New LNG plants to ease tight power supply in Philippines

Two liquefied natural gas (LNG) projects are on track to go online next which the Department of Energy (DOE) said will help stabilize power supply, specifically in Luzon where there has been supply shortfall in recent years.

Citing a report by its Oil Industry Management Bureau, the DOE said the integrated LNG import terminal of Atlantic, Gulf & Pacific International Holdings (AG&P) and Linseed Field Power Corp. would be commissioned in March 2023 and start commercial operation the following month.

Similarly, First Gen Corp. has set the commissioning of its LNG facility in March next year and the commercial run three months later or in June.

“There is a need to diversify our power sources including the use of imported natural gas,” said Energy Secretary Raphael Lotilla in a statement. “Given its scheduled availability at the end of the first quarter of 2023, liquefied natural gas is considered an important source for fuel diversification.”

Historical government data would show the Luzon grid, the country’s largest island, has been experiencing supply deficits during the summer months.

Anticipating high demand

For next year, the DOE previously flagged a “difficult” power supply scenario as it was expecting power interruptions due to the unavailability of certain power plants and the declaration of several red and yellow alerts.

Red alerts, in particular, are expected between May and June, or the months when electricity demand is at its highest as the available capacity during the period will fall below the operating margin (excess electricity supply) due to insufficient power reserves.

A yellow alert is issued when power reserves fall below the ideal levels while a red alert is declared due to insufficient electricity, which might result in rotating power interruptions.

“Our foremost concern is to ensure that there is enough capacity supplied through various sources most especially in the coming summer months to sustain the power supply in the country,” said Lotilla, adding the additional supply also includes stranded power from coal-fired power plants in Bataan due to transmission constraints.

AG&P and Linseed are constructing the P14.6-billion Philippines LNG Regasification Terminal in Batangas. It earlier said the planned facility would open “a new era of clean, efficient fuel” and “secure the current and future energy demand of the region.”

Conversion of facilities

It has so far completed the conversion of the LNG carrier called ISH into a floating storage unit or vessel, a component of a combined offshore-onshore import with an initial capacity of 5 million tons per annum.

For its part, First Gen (FGEN) through its unit FGEN LNG Corp. is undertaking the LNG facility which would meet not only the natural gas requirements of its existing and future gas-fired power plants of third parties and affiliates, but also accelerate the ability to introduce LNG to the country.

First Gen’s LNG project includes a floating storage regasification unit, a storage ship that has an onboard regasification plant capable of returning LNG back into a gaseous state.

According to Lotilla, LNG is aligned with “the goal of transitioning to a low-carbon future and helps stabilize power supply from variable renewable energy.” LNG produces 40 percent less carbon dioxide.

Natural gas, as explained by the DOE, will be able to support the intermittency of renewable sources due to its ability to provide flexible capacity.

“This flexibility allows LNG plants to serve not only peaking requirements to support renewables and ancillary power, but can likewise provide mid-merit and base load requirements,” it added.