Texas-based Excelerate Energy LP said Wednesday it is developing the country’s first open access liquefied natural gas import terminal off Batangas Bay with an investment of P11.3 billion ($230 million).
The open access LNG project is expected to be completed by the second quarter of 2022 as the Philippines prepares for the depletion of the Malampaya natural gas field.
“We will submit our permit to construct, expand, rehabilitate and modify to the Department of Energy soon, which is the next steps in bringing this nationally important facility online as early as the second quarter of 2022,” Ramon Wangdi, president of Luzon LNG Terminal Inc., the local subsidiary of Excelerate, said in a statement.
Excelerate is preparing to start construction of the Filipinas LNG Gateway project and will submit its PCERM application within the year.
Under the open access model, Filipinas LNG will provide access to all power plants in Luzon that use natural gas as a fuel for generating electricity.
“Since receiving a notice-to-proceed from the Philippine DOE in late 2019, Excelerate has worked diligently to develop Filipinas LNG so that the energy markets can be prepared for the next chapter after Malampaya,” Wangdi said.
He said Excelerate and local partner Topline Energy and Power Development Corp. made significant progress on the project despite the substantial challenges brought about by the COVID-19 and its resulting lockdowns.
The supply from the Malampaya gas fields in offshore northwest Palawan started to decline and Filipinas LNG said its LNG project would address the country’s need to supplement and eventually replace Malampaya by supplying a quick, reliable and sustainable gas solution.
The terminal will utilize Excelerate’s state-of-the-art offshore floating storage regasification unit technology, designed to perform in extreme weather conditions.
The technology was proven at Excelerate’s operations in the United States within the Gulf of Mexico and North Atlantic, Israel and the Bay of Bengal, it said.
“Reliability is critical in fueling power plants, and when it comes to LNG, there is no substitute for experience,” said Wangdi.
Having developed and operated over half of the floating LNG import terminals in 13 countries around the world, Excelerate is bringing 50 years of operational experience to Filipinas LNG.
“Excelerate is the only company with the unique and unmatched industry experience that can deliver this complex project,” he said.
The project will have an import capacity of about 5 million tons of LNG per annum and will supply fuel for up to 4,000 megawatts of baseload power generation, allowing it to service multiple power plant customers in Luzon.
Filipinas LNG follows DOE’s third party access model where LNG import capacity is marketed to multiple gas users in the region on an open and transparent basis.
“One distinguishing feature of Filipinas LNG’s ‘TPA’ model is that it allows all gas users in the region unfettered access to the global LNG marketplace by signing up for regas capacity at the terminal,” Wangdi said.
He said this is the opposite of the “own use” model where separate LNG terminals are being built for each independent power plant.
Wangdi said Filipinas LNG’s open access model, which is successfully adopted in major LNG markets around the world, allows for substantial economies of scale—the cost savings for which are ultimately enjoyed by the electricity consumers of Luzon.
“Energy markets in the Philippines are dynamic and will change over time. Unlike comparative ‘own use’ solutions, TPA open access floating facilities allow gas users to enter into shorter term contracts for quantities which meet their specific requirements. This method is highly efficient as there is less ‘wasted’ capacity due to underutilization,” Wangdi said.
Offshore LNG facilities such as Filipinas LNG also have a smaller onshore environmental footprint, a key feature for ecologically-sensitive environments such as those in Batangas Bay.
He said this allows for LNG imports to be implemented in a sustainable manner, regardless of which path the energy markets steer towards in the future.
“Under almost any scenario, we see LNG playing an important role in supporting rapidly growing economies such as the Philippines that want to grow its energy supply reliably, competitively, and cleanly. In the long run, we believe the terminal’s strategic offshore location will allow for Filipinas LNG to act as an LNG distribution hub for delivery of natural gas to end users across the Philippines,” said Wangdi.