First Gen on the lookout for natural gas sources

The Lopez-led First Gen Corp. has begun looking for new sources of natural gas abroad as its existing supply contracts for the 1,000-megawatt Sta. Rita and 500-MW San Lorenzo facilities in Batangas are set to expire in 10 to 12 years’ time.

First Gen hopes to ensure the continued and stable operations of the Sta. Rita and San Lorenzo facilities, which alone generate roughly a fifth of Luzon’s power requirements.

In an interview, First Gen president Francis Giles Puno explained that if the company would not be able to source additional gas from the Malampaya gas field, then it would have no choice but to start looking, as early as now, for alternate sources of natural gas supply, including liquefied natural gas (LNG).

Gas field

“If there’s more gas coming from Malampaya, then we won’t have to invest in importing LNG, but if there’s less gas coming from Malampaya then we have to import,” Puno told the Inquirer.

At present, First Gas Holdings, the parent firm of the subsidiaries that own and operate the two gas-fired power plants, sources all its natural gas supply from the Malampaya gas field off Palawan. Based on the reserves found in the field, it is expected to continue producing until 2024. However, phases 2 and 3 to be undertaken by the Malampaya consortium may stretch the life of the gas field to 2039.

First Gen owns 60 percent of First Gas Holdings, while the remaining 40 percent is held by the British Gas Group.

According to Puno, First Gen is also looking at the possibility of investing in an LNG terminal should it proceed with the importation of additional gas supply by itself. Otherwise, First Gen could rely on its existing gas supplier to import gas for them.

More feasible

It is necessary for First Gen to start scouting for prospective gas suppliers as global demand for this resource has been rising steadily. Natural gas has been deemed to be among the more feasible alternatives that will allow countries like the Philippines to diversify its energy and transport fuel sources.

Countries like Brunei and Australia have already announced that they have existing gas supply contracts booked over the next four years and, as such, can only start supplying the Philippines with natural gas by 2015 and 2016, respectively, according to Energy Secretary Jose Rene D. Almendras.

The additional gas supply to be sourced by First Gen will not only enable it to secure stable operations of its two natural gas facilities in Batangas, it can also allow it to proceed with the 550-MW San Gabriel natural gas project.

Always there

“As you know, the San Gabriel project has always been there, but we haven’t been talking about it because we have no gas supply yet,” Puno explained.

“But the moment that there is additional gas supply coming from Shell Philippines Exploration BV, operator of the Malampaya field, then potentially we’d be interested in buying that gas.”

The San Gabriel natural gas facility will be constructed on the same site as the Sta. Rita and San Lorenzo plants, and will use common facilities such as the fuel jetties, oil storage tanks, among others.