SPEX official says Malampaya repair imperative

by Lenie Lectura, 18 March 2015
from BusinessMirror

Shell Philippines Exploration B.V. (SPEX), the upstream company of Shell in the Philippines in charge of operating the Malampaya Deep Water Gas-to-Power Project, may default in its obligations if it did not implement Phase 3 of the Malampaya expansion program on time.

The Malamapaya natural-gas facility is currently offline for 30 days until April 14 to give way for the maintenance work and the installation of a second platform.

SPEX Commercial Manager Teresa Loresco could not stress enough the importance of an ongoing expansion through Phase 3, which involves the installation of new compressors and a platform.

She said that this is meant to keep up the volume of gas production. “If we implement Phase 3 next year, there will be constraint in gas [supply] and we will not be able to fulfill the demand for the 2,700-megawatt gas-fired power plants,” Loresco said.

And if Malampaya can’t produce gas, then SPEX will not be able to deliver gas to fire up three natural-gas power plants: 1,000-megawatt (MW) Santa Rita, 500-MW San Lorenzo and 1,200-MW Ilijan.

SPEX has a contractual obligation to supply gas to First Gen Corp., which owns Santa Rita and San Lorenzo power plants, and to Kepco Philippines, which owns Ilijan. “We won’t be able to meet our contractual obligations to our existing customers so we need to carry out Phase 3 now,” Loresco said.

The Malampaya gas field off Palawan contains 2.7 trillion cubic feet of natural gas and 85 million barrels of condensate. The consortium has consumed around 1.5 cubic trillion of gas and the facility is expected to run out of gas by 2024.

To sustain the level of gas production committed under existing contracts, the consortium has started a $1-billion expansion program through Phases 2 and 3.

“For Phase 3 the work involved is the installation of the platform which will help source the gas. We also need to install new compressors so that the pressure is strong,” explained the SPEX official.

The consortium is composed of SPEX, 45 percent; Chevron Malampaya Llc., 45 percent; and Philippine National Oil Company-Exploration Corp., 10 percent.

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