| In October 1989, Occidental
Philippines, Inc. (Oxy), a subsidiary of Occidental Petroleum Corporation,
discovered natural gas in a deep-water well (the Camago well) located
within a 350,000 hectare area 75 km. northwest offshore Palawan province
and 500 km. south-SW of Luzon. While this was not the first natural
gas discovery in the country - in 1980, the Philippine National Oil
Company Exploration Corporation (PNOC-EC) discovered natural gas in
Isabela, Northern Luzon sufficient to generate about 3MW of power
– it seemed a promising find which augured well for the establishment
of a Philippine natural gas industry.
After a year, Oxy’s exploration contract was converted into
a service contract (SC38) with Shell Philippines Exploration B.V.
(SPEX) farming in to the extent of a 50 percent interest. As part
of its investment commitment, SPEX took over operation of the field
and drilled three more wells, the second of which resulted in the
discovery of the Malampaya gasfield in 1992,which is connected to
the Camago structure. Continuing with its drilling program over
the next two years, SPEX was able to ascertain proven recoverable
reserves of about 2.5 trillion cubic feet (TCF) of gas and some
85 million barrels (MMB) of condensate. The Malampaya gasfield was
declared a commercial find in May 1998. In September the same year,
SPEX acquired full ownership in SC38 and then formed a consortium
with Texaco Philippines, Inc. (now ChevronTexaco) and PNOC-EC.
This SC 38 consortium set about making the largest single foreign
investment in the country’s history by developing the Malampaya
gasfield, laying 504 km. of pipeline through some of the world’s
best undersea vistas and building an on-shore gas facility in Tabangao,
Batangas Province (Southern Luzon) that now processes the natural
gas that is drawn from the gasfield. In October 16, 2001, President
Gloria Macapagal-Arroyo inaugurated the Malampaya Deep Water Gas-to-Power
Project which now supplies gas to fuel three combined cycle gas
turbine (CCGT) power plants with a combined capacity of 2,760 MW,
comprising about 19 percent of the country’s total installed
capacity in 2002. The gasfield has a potential capacity to produce
up to 4.3 TCF of gas.
The project was completed in little over three years, landing gas
for power plant commissioning and commercial operations in January
2002. With the project’s completion, the orientation has shifted
to bringing this new energy source to where it could be of most
benefit. While the three power plants are all located within a 12
km. radius from the Batangas onshore gas plant, they are certainly
not the only potential users of the gas. It therefore became critical
to prepare a blueprint for this emerging downstream industry which
would encompass both physical and regulatory aspects.
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