Malampaya starts 20-day shutdown

MANILA, Philippines — Malampaya consortium operator Shell Philippines Exploration B.V. (SPEX) is ready to execute the 20-day scheduled maintenance shutdown starting today until Oct. 21.

“Preparations and contingencies are in place, including strict health protocols. This is a result of 12 months of planning with our gas plant customers and the Department of Energy (DOE),” it said.

“The scheduled maintenance shutdown will ensure continued reliability of our offshore and onshore facilities,” it said.

The Malampaya facility supplies fuel to around 40 percent of gas-fired plants in Luzon, powering around 3,457 megawatts (MW) of power plants that provide power supply to the Luzon grid.

Three of its power generators – the 1,000-MW Sta. Rita and 500-MW San Lorenzo gas plants, collectively called the First Gas plants, and the 1,200-MW Ilijan power plant – will be affected by the scheduled shutdown and will need to run on more expensive liquid fuel to fulfill their supply requirements.

To ensure adequate power supply during the period, Manila Electric Co. (Meralco) has asked gas-fired generators to continue running on liquid fuel and requested the Energy Regulatory Commission (ERC) to allow its energy contract with the Power Sector Assets and Liabilities Management Corp. (PSALM) to start.

“On the part of Meralco, the First Gas plants will be asked to run on liquid fuel.  Meralco also wrote ERC about implementing the contract for the supply of electric energy (CSEE) with PSALM for 90 MW beginning 29 September 2021,” Meralco vice president and head of utility economics Lawrence Fernandez said.

The DOE earlier directed the Independent Electricity Market Operator of the Philippines (IEMOP) to conduct supply-demand simulations on the upcoming Malampaya maintenance shutdown.

Based on its simulations, IEMOP chief operating officer Robinson Descanzo said the market operator sees a 4,000-MW supply margin as most of the gas-fired power plants being served by the Malampaya gas facility will be able to run on alternate fuel and the coal plants on shutdown have resumed operations.

The 4,000-MW supply margin is on top of the projected demand during the period and the 2,000-MW reserve requirement, leaving an excess of 2,000 MW in the system.

As for the WESM price, Descanzo said prices are projected to be steady since most of the gas plants running on alternate fuel are under power contracts.

The DOE earlier said it was preparing for the impending shutdown of the Malampaya natural gas facility as this is expected to put an upward pressure on electricity prices.

DOE Undersecretary Felix William Fuentebella said there would be a cost impact with the Malampaya shutdown since gas-fired power plants relying on the facility’s supply would have to run on a more expensive liquid fuel.

Meralco expects some upward push in the generation charge in October due to the Malampaya facility shutdown.

The power supply agreements with the First Gas plants require them to run on liquid fuel while the Ilijan baseload and mid-merit power supply agreement requires the generator to provide full capacity notwithstanding the lack of fuel.