Malampaya a model for upstream energy projects

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    Malampaya could serve as a lesson for future developers of upstream energy projects in the Philippines, according to an energy expert but policies must be intact to make  development of  the next water gas-to-power source successful.

    “The Malampaya deep water gas-to-power project has proven to be the most important energy project in the Philippines in recent time. And this is something which other energy schemes can learn from,” said Rufino Bomasang, chairman of the Petroleum Association of the Philippines (PAP) in an  article “Towards Philippine Energy Security: Learning from Malampaya.”

    Bomasang said the discovery of small but commercially viable oil fields and the development of the world class Malampaya deep water gas-to-power project were among the initiatives that lessened the dependence of the Philippines on imported fuel.

    Although it required over 500 kilometers of undersea pipeline to reach the Luzon market, Malampaya managed to generate 40 to 50 percent of the island’s power requirements.

    Bomasang attributed Malampaya’s success to four factors:

    One, Shell’s extensive experience in developing deep water gas projects—particularly in the Gulf of Mexico. Their technical expertise has been very evident from the development stage of the project.

    Two,  Shell has been committed to sustainable development from the early stages of Malampaya in 1998 up until 2001;

    Three, Shell Philippines Exploration (SPEX)  BV, operator of the project on behalf of the SC38 consortium.

    Maintained the employment of Filipino engineers, technicians, and workers in the entire organization.

    Four,  Shell’s decision to allow PNOC-EC to participate enabled its managers and engineers to take notes from the oil giant.

    Bomasang said  PNOC-EC’s involvement further strengthened the public image of its multi-national affiliates, SPEX and Chevron.

    “Other companies may well have as much technical expertise as SPEX, but they certainly can learn how to manage and minimize non-technical risks and implement projects expeditiously,” Bomasang noted.

    Bomasang has also given credit to government for making the project possible by implementing incentives, consistent policies, and “sanctity” of policies.

    He says these government actions “made it viable to develop a natural gas field in prohibitive water depth and so far from the market.”

    Bomasang noted, “For the Philippines to find and develop the next Malampaya, it is of utmost importance that these policies are kept intact.” He also believes that the next Philippine power supplier must have the expertise and commitment to mobilize something as big as the Malampaya gas-to-power pProject.

    Despite being a complex initiative, Malampaya, which has an 850-meter water depth, was completed on time and under budget.

    The company  contributed $11 billion to the government, save USD8 billion in energy imports, meet 40 percent of Luzon’s power demands, and paved the way for fossil fuel as a cleaner alternative than coal.