First Gen eyes completion of 2 LNG plants in 2023

By Lenie Lectura – May 29, 2019
from Business Mirror

Energy and local officials, joined by lawmakers, drop the time capsule during the First Gen Batangas Liquefied Natural Gas Terminal groundbreaking in Santa Rita, Batangas City, on Tuesday. The LNG project will help ensure supply of cost-competitive, flexible and low-carbon fuel for gas-fired power plants in the Philippines. Leading the capsule drop are (from left) Batangas Rep. Mario Vittorio Mariño, House Energy Committee Chairman Lord Allan Jay Velasco, First Gen Corp. President and COO Giles Puno, Energy Secretary Alfonso Cusi, First Gen Chairman and CEO Federico Lopez, Senate Energy Committee Head Sherwin Gatchalian and Batangas Gov. Hermilando Mandanas.

STA. RITA, Batangas—First Gen Corp. wants to start construction of two new gas-fired power plants as early as next year and finish it by 2023, just in time for when the Lopez-led firm would have put up its liquefied natural gas (LNG) terminal within the First Gen Clean Energy Complex.

First Gen EVP and Chief Commercial Officer Jonathan Russell said after the groundbreaking ceremony of its LNG terminal project that two gas plants will have a combined capacity of 1,200 megawatts (MW).

“Next to the San Gabriel site, we have two additonal vacant lots which can take two new units…about 1,200 MW,” Russell said.

Ideally, construction for the two gas plants must be finished in 2023.

“There’s a need for new capacity by 2024 so we’d like to start construction of those soon so that they can start to deliver power using LNG by 2024. We need to build them by 2023 so we can start them in 2020,” he said.

But a final investment decision (FID) has yet to be reached concerning the two new plants.

“We haven’t taken a final investment decision yet because we haven’t decided which contractor to choose,” Russell added.

First Gen already operates four gas-fed power plants with an aggregate capacity of about 2,000 MW. These are the 1,000-MW Santa Rita, 500-MW San Lorenzo, 414-MW San Gabriel and 97-MW Avion.

On Tuesday morning, First Gen broke ground for its $700-million to $1-billion LNG import terminal.

The project will be developed in two phases. The first includes new unloading facilities for LNG carriers with capacities ranging from 40,000 to 177,000 cubic meters; a 200,000-cubic meter LNG storage tank with a maximum send-out capacity of up to 5 metric tons per annum (MTPA); two LNG truck loading bays; as well as provisions for a future LNG carrier loading system for vessel capacities ranging from 5,000 to 40,000 cubic meters.

The second phase includes an additional 200,000 cubic meters; LNG storage tank; increasing its send-out capacity up to 7 MTPA; two additional LNG truck loading bays; and an LNG carrier reloading system.

The company is targeting to finish the LNG terminal before gas from the Malampaya gas facility runs out in 2024. When he delivered his speech during the ceremony, Energy Secretary Alfonso Cusi said he hopes First Gen will be able to finish construction during the Duterte administration.

“I think that might be a little challenging,” said Russell when asked if the LNG facility can be put up in 2022 “because we don’t need the LNG until the Malampaya finishes. We want to get it finished before Malampaya expires. We are hoping to get the project finished in 2023, but we certainly want to start it before the end of the term,” he said.

First Gen will tap lenders to complete the financing of the LNG project.

“We’re in discussions with several financing institutions. In the long term, we hope we can take out project financing. It could be 60 percent to 70 percent financed. We need to get on this with this project. If we don’t start to move, the risk is that 3.2 GW of capacity just disappears from the grid because of no gas. So there’s a real imperative to get moving. We need to work with partners to help make that happen,” Russell added.

First Gen has partnered with Tokyo Gas Co. Ltd. for the LNG project. Both signed a joint development agreement (JDA) in December last year.

“Given the joint development agreement between Tokyo Gas and First Gen, we consider that the holding of a Kagami Biraki ceremony is an appropriate way for First Gen and Tokyo Gas to celebrate our collaboration, the completion of the significant predevelopment work, and the commencement of the next phase of the development of the project,” said Federico R. Lopez, chairman and CEO of First Gen.

First Gen is still on the lookout for interested firms willing to join the project. Discussions with potential partners are still ongoing.

Once completed, the LNG terminal will allow the country to import LNG and ensure a continuing stable supply of clean energy once the Malampaya gas field is depleted. The entry of LNG will encourage both industrial and transport industries to consider it as a replacement to more costly and polluting fuels.

“This groundbreaking is putting the Philippines in the value chain of LNG,” Cusi said.

Image Credits: Roy Domingo