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Malampaya Case Study
Malampaya Case Study
from agriculture to industry. In terms of energy use, conventional fossil fuels (Oil and
gas) are the main source for its primary energy demands, however Philippine economy
greatly increases at an undeniably fast rate therefore affecting the demand for electricity
connections per year, if this continues, it will seriously cause power shortage that will
sources, but alternative energy sources cannot reach the necessary energy that is needed
energy sources, Malampaya was developed and it signaled the birth of the natural gas
in the history of the Philippines. Acknowledged as one of the best examples of a highly
Energy and developed and operated by Shell Philippines Exploration (SPEX), on behalf
of joint venture partners Chevron Malampaya LLC and the Philippine National Oil
below the seabed off the coast of Palawan Island and transports it more than 500
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Figure 1: Malampaya Facility
produce 400-450 million cubic feet of gas per day for over 20 years (Sohn, 2017). The
refined gas from the Malampaya project feeds a separate pipeline project that supplies
three gas turbine power plants in Batangas province. These plants are expected to
supply Luzon with a total of 3,200 megawatts of electricity, which is over 16 percent
According to Natural Gas Association, Of the three fossil fuels used for electric
power generation (coal, oil, natural gas), natural gas emits the least carbon dioxide per
unit of energy produced. It emits 30% less carbon dioxide than burning oil and 45%
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Figure 3: Natural Gas Composition
Burning natural gas also releases lower amounts of nitrogen oxides, sulfur
dioxide, particulates and mercury when compared to coal and oil therefore Natural gas
can be very efficient in reducing the greenhouse gas effect in the world.
Malampaya field contains recoverable natural gas reserves of some 2.7 trillion
cubic feet and 85 million barrels of condensate. The gas is extracted from 2,200 meters
below the seabed, which is at a water depth of 830 meters (Shell, 2001). This project to
extract natural gas deposits from over 3,000 meters below sea level and transport this
to a market over 500 kilometers away posed one of the greatest deep-water challenges
in the world and required the use of the latest in gas technology and skills.
The Malampaya franchise is set to expire in 2024. The natural gas it has
produced has provided a significant share in our electricity production mix. Malampaya
has given us a fuel option that is cleaner than coal, the predominant fuel source today.
However according to SPEX, it is foreseen that the Malampaya site will run out
of Natural gas by 2022, earlier than the contract expiry therefore Shell explore much
therefore it can be depleted at some point. It is the crisis that Malampaya and the
Philippines faces, a declining supply of natural gas in the extraction site at Palawan.
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Because China continues to claim Recto Bank (Figure 4), a partial part of the
West Philippine sea, according to the data from the United States Geological Survey
said that Recto bank and other portions of West Philippine Sea contains more than 11
billion barrels of oil and 190 trillion cubic feet of natural gas in proved and probable
sources.
It will be very hard for the government to discover a spot that a natural gas can
capacity to supply a minimum five million tons of natural gas equivalent to 5,000 MW,
will idle the power plants. With the country’s economy dependent on the constant
supply of reasonably priced electricity, failure is not an option. Therefore, before the
Malampaya loses it supply that can be estimated at the year 2022, government invests
Natural Gas can be transported in two ways, one in the form of pipelines that
Malampaya has used and another is transportation as a liquified natural gas via special
LNG tankers.
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This is the only reason for liquefying the natural gas, after transportation, LNG
is commonly vaporized again so as to acquire energy from it. So far, the direct usage
of LNG as fuel remains uncommon. LNG tankers are usually identifiable from their
spherical liquid gas tanks, the top half of which is above the deck (Figure 5). The
spherical shape is perfect for both the pressure resistance and heat insulation of the
several mechanisms are in place to guarantee that the pressure in the tanks does not
surpass the permitted maximum. For instance, the vaporized natural gas can be used for
ship propulsion.
The major difficulty in the use of natural gas is transportation and storage
because of its low density. Natural gas pipelines are economical, but are impractical
across oceans. Many existing pipelines in North America are close to reaching their
potential shortages. In Europe, the gas pipeline network is already dense in the West.
New pipelines are planned or under construction in Eastern Europe and between gas
fields in Russia, Near East and Northern Africa and Western Europe.
LNG carriers can be used to transport liquefied natural gas (LNG) across
oceans, while tank trucks can carry liquefied or compressed natural gas (CNG) over
shorter distances. Sea transport using CNG carrier ships that are now under
For LNG transport a liquefaction plant is needed at the exporting end and
long distance, high volume transportation of natural gas, whereas pipeline transport is
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preferred for transport for distances up to typically 4.000 km overland and
For CNG transport high pressure, typically above 200 bars, is used.
Compressors and decompression equipment are less capital intensive and may be
economical in smaller unit sizes than liquefaction/regasification plants. For CNG mode
the crucial problem is the investment and operating cost of carriers. Natural gas trucks
and carriers may transport natural gas directly to end-users, or to distribution points
The main alternatives to natural gas include nuclear power, solar power,
ethanol, and wind power. Fossil fuels still dwarf these alternatives in global and
domestic energy markets, but there is considerable public momentum to increase their
utilization. The government was not utilizing the Bataan nuclear power plant because
it can cause hazards to areas and the people living nearby, also it was not fueled because
of the issue of 1986 Chernobyl Nuclear Power Plant disaster in Ukraine wherein almost
100 thousand people were affected due to radiation poisoning. Solar and Wind power
are a better alternative and cleaner than natural gas, but it doesn’t produce enough
Upstream (Oil and Gas) Industry (PAP) is working closely with the government
As pointed out by the Department of Energy, the Philippines is still very much
underexplored. Even in offshore northwest Palawan, where Malampaya and other oil
and gas fields are located, new leads and prospects have been delineated that need
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conducted in offshore southwest Palawan had delineated several large oil and gas
deposits in contested waters in the West Philippine Sea that more important. The
Duterte administration is trying to develop political options that will make the
development of potential natural gas deposits in Recto Bank possible. Experts say there
are technical solutions to exploit the new fields and tie-back to Malampaya to make use
of its facilities including the pipeline to Batangas. But the political problem with China
The government do not have all the time in the world to wait for China and the
agree on something, the development of a new gas field can take a decade. That starts
with exploration activities which cannot take place until a geo-political agreement is
reached.
This is why setting up an LNG import facility tied into the existing gas-fired
power plants is an urgent need. Though government can use alternative liquid fuel, the
overall economics would be expensive for the consumer. We must realize that the
offshore platform can support gas exploration in adjacent fields. The problem is that
the LNG terminal as the only proposed solution forces the country to import even if
there may still be available indigenous sources, and this will bite us back in the end.
And there are many negative side effects if we force importation rather than exploration
discourages exploration, further exposing the country to higher prices like exchange
rate risks, volatility of fuel prices in the world market and it can lead to possible supply
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hostage, which is a scary situation for our economy if the government consider the
possible geopolitical risks not only with fuel source but also in shipping.
As the Philippine Nuclear and Oil Corporation (PNOC) position paper puts it:
“It is a complex political, technical, and commercial issue. Our power demand
characteristic requires a fuel which can give the needed mid merit and peaking
capability.”
quickly to give industry time to provide the best service and cost to consumer, while
For the First Gen Power group that owns the power plants using Malampaya
gas, First Gen has been planning what to do after 2024 and are ready to work with
First Gen has, in fact, already spent millions of dollars on studies to put up in
the next five years a liquefied natural gas (LNG) terminal in their Batangas site to
support their gas fired power plants post Malampaya. First Gen plan is to start
developing this $1 billion (LNG) terminal next year and are also expecting to close
this year.
It is just as well that the private sector is moving because the Luzon power grid
is depending on those power plants to keep on working beyond Malampaya. PNOC has
come up with plans, but there is little movement on the ground that amounts to anything.
First Gen has expressed a willingness to work with PNOC, but is taking no chances on
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The demand for LNG has increased significantly over the past years as China is
replacing their polluting coal-fired power plants with power plants using LNG (Figure
6). The first order of business is to make sure we have this LNG terminal which takes
The government was trying to build an alternative option for the declining
supply of Malampaya but to think that government just sorted out to importation of
natural gas, It is a bit odd, the government should use all the resources in the
Philippines, Using LNG terminals should be just a temporary solution because the price
of natural gas in the foreign countries is not steady it can go high, and the price will go
down to the consumers thus, the government should focus on two things, claiming the
recto bank that china claims and building temporary LNG terminals for the declining
supply. The resources of the Philippines should be ours to claim and not to be benefitted
by others.
was not an element but was formed by hydrogen and oxygen. The name “hydrogen”,
which means “water former” in Greek, was proposed by A.L. Lavoisier in 1783. This
highly reactive element, the first one in the periodic table, has two isotopes, deuterium
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and tritium. Hydrogen is the most abundant element in the universe and the third one
in the earth’s surface where it occurs as a diatomic molecule or combined with other
elements; 70% of the existent hydrogen is found in water and in organic matter. Since
the beginning of the 19th century, scientists have recognized hydrogen as a potential
source of energy; it is known that hydrogen could be used as a primary energy source
containers.
Hydrogen has the advantage to generate electricity when combined with oxygen
the Carnot cycle, the efficiency in the generation of electricity is higher than in
conventional engines. Fuel cells operate at different working temperatures and could,
electrical current is needed. Such is the case of hospitals, shopping malls, dwellings or
transportation. Figure 8 presents the main types of Fuel Cells together with the working
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temperature and their kind of fuel. If hydrocarbons instead of hydrogen are used as fuel,
In the past years several companies have been created to do research and
development on fuel cell energy: Tokyo Electric Utility, Kansai Electric Power
Energy Corp, EPRI, Ballard Power Systems and others. Furthermore, Westinghouse
Company has announced the marketing of a 1 MW solid oxide fuel cell power plant
70% efficient, which started to operate in 2001. A new member of the fuel cell family
is the regenerative fuel cell, in which water is separated into hydrogen and oxygen by
a solar-powered electrolyzer. The hydrogen and oxygen are fed into the fuel cell, which
in turn produces electricity and water. The water is then recirculated back to the solar-
powered electrolyzer where the process is repeated. The choice of an adequate fuel cell
depends on its use. Hydrogen can also be extracted from oil, gasoline
and methanol through reforming, but in these cases carbon sequestration technologies
are required. Besides, hydrogen can be produced directly with sunlight and water by
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of non-CO2 hydrogen producing technologies such as wind, solar or nuclear can help
hydrides (Hanneken, 1999). Although some hydrides are commercial, studies on new
alloys with better conditions of temperature and pressure storage are still needed.
Research for hydrogen storage in carbon structures is currently under way worldwide.
In Kiev, Germany, the town gas which is composed of 60% hydrogen has been stored
in a gas cavern since 1971. Gas de France has stored hydrogen-rich refinery products
in an aquifer structure, and The Imperial Chemical Industries had stored hydrogen in
salt mines caverns. Hydrogen transportation depends on the needs. At present about 5%
9, the different methods of hydrogen transportation with their general use are shown
Fuel cells are a promising technology for use as a source of heat and electricity
for buildings, and as an electrical power source for electric motors propelling vehicles.
Fuel cells operate best on pure hydrogen. But fuels like natural gas, methanol, or even
gasoline can be reformed to produce the hydrogen required for fuel cells. Some fuel
cells even can be fueled directly with methanol, without using a reformer.
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In the future, hydrogen could also join electricity as an important energy carrier.
An energy carrier moves and delivers energy in a usable form to consumers. Renewable
energy sources, like the sun and wind, can't produce energy all the time. But they could,
for example, produce electric energy and hydrogen, which can be stored until it's
needed.
supply of our country thus solving the declining supply of natural gas in the Malampaya
facility. But having many energy sources is more preferred for us to be more power
shortage proof. Natural gas and other fossil fuel help the Philippines to maintain power,
in addition of other renewable sources, and lastly the Hydrogen and Fuel Cell
Technology will help the Philippines to maintain the good energy supply for up to many
years.
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References:
BAIN, A. and W. D. VAN VORST, 1999. The Hindenburg tragedy revisited: the fatal
FUNK, J. E., 2001. Thermochemical Hydrogen Production: past and present. Int. J. of
OGDEN, J. M., 1999. Prospects for building a hydrogen energy infrastructure. Annual
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Review of Energy and Environment. 24, 227-279
CuInSe2for hydrogen evolution in acidic media. Int. J. of Hydrogen Energy. 27, 143-
147.
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