Depleting clean energy

TILBURY – Until I arrived here to be part of a Philippine media delegation to a clean energy study tour group in Canada, the closest thing I knew about liquefied and compressed natural gas was the Malampaya natural gas reservoir. Discovered in 1992 at offshore northern Palawan, it is privately operated by Shell Phils. Exploration Corp. on behalf of other consortium members Chevron and state-run PNOC-Exploration Corp. (EC).

At present, the country’s only source of indigenous natural gas is from the Malampaya deep water gas-to-power project. Currently, the only users of this indigenous natural gas are the Lopez-owned First Gen through its subsidiary First Gas and the 1,200-megawatt (MW) Ilijan plant of Korean Electric Co. (KEPCO). These power utilities are located in Batangas where natural gas flows through underwater pipeline all the way to Malampaya gas field in Palawan.

First Gen prides itself as a leading power generation company that pioneered the use of this indigenous natural gas through its two existing power plants, namely, the 1,500-MW Santa Rita and 500-W San Lorenzo. The two plants are a major backbone of power supply in Luzon.

In its report to the Department of Energy (DOE),  First Gen is currently expanding its power generation assets as it is expected to complete its 97-MW Avion plant running on aeroderivates fuel and another 414-MW San Gabriel plant. The additional capacity is expected to be completed and come on stream by 2016. ?San Gabriel can run also on natural gas.

Natural gas is touted as the “fuel of the future” as it is a clean source of energy and environment-friendly fuel.

It is cheaper than oil and cleaner than coal. Thus, it is fast becoming most in demand energy source by countries around the world. But Malampaya’s reservoir of natural gas is projected to be depleted in less than a decade. Hence, the facility is projected to produce less fuel in its remaining lifespan. As the operator of Malampaya gas field, Shell Philippines Exploration B.V. installed another platform to help pump gas from under the ocean.

Malampaya operators are also searching for other gas sources near their service contract in the hope to extend the life of the country’s premier natural gas  reservoir. The Philippine government, on its part, has been trying to explore areas where there may be other possible natural gas reservoirs within the country’s territory, including those around the mineral-rich West Philippine Sea.

One of the areas identified for oil and gas exploration is Recto Bank located in the disputed West Philippine Sea. Due to overlapping maritime territorial conflict with China, the exploration project has been put on hold indefinitely.

PNOC-EC board chairman, former Manila Mayor Mel Lopez earlier told us the state-run company has discovered veritable natural gas reservoir in Isabela. However, Lopez admitted, it would further take time to determine if this reservoir could be commercially viable.

Without a new source of natural gas, the country may have to import from abroad, which may be cheaper than to buy crude oil. The private sector cannot afford to wait for the government to take action. To ensure such vital energy security requirement is met, some of the leaders of natural gas industry took matters into their hands.

With the expected depletion of the indigenous natural gas in Malampaya sometime in 2025, First Gen recently unveiled plans to build its own liquefied natural gas (LNG) facility in Batangas. The LNG facility will allow the importation of natural gas currently in abundance in North America and Europe through positive technological developments such as shale gas production.

Natural gas is delivered through specialized tankers in freezing temperatures. Natural gas will be liquefied, then stored in these tankers and delivered to an LNG facility, which will re-gasify or vaporize it. In gas form again, it can be used as fuel to run the turbines of the gas-fired power plants.

A Canadian company called Fortis British Columbia Inc. (Fortis BC), based in Vancouver, operates this kind of facility converting LNG to compressed natural gas (CNG). This we found out here from Michael Orth, operations manager of FortisBC. Canada has one of the world’s richest natural gas deposits.

Briefing us before a plant tour of their “peak-shaving” LNG facility here in Tilbury Island, Orth explained in simple terms how the process is done. Orth drew parallelism of first converting a natural gas into liquid form when there is low demand and turning it into gas when there is high demand. “It is like converting 600 ping pong balls into one ping pong ball.”

From their company profile, FortisBC Inc. is an electric power and gas distribution/retail company in the Canadian province of British Columbia, a subsidiary of Newfoundland-based Fortis Inc., Canada’s largest private utility company. FortisBC proudly claim to provide safe and reliable natural gas, electricity, alternative energy and related services to customers in BC.

According to Orth, FortisBC promotes the use of CNG instead of diesel as fuel for vehicles. The use of LNG and CNG in trucks, buses and cars is cleaner and more efficient fuel for transportation, he stressed. To entice companies to participate in the wider use of LNG/CNG, the government of Canada offers carbon credits for helping climate change initiatives of their country to achieve the “greenhouse” effect.

In the Philippines, our natural gas in Malampaya became a dipping reservoir of corruption. As much as P9.5 billion of government funds raised out of royalties from the private contractors of Malampaya have allegedly been siphoned off through these years. A self-confessed whistleblower Merlina Suñas claimed at least P900 million Philippine government’s earnings from the project went to alleged “bogus” non-government organizations run by businesswoman Janet Lim-Napoles.

Instead of going to the intended beneficiaries as provided for by law mainly for renewable energy projects and some for calamity victims, Napoles allegedly through her conduits like Mercy Tuason, diverted the Malampaya funds to their personal bank accounts. Plunder  and graft cases are now pending at Sandiganbayan against Napoles and several lawmakers and local government officials linked to the alleged bilking of pork-barrel and Malampaya funds.

Unfortunately, the latest news is that not only the large amounts of funds from Malampaya royalties have been mis-used, but even the natural gas reservoir as our source of clean energy is also sadly fast depleting.