INTEGRATING LNG INFRASTRUCTURES FOR POWER GENERATION IN THE PHILIPPINES Raymundo B. Savella
INTEGRATING LNG INFRASTRUCTURES FOR POWER GENERATION IN THE PHILIPPINES
Raymundo B. Savella
• INTRODUCTION
• PHILIPPINE ENERGY REQUIREMENTS
• PHILIPPINE NATURAL GAS SCENE
• PHILIPPINE POWER INDUSTRY
• LNG CHALLENGES
• CONCLUSIONS
OUTLINE
Location Map
Table of Organization
PHILIPPINE NATIONAL OIL COMPANY
Antonio M. Cailao President & CEO
DEPARTMENT OF ENERGY
Carlos Jericho Petilla
Secretary
PNOC EXPLORATION CORPORATION Pedro A. Aquino, Jr President & CEO
Petroleum E & P; natural gas development; coal exploration, production & marketing; port operation
PNOC ALTERNATIVE FUELS CORPORATION Dante B. Canlas President & CEO
Explore, develop and accelerate the utilization of alternative fuels
PNOC SHIPPING AND TRANSPORT CORPORATION Rogelio M. Guadalquiver President & CEO
Shipping, barging and tankering
PNOC DEVELOPMENT AND MANAGEMENT CORPORATION Herminio M. Alcasid President & CEO
Industrial estate development and management
PNOC RENEWABLES CORPORATION Carlos Gatmaitan President & CEO
Promote the development of renewable energy
PNOC EC is the upstream oil, gas and coal subsidiary of
the state-owned Philippine National Oil Company
(“PNOC”)
Involved in eight Petroleum Service Contracts and six Coal
Operating Contracts
Pioneered the use of natural gas for power generation –
operated the San Antonio Gas Plant, the country’s 1st gas-
fired power plant
PNOC EXPLORATION CORPORATION (PNOC EC) Who we are?
• Population is 100 million - Still growing at 2% per year (2 million/year)
• Growth projected to be 7.5% - ASEAN average is 5.5%
• Need a lot of energy to sustain growth
• No replacement for Malampaya
• Otherwise – power outages in the country
Philippines : At a Glance
2011 Philippine Energy Mix
39 % of the Philippines’ energy requirement comes from oil & gas
2011 Philippine Power Mix
47% comes from fossil fuels – more than half from coal
Biomass 0.2%
Wind 0.0%
Biodiesel 0.0%
Solar 0.0%
Fuel Oil 3.0 %
Diesel 0.9 %
Philippine Gas Scene
• 450 MMSCFD gas and 12,000 barrels condensate produced from the Malampaya Gas Field
• Transported to Luzon by a 500-km pipeline – the only pipeline infrastructure
• Gas generates 2,700 MW of electricity
• Supplies 40% - 50% of power requirement of Luzon where 50% of Filipinos reside
Philippines’ Only Gas Field
Malampaya Platform
Photos courtesy of SPEX
Malampaya Pipeline
Source: SPEX
Power Plants
1,000 MW Sta. Rita & 500 MW San Lorenzo
1,200 MW Ilijan Photos courtesy of SPEX
• Governed by Philippine Power Industry Reform Act
2001
– Free market competition
– Removal of subsidies; except for small island grids
– No policy on fuel mix for power generation
– No cap on coal-fired power plants
• The Law does not promote energy security
PHILIPPINE POWER INDUSTRY
• By law, 10% of demand should be traded in the spot market in
Luzon & Visayas
• 90% of demand under bilateral agreements (long term contract)
with private entities
• Efforts to amend the Power Industry Reform Act to ensure
energy security (more Government intervention)
PHILIPPINE POWER INDUSTRY
• Power rates are 2nd highest in Asia - next to Japan
• Coal is the default fuel - expected to reach 60% by 2016
• No subsidy on fuels except for the CNG for transport
• Expected power deficit in Luzon by 2015
PHILIPPINE POWER INDUSTRY - Consequences
Luzon Grid Supply-Demand Outlook (DOE Luzon Power Development Plan, 2012 - 2030)
Source: DOE, May 2013 ! Increase in coal capacity; flat for natgas
Current Industry Structure
Source: DOE, May 2013
• Philippines has been a gas producer since 1994
– San Antonio (1994-2008)
– Malampaya (2001 – 2024)
• Presently 100% of gas production from Malampaya
– 98% of production for 3 power stations
– 2% for industrial customer and CNG vehicle program
• Expected depletion in 2024
• Clamor for natural gas from the industrial sector
Demand exceeds supply
PHILIPPINE NATURAL GAS INDUSTRY
• No gas discoveries yet
• Several on-going LNG studies
• No regional gas pipeline network - only existing pipeline is from Malampaya
Onshore Gas Plant to customers
• 100 km Batangas to Manila (BatMan) gas pipeline by PNOC still a pipe dream
• No policy and regulatory framework for LNG – but there is a proposed bill
(“Natgas Bill”) to include imported gas (to filed soon)
• On-going Philippine LNG Master Plan by the DOE/PNOC
PHILIPPINE NATURAL GAS INDUSTRY
BATANGAS – MANILA
NATURAL GAS
PIPELINE ROUTE
South Luzon Expressway (14.6 km)
Southern Tagalog Arterial Road Extension (42.8 km)
SL Expressway Extension(7.2 km)
Sto. Tomas Interchange
Sambat Interchange
Bulihan Interchange
Tambo Interchange
Malainen Interchange
Batangas Interchange
Batangas Seaport
ZONE 2
ZONE 3
DPWH Diversion Road (4.2 km)
Tabangao – Sta. Rita Pipeline (6.3 km)
MALAMPAYA ONSHORE GAS PLANT
LNG will play an important role in securing the country’s future energy needs
• Low initial demand and long ramp-up period
• Competing with coal in the power sector
• Developing the market of the industrial sector
• Uncertainties on future policy and regulatory framework
• Developing the LNG infrastructure – pipeline network,
terminals
LNG CHALLENGES - Commercial
• Long lead-time in securing permits (Government bureaucracy)
– Over 2,000 permits needed for Malampaya gas project
• Need support and endorsement of:
– National government agencies
– Local government units
– NGOs
Solution : Create a one-stop shop agency
LNG CHALLENGES – Permitting
The Realities: • Gas is an essential component of our power sector -
responsible for supplying 30%-40% of Luzon’s power needs – where 50% of Filipinos live
• Production only from one field and no replacement
• Coal is not acceptable – gas is!
• If exploration efforts unsuccessful – need to import
• No government direct investment
• Make it easy for private parties to come in
• Malampaya will be depleted by 2024 – 10 years from now
• It took 10 years to develop and produce Malampaya
• Finalizing the LNG master plan
Start planning the LNG infrastructure now!
SC 38 (Malampaya) Project Timeline Against Socio-Economic Landscape
Global Financial Crisis
• Philippines will be importing natural gas soon
No replacement for Malampaya gas
Coal as default fuel - Environmental issues
Strong demand from industrial and power sectors
• Development of an LNG infrastructure is critical for a
successful LNG program
• Private-sector will take the lead - no direct investment from the
government
• There will be government incentives
• Government to integrate these projects based on LNG master
plan
CONCLUSIONS
Thank you