasibility study by the ASEAN Energy Management and Training Center (AEEMTRC) and the European Union, is considered in consonnance with he Philippine gas industry development plan.
IV. ROLE OF PRIVATE SECTOR
Strong Philippine commitment towards the full development of globally oriented market economy corollarily requires a private-sector generated development of the natural gas industry. The farming out to the private sector of the responsibility to develop a major portion of the gas market is a candid demonstration of this point. Even the 500 MW market allocated for NPC is expected to be turned over to private interest with the impending privatization of this government corporation. It shall be noted that the government has maintained its commitment to leave business in the hands of the private sector when it discouraged the Philippine National Oil Company (PNOC) from getting involved in the business of providing the submarine gas pipeline from the Camago-Malampaya field to the city gate.
This policy is explicitly embodied in Executive Order 215 issued in 1987 which provided the ground rules for private sector participation in power generation. Early this year, an amendment to EO 215 expanded the accreditation of all IPP's in the special economic zone and non-utilities that generate their power for own use. The department has also issued guidelines which allowed customers of 2 MW and above to contract directly with any power generating companies. The government also promotes the setting up of small gas-fired power plants by those involved in indigenous onshore gas exploration and development using their own gas.
The Department of Energy also favors open access to the offshore pipeline from the Camago-Malampaya as long as the access is acquired on commercial terms. This exercise permits other gasfield operators to gain access or tap into the pipeline for gas transport with corresponding tariff or charge. Open access is also encouraged for onshore pipelines to promnote diversification in the growth of the natural gas industry.
The Omnibus Power Restructuring Bill being deliberated in Congress provides the milestones for the eventual privatization of the power industry. NPC's restructuring, as provided in this bill, entails the following: (a) power generation to be transferred to
independent power producers (IPP's); (b) distribution plants with capacity up to the optimum percentage of total demand in the distributors' franchise area; and (c) hydropower generation facilities and transmission facilities will remain government owned.
V. OPPORTUNITIES FOR INVESTMENT
a. Indigenous oil and gas exploration/development
Potential hydrocarbon areas in the Philippines assessed to be "gas-prone" have now become highly prospective due to government assured development of the domestic natural gas industry. Prospects in the known gas fields in offshore northwest Palawan, and the Reed Banks, which were not viable on their due to size and distance from the market could now become viable. Thus, they deserve priority in exploration.
In the Central Luzon Basin the gas potential was recently enhanced with the result of the Manila Bay well drilling in 1995. This prompted local exploration companies to acquire new contract areas or expand their holdings in the Central Luzon Basin. These companies would welcome foreign technical and financial investment participation.
In the Cagayan Basin in northern Luzon, PNOC and another local company have contract areas prospective for more gas discoveries in addition to San Antonio. In the Cotabato Basin and Agusan-Davao Basin in Mindanao, extensive geophysical exploration activities are being carried out by two consortia for eventual identification of drillable targets. Natural gas is a major target for these activities.
Certainly, the room for foreign investment is natural gas exploration in the country is wide open. This maybe down through participation in the activities of the established service contractors. Alternatively, areas not covered by existing contracts may be applied for at the Department of Energy. Foreign equity may be 100% for any of the service contract modes.
b. Gas infrastructure
To provide the vital link between the sellers of natural gas and the market, the government will actively promote the setting up of gas distribution networks in Luzon. For the 500-kilometer pipeline from northwest Palawan to Luzon, Shell and Occidental Petroleum have committed to build and operate the pipeline themselves. They have not closed the door, however, to new partners.
The Luzon network will primarily depend on the pipeline connecting the Camago-Malampaya field to power plants in the Batangas and Cavite areas. This pipeline system will be expanded to cover Metro Manila and Bataan and later the rest of Central Luzon and Southern Luzon. The onshore pipeline from the beach at Batangas (at the end of the 500-kilometer offshore pipeline from Camago-Malampaya) to Manila will be about 110 km. When this is continued all they way to Bataan via Bulacan and Pampanga provinces up to 250 km in length. In addition, an LNG receving facility will be built in Bataan or in Batangas.
On the onshore pipeline, it is very likely that those who will be building the power plants will themselves build the onshore pipelines to their plants and they will probably be seeking partners for the pipeline construction. First Gas Holdings has in fact announced that it will build the onshore pipeline to its power plants. This company has awarded the construction of an 990 MW gas-fired power plant on turn-key basis to Siemens of Germany.
Over the long term, the expansion of the Philippine gas industry into the rest of Luzon and Mindanao will entail extension of the transmission pipelines and the construction of distribution pipelines. These constitute big opportunities for companies who have the necessary capital and technical expertise in pipeline construction and operation.
c. Independent power production and power transmission
The most attractive and immediate opportunity for investment is in the construction and operation of the power plants that will use Camago-Malampaya gas.
The next important opportunity after 2003 is the conversion of the Bataan nuclear plant into a 1500 MW gas-fired combined cycle plant. This may even be accelerated if FGh decides to use LNG for its plants and give up its 1500 MW allocation. In this case, NPC would accelerate the conversion of the nuclear plant which together will provide the 3000 MW market for Camago-Malampaya gas by 2000/2003. Beyond 2010, other major gas-fired power plants totaling 2000 megawatts in Mindanao will likewise be offered to the private sector.
Notably in relation to IPP opportunities, the Department of Energy has recently approved the sale of sub-transmission facilities to local power distribution utilities in line with the government program to dismantle NPC's monopoly of power distribution and generation. This means that private distributors and power producers can now avail of
this facilities. The department will oversee the transfer of the transmission assets to the power distributors.
d. Other gas markets
One immediate opportunity is for foreign private companies to look at the potential of the state-owned Manila Gas. This company has existing old gas distribution network in Manila that can be rehabilitated and expanded. It is currently being privatized and whoever takes over would be in a position to develop markets for gas in the metropolis.
Major industrial and commercial gas users, particularly in the industrial zones in Luzon and northern Mindanao, will undoubtedly switch to gas as the price becomes competitive and as the country's emission standards get even more stringent. They will likewise need partners who have expertise in gas conversion and utilization.
Finally, a potentially large market is the transport sector. A major shift to gas in this sector would substantially reduce the current heavy pollution in Metro Manila. Currently, the Department of Energy is conducting studies towards formulating a definitive policy on the utilization of natural gas in this sector.
VI. SUMMARY
In summary, the most abundant gas occurrence in the Philippines is associated with oil. Although the discovered reserves are still insufficient to supply future demand, LNG and gas supply from a projected Trans-ASEAN pipeline provide necessary assurances for the sustainability of the Philippine Gas Industry Development Plan. This plan is, of course anchored on the Camago-Malampaya gas development at the moment. To provide more indigenous gas resources to the natural gas industry, the government promotes very strongly the exploration, development and utilization of natural gas. The establishment of a nationwide gas infrastructure is expected to work towards maximizing the gas potential of the country through extensive exploration, coupled with development of local gas markets sparked by a galloping economic growth. Opportunities for investment are wide open under strong government commitment for a private sector led natural gas industry development from upstream to downstream.
Source: Journal of the Geological Society of the Philippines, Centennial Issue, January - June 1998
PRIMARY ENERGY MIX FORECAST 2003-2012
POWER FORECAST (generation)
POWER FORECAST (Luzon grid)
POWER FORECAST (Capacity Additions)
UPSTREAM SECTOR
Camago-Malampaya Deep Well
Camago - Malampaya Gas Deposit
One of the first petroleum explorations took place in Northwest Palawan in 1971 wherein Pag-asa 1 was drilled. This venture however was unsuccessful, as well as other wells in the location. It was the drilling in Nido 1 wherein the first oil reserves were discovered. The other sites such as Destacado A-1X and San Martin which were excavated in 1982 were merely branded as sub-commercials. It was the triumphant discovery of natural gas reserves in Camago 1 in 1989 that acted as a catalyst for the creation of Malampaya 1 in 1991. Five wells were drilled in the Camago-Malampaya site wherein a total amount of 2.5-3.2 TCF of gas was unearthed. San Antonio Gas Deposit
The San Antonio gas exploration-Ipil 1 venture was put into action 1958. Three wells were drilled in Cagayan Valley however, it was abandoned because of failure to encounter hydrocarbon. The project however was revisited in May 1980 wherein the drilling of San Antonio 1 produced around 0.0063 to 0.010 TCF of gas which was did
not seem profitable during that time. A seismic study took place in 1981 which increased the amount of reserves to 0.024 TCF of recoverable gas. Presently, the San Antonio Gas site is producing 1 MMSCFG a day which supplies energy to a three megawatt power plant in Echague, Isabela.
Libertad Gas Deposit
Another site was a prospect for natural gas exploration was located in Northern Cebu. Exploration ventures were headed in 1958 which resulted to 21 drilling sites in the Libertad deposit. Libertad 13 which was excavated in September 1993 produced an amount of 2.5 MMCFG a day. Four other wells which were tested yielded 8 MMSCFG per day.
Iloilo Basin
The Iloilo Basin was drilled in 1953- Oton 1 wherein out of the eight wells which were excavated, five released an amount of gas. Due to this discovery, a research was conducted in order to study the feasibility of the gas in Iloilo. The result of the survey determined a high amount of methane in the discovered gas. Central Luzon Basin
A venture took place in the Central Luzon basin which was drilled in 1979. A rather small well was found in an area near Tarlac. In 1995 however, a well was punctured in Manila Bay being that a survey conducted affirmed the possibility of gas discovery. 1
However, the natural industry is heavily dependent on the Malampaya-Camago reservoir such that it provides 40% of power in Luzon. The researchers will further expound on the history behind the discovery of Malamapy. In the year of 1989, a subsidiary of Occidental Petroleum Corporation called Occidental Philippines, Inc. (Oxy) unraveled a natural gas reservoir in deep water well in Camago. It was detected within a 350,000 hectare area which was 75 kilometers offshore the Palawan province and 500 km south of Luzon. Despite this promising discovery in the 1980’s, this event was not the impetus for the establishment of the natural gas industry in the Philippines, it was however the location of natural gas in Isabela, Northern Luzon. The Philippine National oil Company Exploration Corporation (PNOC-EC) unearthed a pool of natural gas which was said to be adequate enough to generate around 3MW of power. This paved the way for the development of the Natural gas industry in the Philippines. The expansion of this discovery ignited the transformation of Oxy’s exploration contract into a service contract (SC38) with Shell Philippines Exploration B.V. (SPEX). 1 Guillermo R. Balce, D.Sc. and Eric F. Pablico. PHILIPPINE NATURAL GAS RESOURCES : MAXIMIZING
In order to further maximize their returns, SPEX decided to take control of the field operation and excavated three more wells. Of the three, the second would be the finding of the Malampaya gas field in the year 1992 which was linked with the Camago structure. In two years, SPEX uncovered feasible reserves of gas around 2.5 trillion cubic feet and 85 barrels (MMB) of condensate. In 1998, not only was the Malampaya gas field declared as an official commercial find but SPEX was able to gain full ownership of SC38. In line with this SPEX also established an alliance with Texaco Philippines, Inc (also known as Chevron Texaco) and PNOC-EC. The said SC38 coalition aims to create the largest single foreign investment in the Philippines by materializing the Malamampaya gas field project. Parallel to this would be the laying of a 504 km pipeline on an on-shore gas facility in Tabangao, Batangas Province in Souther Luzon. This success acted as an impetus for former President Gloria Macapagal-Arroyo to inaugurate the Malampaya Deep Water Gas-to-Power Project in October 16, 2001. The said project now equips gas to fuel three combined cycle gas turbine (CCGT) power plants which provides 2,760 MW which contribute around 19 percent of the country’s installed capacity in the year 2002. However the gas field is capable of providing up to 4.3 TCF of gas for our country. 2
In around three years, the project was finally accomplished; natural gas was now legitimately commissioned for power plants in January 2002. The completion of the project paved the way for the future of the natural gas industry in the Philippines.
Downstream Sector
2 "Natural Gas." DOE Portal website. http://www.doe.gov.ph/ER/Natgas.htm (accessed September 12, 2011).
Expanded Use of Natural Gas
GROWTH AND DEVELOPMENT
Batman 2 Project
The Integrated Bataan Liquefied Natural Gas (LNG) Terminal, Power Plant and Natural Gas Pipeline Project (BATMAN 2) involves (1) the development of an LNG terminal in Limay, Bataan, (2) the conversion to gas-firing of the Limay Power Plant and/or development of greenfield gas-fired power plants as anchor loads and (3) the construction and operation of the associated pipelines to transport the gas to the target markets.
The LNG Terminal will serve as the receiving, storage and regasification facilities for imported LNG. A pipeline coming from the Terminal will transport natural gas to the Limay and greenfield power plants.
Aside from supplying fuel for the power plants, the regasified gas can also be made available in Central Luzon, to the various industries in the economic zones of Bataan, Zambales and Pampanga provinces. Via the Bataan to Cavite offshore pipeline (BAT-CAVE) traversing Manila Bay, the LNG Terminal will secure and sustain the gas supply in the country, including BATMAN-1 and its future demand, beyond the life of the Malampaya Gas Field.
Bataan Gas Receiving Terminal
The proposed gas receiving terminal at the PNOC Alternative Fuel Corporation (PNOC AFC) industrial complex is envisioned to accomodate multiple liquified natural gas (LNG) suppliers and gas customers. Consisting of on-shore and off-shore facilities, the terminal will be receiving regassified LNG from abroad. LNG carriers will deliver and unload ("ship to ship") LNG to another vessel, a Floating Storage and Regassification Unit (FSRU) which will be permanently moored. The regassified gas from the FSRU will be conveyed to an on-shore gas facility before being transported via pipelines to varoius customers.
The gas terminal can be a catalyst in the development of the proposed Bataan to Manila Gas Pipeline Project (BATMAN 2) and augment, secure, and sustain gas supply in the country, including the Batangas to Manila Gas Pipeline Project (BATMAN 1). With the gas terminal, natural gas can be extended to supply to the three (3) power plants in Batangas, namely Ilijan, San Lorenzo, and Santa Rita.
Initial identified gas offtakers are the 600 MW Limay power station running on diesel and 480 MW Pyongtaek power plant fueled by natural gas. The Pyongtaek plant is planned for relocation from South Korea to Bataan.
PNOC EC completed a pre-feasibility study for this project. The company has options to sell natural gas, and earn from terminal and pipeline tariffs. Depending on LNG supply, the project can be operational in three (3) years.
GAS Demand Forecast
• Gas demand of existing facilities estimated to increase from 103 bcf (2003) to 198 Bcf (2012) assuming 5.4% annual GDP growth rate (High growth rate)
• Additional Gas demand expected -‐ Power – Gas-fired power plant could fill new capacity requirements by 2008
including the conversion of 500MW Sucat, 300 MW Malaya and 620 MW Limay plants
-‐ Transport – Up to 1,300 public transport vehicles running on CNG by 2003 -‐ Industry – up to 20 Industrial parks located along Batangas - Metro Manila
corridor are potential industrial gas markets -‐ Residential – natural gas can potentially replace LPG as cooking fuel
LNG Importation Options
• Additional gas demand to increase from 23 BCF in 2008 to 194 BCF in 2012 to meet gas deman for power and non-power users
• Importation Options -‐ LNG from Bruner, Indonesia or Malaysia -‐ Piped gas thru possible pipeline interconnection with the Trans-ASEAN Gas
Pipeline System (TAGPS)
UPSTREAM PROFILE
DOWNSTREAM INFRASTRUCTURE
Growth and Development
Proposed Trans-ASEAN Gas Pipeline System , TAGPS
Prospects and Opportunities
Emerging Market
Philippines
• Future new terminals in discussion -‐ Philippine National Oil Co has been given responsibility to organize LNG
import and gasification of the country (2010) • 1.5Mtpa FSRU at Bataan, Luzon island – 2015? • Another project proposed to feed power stations on Mindanao
-‐ Currently with World Bank re funding
EWE (Australia) LNG Hub:
-‐ Integrated with 300MW closed-cycle power station development • Pagbilao Grande Island, Quezon • 80,000 t/a • Single 130,000m³ tank (2nd tank in expansion)
• June 2013
INVESTMENT OPPORTUNITIES
UPSTREAM
• 25 TCF of natural gas in undiscovered resources in 16 petroleum basins
ADDITIONAL GAS REQUIREMENT
• 23 BCF in 2008 to 194 BCF in 2012
DOWNSTREAM
• 80-100 km Batangas-Manila Pipeline Project (BatMan 1) • 130-150 km Bataan-Manila Pipeline Project (BatMan 2) • 40-km Bataan-Cavite Undersea Pipeline Project (BatCave) • Spur lines such as the 35-km Sucat-Malaya Pipeline • LNG terminals in Batangas and Bataan • Conversion of thermal power plants to natural gas (Ex. Pagbilao Thermal
Power Plant – Batangas) • Natural gas demand of 20 Industrial parks along the Pipeline route • Potential natural gas demand of commercial buildings and complexes in
Metro Manila area • Refilling stations in Metro Manila for Natural Gas Vehicles • CNG Vehicle
Projects Ongoing