Energy sector braces for ‘triple whammy’ next year

Published July 23, 2021, 3:03 PM

by Myrna M. Velasco

The Philippine energy sector is bracing for a “triple whammy” next year – especially in the peak demand months of summer – due to highly probable continued forced outages in power facilities; de-rating of the gas plants; and shortage of gas fuel that can already be extracted from the Malampaya field.

That was the warning given by Senate Committee on Energy Chairman Sherwin T. Gatchalian as he noted that the production of the Malampaya field is already at its ‘depletion stage’ and its output scale may wobble further next year.

Senate Committee on Energy Chairman Sherwin T. Gatchalian

He relayed that based on discussions that the Senate body had with First Gen Corporation of the Lopez group, “they were not expecting that depletion at Malampaya will be happening that fast, so from what we were told, they are now partly shifting fuel use to condensate because of the recurring gas restriction dilemma at Malampaya this year.”

The lawmaker thus cautioned that the country’s power supply woes next year could worsen – “because you will have problems both in the upstream and that’s your fuel source; and then on the generation of the plants. That’s why the DOE (Department of Energy) will need to give its full attention on resolving the energy security problems of the county and they must do the right thing.”

As early as now, Gatchalian said the department must ensure that the proposed floating storage and gasification units (FSRUs) to bring in imported liquefied natural gas (LNG) will already be commercially onboarded next year, so these can plug the gap in Malampaya’s production.

Gatchalian emphasized that even if new well drillings will have to be carried out within the Service Contract (SC) 38 plays of Malampaya, it may still take time before they reach commercial production, hence, the FSRUs will be highly critical as stop-gap facilities in ensuring the continuous operation of the gas-fed power assets.

In the experience of the Malampaya consortium when they invested for additional well drilling and a new platform for the gas field, it took at least five years or from 2010 to 2015 for the project to be concretized – that was from the ‘cash call phase’ up to the commercial production of the new wells.

He qualified that if the generating capacity of the gas plants will be substantially de-rated because of gas deficiency from Malampaya, then the power supply for Luzon could be extremely strained and that may result in longer or more frequent occurrences of rotating blackouts.

There are more than 3,200MW of gas-fired power facilities, primarily sited in Luzon grid, and these are depended upon for baseload as well as mid-merit capacity needs of the power system.

Gas technology is likewise depended upon as the best complement to the on-and-off generation of renewables because of flexibility of their operations, therefore, it is critical that the country’s gas-fired generating facilities will seamlessly run.

The Malampaya Energy XP Pte. Ltd., a subsidiary company of Udenna Group which is the buyer of the 45-percent stake of Shell Philippines Exploration B.V. (SPEX) in the Malampaya project, already tipped off that gas shortage will already come off as a major dilemma for the country’s power sector next year.