What's New

Downstream Natural Gas

The birth of the Philippine natural gas industry brings the country closer to its goal of harnessing environment friendly fuels to ensure a stable, diverse and secure energy supply. However, the growth of this industry is anchored on the development of additional gas-generated capacity, other non-power applications and the necessary infrastructure that is to bring the natural gas to its potential markets. The infrastructure includes the appropriate pipeline transmission and distribution networks, LNG terminals and facilities, gas refilling stations for CNG-run vehicles and ancillary facilities.

In the absence of the law for the natural gas sector, the stage for the industry’s development has been set with the preparation of a gas policy framework, industry rules and regulations. A clear and concise policies, objectives, programs and strategies formulated by the DOE, together with the critical cooperation and participation of the private sector, development  of a natural gas industry is ensured.

While there is still much to be done, the DOE will be at the forefront of efforts to rally the participants in this new industry to success.

 STUDIES:

Current Industry Structure

The current gas industry in the Philippines is characterized as an emerging, essentially a “single-project” stage, with the country’s first commercial gas field, the Malampaya Gas Field in Northern Palawan, having commenced delivery of gas to three combined cycle gas turbine power plants only in October 2001. The commercial arrangements for the “Malampaya gas-to-power project” essentially define the current structure of the gas industry. The following are the interplay in the structure:

• A consortium of three companies, namely, Shell Philippines Exploration BV (SPEX), Chevron-Texaco Philippines, Inc., and the Philippine National Oil Company Exploration Corporation (PNOC-EC) is developing the gasfield under a service contract (SC No. 38) with the government.

• With a total project investment of about US$ 4.5 billion, the SC 38 venture includes the construction and operation of a 504-kilometer, 24-inch deepwater pipeline that transports the gas to an  onshore gas processing plant in Tabangao, Batangas province in the island of Luzon, which the consortium also owns and operates.

• Currently, the SC 38 consortium supplies gas to three power plants and to Pilipinas Shell Petroleum Corporation (PSPC) for the refinery and CNG refilling station with individual gas sales and purchase agreement (GSPA) and power purchase agreements (PPA) for the three power plants. The three power plants are all located in Batangas province.

• First Gas Power Corporation (FGP), operates the 1000-MW Sta. Rita and the 500-MW San Lorenzo, and sells the power output to MERALCO under individual 25-year Power Purchase Agreements.

• NPC, the state power utility, owns the 1200-MW Ilijan Power Plant under Build-Operate-Transfer (BOT), which KEILCO operates under an Energy Conversion Agreement with NPC.

• On April 16, 2010, San Miguel Energy Corporation (SMEC) was declared as the administrator of the 1200 MW Ilijan Power Plant under the privatization program of the government. SMEC is responsible from trading the electricity generated from the power plant.

• FGP, for its part, constructed a 10-km pipeline to transport the gas to its two power plants but has turned over its operation to SPEX.

• NPC operates a 15-km pipeline that brings the gas from Tabangao to the Ilijan power plant.

• PSPC uses the natural gas as fuel for the refinery’s gas turbines and supplemental fuel to its furnaces (steam production)

• Likewise, the other GSPA of PSPC with SC 38 provides CNG from the mother station located also in Batangas which subsequently supplies a CNG daughter station located in Biñan, Laguna, under the Natural Gas Vehicle Program for Public Transport (NGVPPT) Pilot Phase.

• Seven CNG Bus Operators were accredited under the NGVPPT to participate in the CNG Pilot Program envisioned to be implemented for seven years.

Pages