As assistant naval staff for plans (N5) in 1999, I had an opportunity to visit the construction site of the concrete gravity structure (CGS) of the Malampaya gas-to-power project in Subic bay area. The then Captain Constancio Jardiniano, later rear admiral and former N5, personally piloted the navy helicopter that brought us there. In our earlier discussions, we both considered the location as an ideal naval operating base for large combatants under the modernization program. For some reason, higher authorities turned down the plan.
Two years later, as skipper of the Fleet flagship at that time, my vessel escorted the Singaporean tugs that towed the topside portion of the rig from 25 miles west of the mouth of Malampaya Sound up to its final destination 27 miles northwest of El Nido township. My task was to enforce the Project’s exclusion zone rules until it commences operation in September 2001 and upon relief by another combatant ship.
The nearby oil rigs put up before the Malampaya project did not yield significant outputs to address the country’s electric power requirements. With the new source of natural gas that would be delivered through an underwater pipeline, the government and some private companies established their power plants before Malampaya started pumping out gas into their turbines. In 2017, Malampaya supplied over 20% of the nation’s electric power through 5 power plants in Batangas City with aggregate capacity of 3,200 MW: Sta. Rita, San Lorenzo, Avion, and San Gabriel all co-located in the First Gen Clean Energy Complex in Sta. Rita, and Ilijan power plant at the eastern tip of Batangas Bay.
In a few years, Malampaya’s gas wells will be empty. This will create a shortage in power production that will certainly affect the country’s economic activities unless new viable sources, either domestic or foreign, are found. The estimated natural gas reserves of the country in 2015 is approximately 3.48 trillion cubic feet, 50th in the world. It produces 1.08 million cubic feet making the country the 58th in the list and consumes 1.10 million cubic feet. At current national consumption rate, the domestic gas reserves will last for 25-30 more years.
Natural gas is categorized as a fossil fuel like petroleum and coal. But it is much cleaner because its carbon dioxide emission is approximately 30% and 50% lower than petroleum and coal, respectively. The reduction of carbon dioxide emission into the atmosphere is in full accord with the 2015 Paris Agreement. Hydrogen and other gases emit very small amounts of carbon dioxide, and are considered the fuels of the future but their usage is still many years away due to technological concerns. Renewable energy sources such as geothermal, hydro, biomass, solar, wind and tidal, would be inadequate to meet the power demands in the near term.
Based on the Energy Department’s figures before reforms were introduced in 1998 by the government with private partnership, the power production came from: oil-fired plants (47%), imported coal-fired plants (19%), local coal-fired plants (4%), hydro power plants (10%), and geothermal plants (20%). Nearly 20 years later, new sources emerged like natural gas and renewables. From 23% in 1998, coal-fired power output more than doubled to 50% in 2017 but oil-fired plants output plunged by nearly 12-fold from 47% to 4%. Hydropower supplies remained at 10% but geothermal production rate declined by half from 20% to 11%. The Malampaya natural gas output accounted for 22% share in the total production while renewables produced 3% in the overall production. A recently operational oil and natural gas field in Alegria, Cebu is only capable of supporting a 60-MW gas plant, extracting barely 180-360 barrels of oil daily, and projected to last until 2037.
Some legislators sounded alarm over the depletion of the Malampaya reserves that could lead to rotational power outages reminiscent of the pre-Malampaya period in the late 1990s.
The government has already initiated actions to address the issue by encouraging investments in renewables and issuing a new policy governing the country’s downstream natural gas industry, recognizing the eventual depletion of Malampaya reserves and the potential of natural gas to “satisfy the increasing local demand” of power for residential, commercial and industrial use.
Included in the Department of Energy’s Power Development Plan, 2017-2040, are land-based gas-fired power plant projects in Port Irene, Cagayan Province and Batangas City, and floating barge gas-fired plants in Sual, Pangasinan and Batangas City. First Gen Corporation, one the country’s pioneers in gas-fired power plants, plans to introduce a floating regasification unit to insure continuous supply of natural gas that fuels its power plants. On the other hand, PHINMA Energy Corporation and Vires Energy Corporation are focusing on floating power barges fueled by natural gas.
Due to limited production in Alegria, Cebu, and the eventual drying up of Malampaya field, the source of natural gas would come from importation and local extraction from known natural gas reserves in western Palawan, the Reed Bank. Confirmed to contain substantial quantity of natural gas in 1976 the government awarded the contract to Sterling Energy in 2002. Forum Energy in 2005 acquired the concession but retained Sterling Energy as operator. In 2011, the concessionaire started preparations to drill gas wells but on China’s objection the government had to suspend all works, effectively putting the project on hold. The location of the identified extraction area in the Reed Bank is about 50 miles north of the Philippine naval detachment in Flat Island and 175 miles west of the Malampaya project, well within the country’s 200-mile EEZ. The longer the suspension of resource extraction is, the higher our dependence on imported natural gas.
Looking at the timeline in relation to domestic and foreign events, the nation could have taken more concrete actions to preserve, protect and defend our patrimony specifically its subterranean energy resources. First of all, we had a respectable Navy when we found the location of those valuable resources in our western frontier. Second, we failed to grasp the consequences of China’s modernization starting in the late 1970s to develop a highly capable seagoing force. The inward looking mindset of our leaders, civilian or uniformed, at that time may have contributed to the failure in understanding the real meaning of a maritime nation and, more so, in digesting the “defense in-depth” concept to secure an archipelagic state –its sovereignty, its people and its territory.
The uncertainty of resolving the Reed Bank dilemma and the eventual depletion of Malampaya reserves would necessitate closer government and private enterprise cooperation and coordination. Energy industry players may introduce new technologies and arrangements that may not be in existence in the Philippines. Consequently, the entry of these technologies would affect the current policies, rules and views of government regulatory agencies. Only by bridging the regulatory requirements and industry expectations would unhampered cleaner energy supply be assured, for as long as the convergence would not compromise the internationally accepted principles, policies and practices, and the domestic laws on energy development and utilization.