Shell-led consortium to start $1-B Malampaya expansion

THE CONSORTIUM operating the Malampaya deepwater-to-gas power project in offshore Palawan is set to begin next week the third phase of its $1-billion additional investment in the Philippine gas field.

Shell Philippines Exploration BV and its joint-venture partners Chevron Malampaya LLC and PNOC Exploration Corp.—which own the Service Contract 38 license—will hold a “strike steel” ceremony on Dec. 7 at the Keppel Subic Shipyard in Zambales to signal the commencement of Malampaya Phase 3.  The event refers to the ceremonial cutting of the steel plate that will form the mold for the platform base.

The $1 billion in additional investment in the existing $4.5-billion Malampaya power project is being divided for Phases 2 and 3. For Phase 2, the SC 38 consortium is investing $250 million for the drilling and development of two additional wells. This is expected to be completed by February 2014.

Phase 3 of the Malampaya project will see the investment of $750 million for the installation of the yard where additional equipment and facilities will be housed by December 2015.

To date, Malampaya is one of the biggest and most significant industrial endeavors in Philippine history. Since it began producing natural gas in October 2001, the Malampaya gas field has been providing benefits to the country, including the supply of Luzon’s clean power generation requirements, reduction in oil imports and an increase in government revenues.

By implementing phases 2 and 3, the SC 38 consortium will be able to ensure the continued supply of natural gas to three crucial power facilities in Luzon. The natural gas produced by the Malampaya field provides natural gas to to the 1,200-megawatt Ilijan plant of Korea Electric Power Corp. (Kepco); 1,000-MW Sta. Rita and 500-MW San Lorenzo plants, all in Batangas. The power generated from these three facilities alone comprises roughly 40 to 45 percent of the electricity generated in Luzon.