RP emerging as world’s top geothermal producer

The Philippines could rise to become the number one geothermal power producer in the world after three geothermal service contracts which can raise up to $900 million worth of investments in the next 25 years were firmed up.

Energy Secretary Angelo Reyes said the implementation of these geothermal projects will provide economic opportunities for the country and “bring us closer to our goal of becoming the largest producer of geothermal energy in the world.”

The country currently ranks second to the United States in terms of geothermal power output. After the development of the first geothermal energy facility in the country in 1971, development initiatives progressed significantly over the years, bringing current generation from geothermal facilities to a total 1,978 megawatts (MW).

Among the country’s indigenous energy resources, geothermal is the largest supplier of electricity with an estimated total untapped potential of about 2,600 MW.

Reyes said the three geothermal contracts are expected to produce as much as 120 MW in additional capacity.  Within the first five years of exploration, the new geothermal contract holders will be able to produce from 20 to 40 MW. The firms are expected to start exploration by August this year.

These firms are expected to invest up to $300 million each if they eventually decide to develop the geothermal reserves and put up their own power facilities.

According to Reyes, the country will need only 70 MW more to overtake the US and become the world’s largest producer of geothermal power.

The DOE has awarded the geothermal service contracts to Guidance Management Corp. (GMC), Biliran Geothermal Inc. (BGI) and Basic Energy Corp. (BEC) to explore and develop the geothermal contract areas in Amacan, Biliran and Mabini, respectively.

The Amacan geothermal prospect in Compostela Valley has a target capacity of 20 to 40 MW. GMC, a synergy between a Filipino mining group led by Joaquin Rodriguez and Australian mining and energy players, will conduct geological and geophysical surveys in the first two years before drilling exploratory wells and will initially invest about $8.1 million.

GMC has previously entered into a joint venture project with Aragorn Power and Energy Corp. for a geothermal service contract in Kalinga province.

BGC, on the other hand, is expected to pour in some $15 million to develop 20 to 40 MW of the target geothermal capacity in Biliran province. It is estimated that Biliran Island, considered a compound volcano, has at least 100 MW of geothermal energy reserves.

BGI managing director Zosimo Sarmiento, for his part, said their foreign investors have committed to participate in more geothermal energy development in the country.

BGI is a joint venture company between Filtech Energy Drilling Corp. and Envent Holding Philippines Inc. Envent’s key shareholders are Reykjavik Energy Invest and Geysir Green Energy, both globally leading development companies in the renewable energy sector with specific focus on geothermal energy. Both companies are based in Iceland where an impressive 100 percent of the power capacity is derived from renewable sources (23-percent geothermal and 77-percent hydro).

BEC president and COO Oscar de Venecia Jr., meanwhile, said they will participate in the 100-MW Kalinga geothermal contract bidding.

BEC, which has been very active in upstream oil exploration and biofuels development, expects to spend about $3.5 million for the initial exploration activities in its Mabini contract area in Batangas which has a 20 to 40 MW target capacity.

BEC is the former Basic Petroleum Corp. which has a long experience and know-how in energy exploration and development. It has participated in almost all the oil discoveries in the country that have been put under production since 1978.

Among renewable energy sources, geothermal is one of the most competitive in terms of generation cost.

In its latest data, the DOE said geothermal energy could be developed at a cost of 6.4 (US) cents, compared to oil’s 7.8 cents; solar’s 43 cents and nuclear’s three cents.