GOVT GETS $1.1 B FROM MALAMPAYA GAS PROJECT / ABOUT MALAMPAYA PROJECT

[PHOTO - Malampaya is benefiting the Philippines in countless ways, including reducing oil imports, assuring a more stable supply of energy and a cleaner source of power, and meeting up to 40% of Luzon’s energy requirements. The operation of Malampaya in the power stations’ full capacity of 2,700 megawatts is displacing an estimate of some 1.35 million kilograms of CO2 per hour–a cleaner and more sustainable process, as compared to energy generation using coal or fuel oil.]

MANILA, JANUARY 20, 2012 (INQUIRER) By: Norman Bordadora - The Philippine government received $1.1 billion as its share of the income from the Malampaya gas-to-power project.

President Benigno Aquino received the symbolic check for $1,134,669,157 representing the project’s revenue contribution to the national government from Shell Philippines country manager Edgar Chua.

The amount is equivalent to more than P43 billion.

“The project is a joint venture so that government has a share and it is given every year. The US$1.1 billion is the total for 2011,” said Energy Secretary Jose Rene Almendras, who was among the officials who witnessed the ceremonial turnover.

The energy secretary expressed optimism that the government will be receiving the same return in the coming years if the price and quantity produced would be stabilized.

“Hopefully, the supply will continue so that’s the same amount of shares and if the price stays as it is that should be the quantity that we should be getting,” Almendras said.

“The only time that it will go down is when we reinvest, because we have to invest for the Malampaya Phase 2 and Phase 3…. There’s a Phase 2 and 3 which will require us to invest so that we can get more gas and prolong the supply of gas because we need gas as much as we can,” he added.

Almendras said the amount would go directly to the Malampaya fund managed by the Department of Finance.

According to Budget Secretary Florencio Abad, the Malampaya Fund has a specific purpose in law, which is to fund energy development, or for other purposes as duly approved by the President.

“We really have to be prudent whenever charging against the Malampaya Fund because of its impact on our fiscal health. Under the government of President Benigno S. Aquino III, this fund will be used reasonably and rationally,” Abad said in a statement issued in May 2011 on the status of the fund.

“So far under the Aquino administration, we have charged P2.87 billion from the fund for necessary energy-related expenditures,” he said.

These expenditures as of May 2011 include P2 billion for fuel requirements of the National Power Corporation-Small Power Utilities Group, to avert a power shortage in off-grid areas; P450 million for the Pantawid Pasada program, as direct support to jeepney and tricycle drivers affected by the recent spate of oil price hikes; and P423 million for the purchase of the USS Hamilton cutter marine vessel to strengthen the security perimeter of the Malampaya Natural Gas Project.

According to the records of the Department of Budget and Management as of May 2011, P105.95 billion has been collected from the Malampaya proceeds since 2002.

Also as of May 2011, P26.47 billion has been disbursed so far: P3.95 billion to the provincial government of Palawan; and P22.52 billion to national government agencies. Out of this amount, P2.87 billion was released in 2011.

The Malampaya Deep Water Gas-to-Power project is a joint undertaking of the Philippine government and the private sector.

The project is spearheaded by the Department of Energy, developed and operated by Shell Philippines Exploration B.V. on behalf of joint venture partners Chevron Malampaya LLC and the PNOC Exploration Corporation.

Also present during the ceremonies were Finance Secretary Cesar Purisima, PNOC chair and Chief Executive Officer Gemiliano Lopez, Shell Philippines managing director Sebastian Quinones Jr. and Shell Philippines assistant manager Sabino Santos.

THE MALAMPAYA PROJECT: POWER FROM THE DEEP

The Malampaya Deepwater Gas-to-Power project is the first undertaking of its kind in the Philippines employing state-of-the-art deepwater technology to draw natural gas from deep beneath Philippine waters. The indigenous gas fuels three natural gas-fired power stations with a total generating capacity of 2,700 megawatts to provide 40-45% of Luzon's power generation requirements.

Since October 2001, the Philippines has been importing less fuel for power generation, providing the country foreign-exchange savings and energy security from this clean fuel.

Natural gas has the least CO2 among fossil fuels and is more efficient than other sources of power like coal and crude oil.

The Malampaya Project: The Big Picture

The discovery of an alternative and indigenous source of energy was a milestone event for the Philippines, a country that has historically relied on imported fuel for the bulk of its domestic and industrial power requirements.

The Malampaya Deep Water Gas-to-Power project is one of the largest and most significant industrial endeavors in Philippine history. A joint undertaking of the Philippine national government and the private sector, the project is spearheaded by the Philippine Department of Energy (DOE) developed and operated by Shell Philippines Exploration B.V. (SPEX) on behalf of joint venture partners Chevron Malampaya LLC and the PNOC Exploration Corporation.

A STORY OF POWER

The Malampaya story is a story of resilience, perseverance, and innovation spanning over a decade. In 1989, a small gas reservoir called Camago was discovered in the area of service contract 38 (SC 38). In 1990, upon acquisition of a 50% participating interest in SC38, SPEX joined the search for natural gas reserves. Two years later, the Malampaya gas field was discovered, and was later found to be connected to the Camago structure.

SPEX drilled five wells to determine the amount of gas available in Malampaya. The findings confirmed the presence of a formidable power source 80 kilometers northwest of Palawan island–about 2.7 trillion cubic feet of natural gas reserves and 85 million barrels of condensate, located some 3,000 meters below sea level. In 1995, after comprehensive studies, it was concluded that Malampaya presented an extraordinary opportunity for commercial gas development in the Philippines.

The development of Malampaya posed a myriad of daunting logistical, social, environmental, and financial challenges. It required the active participation and involvement of government agencies, communities, and both Filipino and multinational companies. The DOE played a key role in making Malampaya a reality.

In 1998, former President Fidel V. Ramos signed the declaration of commerciality of the venture. Three-and-a-half years later, in October 2001, the Malampaya Deep Water Gas-to-Power Project was inaugurated in a special ceremony at the onshore gas plant in Batangas.

The Malampaya Deep Water Gas-to-Power Project employs state-of-the-art deep water technology to extract natural gas and condensate from the sea floor. Such technology includes sub-sea facilities, a shallow water production platform, an underwater pipeline, a catenary-anchored leg mooring buoy, and an onshore processing gas plant.

THE CUSTOMERS

Power Stations:

Three combined-cycle gas turbine plants–the 1,000-megawatt Sta. Rita power station, the 500-megawatt San Lorenzo power station, and the 1,200-megawatt Ilijan power station–are supplied with processed natural gas to generate a combined 2,700 megawatts of power for Luzon.

CNG Pilot Program:

Malampaya gas is utilized for the government’s pilot CNG program for public utility transport, which consists of a mother and daughter filling station located at the onshore gas plant and at a Shell station in Laguna.

WHAT IS NATURAL GAS?

Dubbed the “fuel of the future”, natural gas is composed of gaseous hydrocarbons found deep underground, or extracted through driven wells. It is formed beneath the earth’s surface over millions of years by the decomposition of organic matter, in much the same way that oil and coal are formed. Natural gas is 85-90% methane, with varying amounts of ethane, propane, butane, and other hydrocarbon compounds. Some condensate and oil will always be associated with the gas. In its natural state, the gas is colorless, odorless, and lighter than air.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partners In The Vision

The Department of Energy, the agency leading the development of Malampaya, is the Philippine government division dedicated to the search and development of indigenous sources of energy.

Project operator Shell Philippines Exploration B.V. (SPEX) and joint venture partners Chevron Malampaya LLC and the PNOC Exploration Corporation are responsible for the development and operation of the project’s upstream component. Chevron, one of the world’s largest global energy companies, acquired 45% of Malampaya in 1999, while PNOC Exploration Corporation acquired 10% in 2000.


Chief News Editor: Sol Jose Vanzi

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