hilippine National Oil Company

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Philippine National Oil Company

Type Government-Owned Corporation

Industry Oil, energy

Founded November 9, 1973

Headquarters Taguig, Philippines

Key people Adm. Reuben S. Lista (Ret), President/CEO

Subsidiaries List[show]

Website PNOC Official website

 The Philippine National Oil Company (PNOC) was created on November 9, 1973 as
a government-owned and controlled corporation founded under martial law Presidential Ferdinand
Marcos to supply oil to the Philippines. Since then, its charter has been amended several times to
include exploration, exploitation and development of all energy resources in the country.

Contents
[hide]

1History
2Subsidiaries
o 2.1PNOC Exploration Corporation[1]
o 2.2PNOC Renewables Corporation
3See also
4References
5External links

History[edit]
PNOC was created in response to the 1970s oil crises. The Philippine government, then under
martial law and governed by President Ferdinand Marcos, responded to the crises by founding
PNOC and forging oil-supply partnerships with supplier countries. The government later acquired
refineries and petroleum transport and marketing firms with the aim of being a total energy
company. PNOC also initiated the exploration of the countrys oil and non-oil energy resources, such
as geothermal.
PNOC Exploration Corporation concentrates on the oil and gas business. Its Malampaya Deepwater
Gas-to-Power Project is one of the largest and most significant industrial endeavors in Philippine
history [1][2] which "signalled the birth of the natural gas industry in the Philippines".[3] PNOC ECs
is involved with the project with Royal Dutch Shell Exploration (as operator) and Texaco.
In 1993, PNOC also ventured into petrochemicals, setting up the Philippines' first petrochemical
industrial estate in Limay, Bataan.

Subsidiaries[edit]
PNOC currently has 2 subsidiaries working together to realize PNOCs vision: PNOC Exploration
Corporation and PNOC Renewables Corporation.
PNOC Exploration Corporation[1][edit]
PNOC Exploration Corporation is the upstream oil, gas and coal subsidiary of the state-owned
Philippine National Oil Company. A government owned and controlled corporation, the Company
was incorporated on 20 April 1976 and is mandated by the government through the Department of
Energy (DOE) to take the lead in exploration, development and production of the countrys oil, gas
and coal resources. The Company was listed in the Makati Stock Exchange and the Manila Stock
Exchange in 1976 and 1977, respectively.
At present, PNOC EC has seven (7) petroleum Service Contracts (SCs), namely: SC 37 (Cagayan
Basin), SC 38 (Malampaya), SC 47 (Offshore Mindoro), SC 57 (Calamian), SC 58 (West Calamian),
SC 59 (West Balabac) and SC 63 (East Sabina). The Company is the operator in SC 37, SC 47 and
SC 63 and a non-operating partner in SC 38, SC 57, SC 58 and SC 59.
PNOC EC used to operate the very first natural gas facility in the country- the San Antonio Gas
Power Plant within SC 37 before joining the Malampaya consortium (SC 38) in 1999 with a 10%
stake. Malampaya is the countrys single biggest investment of its kind.
PNOC EC also holds six (6) Coal Operating Contracts (COCs), namely: COC 41 (Malangas), COC
122 (Isabela), COC 141 (Isabela), COC 184 (Agusan del Sur), COC 185 (Zamboanga Sibugay) and
COC 186 (Zamboanga Sibugay). As part of its coal business, the company also trades coal from
other sources through its two (2) coal terminals located in Malangas and Cebu.
The company likewise owns and operates a private commercial port the Energy Supply Base
(ESB) in Mabini, Batangas which provides berthing, cargo handling, storage and warehousing
facilities to its clients.
PNOC Renewables Corporation[edit]
PNOC Renewables Corporation (PNOC RC) is a fully owned subsidiary of state-owned Philippine
National Oil Company (PNOC). Organized on March 7, 2008, it is the newest PNOC subsidiary.
PNOC RC will be the primary vehicle of PNOC in promoting, developing and implementing new and
renewable energy sources in the country. Through renewable energy, the country would be able to
reduce its dependence on imported oil, while mitigating climate change. Renewable energy is an
important component in the country's drive towards energy self-sufficiency, security and
independence. Renewable energy projects include Hydropower Projects, Wind Project, Biomass
and/or Waste to Energy Projects, Solar Electrification Projects, Geothermal Projects

Govt eyes 9 natural gas pipelines

By Iris Gonzales (The Philippine Star) | Updated February 17, 2014 - 12:00am

0 1 googleplus0 0

MANILA, Philippines - Nine natural gas pipeline projects are targeted to be put in place in Luzon from 2017 to
2022, according to the governments Philippine Energy Plan (PEP).

The proposed pipelines are deemed necessary for the development of the countrys natural gas industry.

These nine projects are the Batangas-Manila 1 (BatMan 1), BatMan 2, Bataan-Cavite (BatCave), Subic
Pipeline, Clark Pipeline, Subic-Fort Bonifacio Pipeline, Sucat-Malaya, Sucat-Quirino lines and a city gas
distribution network -- the EDSA-Taft Gas Pipeline, according to the PEP.

The BatMan 1 Project is considered the backbone infrastructure with an estimated distance of 105 kilometers
and is a high-pressure gas transmission pipeline from Batangas to Sucat.

It is expected to operate commercially by 2017. It will deliver the necessary gas requirements from the
economic zones located along the route from Tabangao, Batangas to Sucat, Paranaque and the transport
sector for the CNG-fuelled buses and taxes, the PEP said.

The supply of natural gas for the BatMan 1 pipeline will come initially from the production of the Malampaya
gas field and will be supplemented by LNG (liquefied natural gas) importation in 2020, the Energy department
also said.

Business ( Article MRec ), pagematch: 1, sectionmatch: 1

BatMan 2, on the other hand, is a 140 kilometer high pressure pipeline that will serve possible markets such as
the Limay combined cycle power plant, which can be converted to natural gas-fired plant, and economic zones,
notably Subic and Clark, including industries located along the route.
BatMan 2 is targeted to be in place by 2020.

BatMan 1 and BatMan 2 will be connected via another infrastructure project, which is the 40-kilometer
undersea Bataan-Cavite and through the 35-kilometer Rosario, Cavite, Laguna (RoBin) line.

Four additional pipelines will be constructed, according to the PEP.

These are the 40-km Subic pipeline which will be linked with the proposed BatMan (2021); the 25-km Clark
pipeline to start from BatMan 2 going to Clark (2022); the 35-km Sucat-Malaya pipeline (2017) which is an
underwater high pressure gas transmission pipeline from Sucat, Paranaque to service the

Malaya Plant in Rizal, which is proposed to be converted into a natural gas plant; and the 15-km Sucat-Fort
Bonifacio pipeline that will service the requirement of commercial establishments inside the Bonifacio Global
City (2017).

Philippine Natural Gas: Industry Overview

1. 1. Philippines Natural Gas Industry Overview 2015
2. 2.
Philippine
Natural Gas Industry OVERVIEW The Malampaya Gas to Power Project is the most
significant industrial investment in the Philippine natural gas industry. It paved the way for the
birth of the countrys natural gas industry and provides a supply of clean and environmental
friendly fuel. However, since this is the only operational source of natural gas in the country
its not really enough to meet the demand of energy in the country. This type of energy is
only available in Luzon hence significant development for the industry must be made. Given
that the natural gas industry is still a new industry in the country, to further develop this
industry the country must have policy stability provided by the legal system of the
government. The government shouldnt keep changing our policies but they should provide a
good business environment for the different and possible investors of the industry who would
look for other possible reserves and build infrastructures. The government must also ensure
peace and order both domestically and internationally. They should protect the existing and
possible reserves from potential threats. Aside from this, they must also encourage
investment from abroad to ensure the viability of the natural gas industry in the country.
Importing liquefied natural gas must be encouraged in the short run while the reserves of
natural gas are still limited. As the Philippines import liquefied natural gas from other
countries, the government must encourage exploration and extraction of natural gas during
the process. With the expansion of the natural gas industry, paved by the Malampaya
deepwater gas to power project, the Philippines will be able to acquire a place in the Trans-
ASEAN Gas Pipeline (TAGP). The Malampaya offshore field is relatively near to Sabah in
Malaysia which was said to have around 6-8 TCF. Although it is a no market area, it is a
potential linkage to the pipeline. With the increasing demand of natural gas in the global
market, various foreign companies have renewed their interest in investing in the industry.
The success of the Malampaya project has gained the investors assurance of a feasible
venture. Besides this, the rising prices of crude oil have put the natural gas as the alternative
fuel. In order participate in the export and import markets of natural gas, the government
should create venues that would encourage participation from investors for gas exploration,
diminish regulatory risks for long term investments and enhance competition with other
alternative fuels. The importation of LNG may act as the quickest way to meet the increasing
gas demand and energy sustainability of the country. However, it is the Malamapaya
3. 3.
venture that
will pave the way for the incorporation of the Philippines as a player in the Trans-ASEAN
pipeline. PHILIPPINE NATURAL GAS SECTOR Natural gas resources in the Philippines
total 25.7 - 39.5 trillion cubic feet (Tcf), of which 3.4 - 5.4 Tcf are discovered recoverable
reserves. They are classified into four types, namely: oil and gas, coal gas, water-associated
gas (includes marsh gas), and inorganic gas. The major deposits are oil-gas types including
Camago-Malampaya in NW Palawan offshore area, San Antonio in Cagayan Valley and
Libertad in Cebu. The current Philippine gas industry development initiative is anchored on
the Camago-Malampaya deposit which is estimated to support the operation of 3,000 MW
gas-fired power plants for over 20 years with its 2.5-3.2 Tcf maximum recoverable reserves.
Commissioning of these plants is programmed by 2002. Gas-fired power plants programmed
beyond 2002 require additional gas discoveries or importation of LNG. Conversion of the
Bataan Nuclear Power Plant to a 1,500 MW gas-fired plant has been offered on the
expectation of more recoverable gas reserves to be delienated shortly. Assurance of gas
supply for the Philippines, including those for non-power uses, are, however optimistically
provided by the LNG option and the Trans-ASEAN Gas Pipeline Project. Opportunities for
investment are wide open under strong government commitment for a private-sector led
natural gas industry development from upstream to downstream. The establishment of a
nationwide gas infrastructure is expected to work towards maximizing the gas potential of the
country through extensive exploration, coupled with development of natural gas markets
sparked by a galloping economic growth. I. INTRODUCTION Petroleum exploration in the
Philippines, from its inception in the 1890's until late in the 1980's, regarded gas as an
unwanted associate of oil. It was only in the early 1990's when natural gas was given serious
consideration, largely because of the discovery of the Camago-Malampaya deposit in
offshore West Palawan. In 1994, the government-owned Philippine National Oil Company
established the first gas-fired power plant utilizing the small gas deposit discovered in late
1950's onshore Cagayan Valley, Northern Luzon. This 3 MW plant demonstrated the
practicability of utilizing natural gas for power. Hence, the long term Philippine Energy Plan
(PEP), drafted in 1994, accorded a substantial share for natural gas in power development.
Enough
4. 4.
assurance
are now in place for the first large-scale gas-fired power plants in the country to be installed
by 2002. By 2005 this would increase to 4500 MW. II. NATURAL GAS RESOURCES IN THE
PHILIPPINES a. Classification Natural gas deposits in the Philippines may be classified into
four types, namely: oil gas, coal gas, water-associated gas and inorganic gas. Oil gas
deposits are gaseous hydrocarbon accumulations evolved in association with liquid
hydrocarbons or oil. The other deposit types, on the other hand, are mainly methane
accumulations in association with coal, water and inorganic materials, as the case maybe.
Water-associated gas includes "marsh gas" which is generated during the decay of
vegetable matter in bogs and swamps at the early stage of petrification. The gas is usually
dissolved in water along with other elements of economic importance such as iodine.
Inorganic gas is formed through inorganic processes such as hydrothermal processes,
contact metamorphism and serpentinization. b. Quantitative assessment Using McKelvey's
(1973) mineral resource assessment scheme, natural gas resources in the Philippines are
classified in this paper into "Discovered" and "Undiscovered". "Discovered natural gas
resources" refer to those that have been adequately delineated by seismic and other means
and measured by drill-stem test in at least one hole per closure. On the other hand,
"Undiscovered natural gas resources" are those that have been estimated by various means
but not measured by drill stem test, although reached by a drill hole. Essentially, quantitative
estimates reported as reserve, recoverable reserve and gas-in-place generally fall within the
category of "Discovered". Reported potential reserve, target reserve, resource potential and
 untested recoverable reserves are in the category of "Undiscovered". However, the
commerciality of a gas discovery is established when field reserves is confirmed with
confidence and the conditions for gas utilization and marketing is defined for the life of the
field. Table 2 lists the quantified natural gas deposits and prospects in the Philippines and
their corresponding estimates in trillion cubic feet (TCF). The total natural gas
5. 5.
resources in
the Philippines thus stand at 25.7 -39.5 Tcf of which 3.4-5.4 TCF is discovered recoverable
reserve. c. Description of major deposits 1. Camago - Malampaya Gas Deposit Petroleum
exploration in Northwest Palawan started in 1971 with the drilling of Pag-asa 1 which proved
unsuccessful. After a series of disappointment wells in the area, Nido-1 well made the first
significant oil discovery. Destacado A-1X and San Martin were drilled in 1982 and
encountered gas columns in the carbonate reservoir. Although they flowed gas to the surface
they were declared sub-commercial. The Octon well was tested for gas but was also sub-
commercial. In 1989, the thick column of gas and condensate in the Camago-1 was drilled at
a water depth of 2,365 feet. This discovery renewed interest in the area and led to the giant
Malampaya-1 in 1991 a water depth of 2,746 feet. A total of five (5) wells have been drilled in
the Camago-Malampaya Field delineating an estimated recoverable reserve of 2.5 - 3.2 TCF
of gas. The Camago-Malampaya gas contains about 90% methane (DeGolyer and
Macnaughton, 1996) and its heating value is viable as power plant fuel. However being a wet
gas, it also contains small amounts of heavier hydrocarbons such as ethane and propane.
Other gas prospects in the vicinity were to be drilled by late 1997. 2. San Antonio Gas
Deposit The San Antonio gas deposit in Cagayan Valley was first drilled as Ipil -1 in 1958.
Subsequent drilling of three more wells to delineate the gas deposit failed to encounter any
hydrocarbon, and the area was abandoned. In May 1980, the San Antonio-1 well confimed
the 1958 discovery. The well flowed up to 11.4 million cubic feet gas (MMSCFG) per day of
gas reserves were volumetrically estimated at 0.0063 to 0.010 TCF of gas-in-place which
was still uneconomic at the time. A seismic survey was done in 1981 to further evaluate the
gas deposit. This resulted in the extension of the reservoir thereby increasing the estimated
reserves to 0.024 TCF of recoverable gas. A reservoir evaluation was conducted in May
1989 leading to the identification of three gas reservoirs and justifying the drilling of San
Antonio-2 well. This well encountered technical problems and was plugged and abandoned.
San Antonio 1A was subsequently drilled and this confirmed an extension of the gas deposit.
Today, the San Antonio gas field is currently producing at an
6. 6.
average
rate of 1 MMSCFG per day supplying the power requirement of a 3MW power plant in
Echague, Isabela. 3. Libertad Gas Deposit The Libertad deposit is one of the several
prospects and leads in Northern Cebu. Exploration in this region started in 1958, drilling 21
wells in the Libertad area. The first well that flowed sub-commercial gas was Libertad-13.
This was retested in September 1993 and flowed at a rate in excess of 2.5 MMCFG per day.
With the successful testing of this well, four (4) of which only Libertad 95-1 flowed gas at an
estimated rate of 6 yo 8 MMSCFG per day. Small scale commercial production of the
Libertad gas field now seems viable with the demonstrated success of the 3 MW San
Antonio gas-fired power plant in Isabela. 4. Other Gas Resources 4.1 Iloilo Basin Oil
exploration in the Iloilo Basin started in 1953 with the drilling of the Oton-1 well. This
encountered oil and gas shows. Drilling of eight (8) more wells followed from 959 to 1980.
Five (5) of these wells encountered gas and water from the Upper Miocene to Pliocene
strata. In 1981, a study was conducted on the potential of the Iloilo gas, considering its
similarity to the Kyosui-sei-gasu (water-associated gas) deposit in Japan which formed in
Late Cenozoic marine deposits. The brine on the other hand, is kept from flowing out or kept
from being flushed by meteoric water in an enclosed structure. The study confirmed a high
methane content in formation brine with iodine. 4.2 Central Luzon Basin Exploration effort in
 the Central Luzon Basin was punctuated in 1979 by a minor gas flow from Victoria-1, an
onshore well located in Tarlac. In 1995 a well was drilled in Manila Bay, a prospect area well
was drilled in Manila Bay, a prospect area well within the Central Luzon Basin. This well
tested positive for gas and showed a fairly thick limestone reservoir. Geophysical data shows
other structures favorable for petroleum accumulation in the basin. These prospects are
being targeted by three exploration consortia for drilling within 1997 and 1998.
7. 7.
III. GAS
INDUSTRY DEVELOPMENT PLAN a. Camago-Malampaya gas development Primary
energy consumption from 1984 to 1996 increased at an average rate of about 6.5% per year.
Liquid fuel provided 80% of the total consumption; hydropower and geothermal power
provided 15%; and solid fuels provided the rest. This fuel mix will be drastically changed with
the development of the Camago-Malampaya gas field in order to ensure the attainment of
energy self sufficiency of 40% under the Philippine Energy Plan 1996-2025 (PEP 1996). The
plan ensures the setting up of the initial gas infrastructure, especially the required 500 km
undersea pipeline. The natural gas produced is allocated for about 3,000 MW installed
capacity by 2002. The development program includes: (a) drilling of production wells, (b)
setting up production platform, and (c) construction of the 500-kilometer undersea pipeline.
Production will yield 400 to 500 MMSCFG per day, plus substantial quantities of oil and
condensate. The production system will include a facility to separate the oil, the condensate,
and production water from the gas, after which the dry gas will be piped all the way to users.
The current plan calls for a 24" undersea pipeline all the way to Luzon. b. Gas-fired power
plant development To develop the market for natural gas in the country, the government has
prioritized 3,000 MW for gas-fired power capacity development beginning 2001. The National
Power Corporation (NPC) and the MERALCO group of Companies will each have 1,500
MW. NPC has recently awarded, through bidding to Korea Electric Power Corporation
(KEPCO) a BOT contract for the construction of the gas-fired power plants with total capacity
of 1,200 MW at Ilijan, Batangas. On the other hand, Meralco has assigned First Gas
Holdings Corporation, a joint venture company between First Gas Holdings (MERALCO
Group Member) and British Gas Corporation, to put up gas-fired power plants, starting with a
990 MW greenfield plant at Sta.Rita, Batangas to be commissioned in 1989/1999. This will
be followed by a 510 MW plant in the CALABARZON area. In addition, the 620-MW Bataan
Nuclear Power Plant has also been programmed by government for conversion into a 1,500
MW gas-fired power plant by 2005. In this regard, the Pilipinas Shell-Occidental Petroleum
(Shell-Oxy) joint venture has offered to implement the conversion to a 1,500 MW plant using
the Malampaya-Camago deposit
8. 8.
and other
deposits the joint venture expects to delineate shortly within its service contract area in NW
Palawan. Beyond 2015, a 2,000 MW gas-fired power generating capacity expansion is
programmed for Mindanao, possibly in Zamboanga (PEP, 1996). Possible gas discoveries in
Sulu Sea are being eyed for this expansion. c. LNG Option Realizing the limitations of
discovered natural gas resources in the country and the time it would take for the
development of these resources, the government encourages the importation of LNG. First
Gas Holdings may opt for LNG at the initial phase of its 990 MW plant at Sta. Rita, Batangas
so that it can be commissioned in 1998/99. To complement indigenous gas supply, the
Department of Energy encourages the use of imported LNG which may be competitive in
combine cycle gas turbines and if ever with Camago-Malampaya gas. d. Development of
natural gas market for other uses The Philippine government also encourages the
development of other uses of natural gas. Thus, the Philippine Energy Plan projects
substantial gas markets for industries (cement, food, and steel) beyond 2005 especially for
the industrial centers in Luzon (CALABARZON) and Mindanao (Iligan-Cagayan de Oro).
Natural gas can also be used as feedstock for chemical industries. The Camago-
 Malampaya gas contains low quality cracker feedstock making it unsuitable for ethylene
plant. The development of the gas market for these industries will be contingent on the
discovery of gas with suitable gas composition such as higher ethane and heavier
hydrocarbon contents. Between 2010 and 2020, the plan projects the household sector as a
major gas market. Approximately 400,000 commercial/residential customers are expected in
Metro Manila, Batangas and Cavite in Luzon; and Cagayan de Oro areas in Mindanao. Use
of natural gas for the transport sector is also envisioned to be a major market in Luzon.
Compressed natural gas is threfore projected to be made available in Luzon by 2010.
9. 9.
e. Trans-
ASEAN gas pipeline The plan for a Trans-ASEAN gas pipeline is viewed by the Philippine
government as an assurance that the gas infrastructure being planned will not run short of
natural gas supply over the long-term. The scheduled phasing of the Trans-ASEAN pipeline
development, as proposed in the recently concluded feasibility study by the ASEAN Energy
Management and Training Center (AEEMTRC) and the European Union, is considered in
consonnance with he Philippine gas industry development plan. IV. ROLE OF PRIVATE
SECTOR Strong Philippine commitment towards the full development of globally oriented
market economy corollarily requires a private-sector generated development of the natural
gas industry. The farming out to the private sector of the responsibility to develop a major
portion of the gas market is a candid demonstration of this point. Even the 500 MW market
allocated for NPC is expected to be turned over to private interest with the impending
privatization of this government corporation. It shall be noted that the government has
maintained its commitment to leave business in the hands of the private sector when it
discouraged the Philippine National Oil Company (PNOC) from getting involved in the
business of providing the submarine gas pipeline from the Camago-Malampaya field to the
city gate. This policy is explicitly embodied in Executive Order 215 issued in 1987 which
provided the ground rules for private sector participation in power generation. Early this year,
an amendment to EO 215 expanded the accreditation of all IPP's in the special economic
zone and non-utilities that generate their power for own use. The department has also issued
guidelines which allowed customers of 2 MW and above to contract directly with any power
generating companies. The government also promotes the setting up of small gas-fired
power plants by those involved in indigenous onshore gas exploration and development
using their own gas. The Department of Energy also favors open access to the offshore
pipeline from the Camago-Malampaya as long as the access is acquired on commercial
terms. This exercise permits other gasfield operators to gain access or tap into the pipeline
for gas transport with corresponding tariff or charge. Open access is also encouraged for
onshore pipelines to promnote diversification in the growth of the natural gas industry. The
Omnibus Power Restructuring Bill being deliberated in Congress provides the milestones for
the eventual privatization of the power industry. NPC's restructuring, as provided in this bill,
entails the following: (a) power generation to be transferred to
10. 10.
independe
nt power producers (IPP's); (b) distribution plants with capacity up to the optimum
percentage of total demand in the distributors' franchise area; and (c) hydropower generation
facilities and transmission facilities will remain government owned. V. OPPORTUNITIES
FOR INVESTMENT a. Indigenous oil and gas exploration/development Potential
hydrocarbon areas in the Philippines assessed to be "gas-prone" have now become highly
prospective due to government assured development of the domestic natural gas industry.
Prospects in the known gas fields in offshore northwest Palawan, and the Reed Banks,
which were not viable on their due to size and distance from the market could now become
viable. Thus, they deserve priority in exploration. In the Central Luzon Basin the gas potential
was recently enhanced with the result of the Manila Bay well drilling in 1995. This prompted
local exploration companies to acquire new contract areas or expand their holdings in the
 Central Luzon Basin. These companies would welcome foreign technical and financial
investment participation. In the Cagayan Basin in northern Luzon, PNOC and another local
company have contract areas prospective for more gas discoveries in addition to San
Antonio. In the Cotabato Basin and Agusan-Davao Basin in Mindanao, extensive
geophysical exploration activities are being carried out by two consortia for eventual
identification of drillable targets. Natural gas is a major target for these activities. Certainly,
the room for foreign investment is natural gas exploration in the country is wide open. This
maybe down through participation in the activities of the established service contractors.
Alternatively, areas not covered by existing contracts may be applied for at the Department
of Energy. Foreign equity may be 100% for any of the service contract modes. b. Gas
infrastructure To provide the vital link between the sellers of natural gas and the market, the
government will actively promote the setting up of gas distribution networks in Luzon. For the
500-kilometer pipeline from northwest Palawan to Luzon, Shell and Occidental Petroleum
have committed to build and operate the pipeline themselves. They have not closed the
door, however, to new partners.
11. 11.
The Luzon
network will primarily depend on the pipeline connecting the Camago- Malampaya field to
power plants in the Batangas and Cavite areas. This pipeline system will be expanded to
cover Metro Manila and Bataan and later the rest of Central Luzon and Southern Luzon. The
onshore pipeline from the beach at Batangas (at the end of the 500-kilometer offshore
pipeline from Camago-Malampaya) to Manila will be about 110 km. When this is continued
all they way to Bataan via Bulacan and Pampanga provinces up to 250 km in length. In
addition, an LNG receving facility will be built in Bataan or in Batangas. On the onshore
pipeline, it is very likely that those who will be building the power plants will themselves build
the onshore pipelines to their plants and they will probably be seeking partners for the
pipeline construction. First Gas Holdings has in fact announced that it will build the onshore
pipeline to its power plants. This company has awarded the construction of an 990 MW gas-
fired power plant on turn-key basis to Siemens of Germany. Over the long term, the
expansion of the Philippine gas industry into the rest of Luzon and Mindanao will entail
extension of the transmission pipelines and the construction of distribution pipelines. These
constitute big opportunities for companies who have the necessary capital and technical
expertise in pipeline construction and operation. c. Independent power production and power
transmission The most attractive and immediate opportunity for investment is in the
construction and operation of the power plants that will use Camago-Malampaya gas. The
next important opportunity after 2003 is the conversion of the Bataan nuclear plant into a
1500 MW gas-fired combined cycle plant. This may even be accelerated if FGh decides to
use LNG for its plants and give up its 1500 MW allocation. In this case, NPC would
accelerate the conversion of the nuclear plant which together will provide the 3000 MW
market for Camago-Malampaya gas by 2000/2003. Beyond 2010, other major gas-fired
power plants totaling 2000 megawatts in Mindanao will likewise be offered to the private
sector. Notably in relation to IPP opportunities, the Department of Energy has recently
approved the sale of sub-transmission facilities to local power distribution utilities in line with
the government program to dismantle NPC's monopoly of power distribution and generation.
This means that private distributors and power producers can now avail of
12. 12.
this
facilities. The department will oversee the transfer of the transmission assets to the power
distributors. d. Other gas markets One immediate opportunity is for foreign private
companies to look at the potential of the state-owned Manila Gas. This company has existing
old gas distribution network in Manila that can be rehabilitated and expanded. It is currently
being privatized and whoever takes over would be in a position to develop markets for gas in
the metropolis. Major industrial and commercial gas users, particularly in the industrial zones
 in Luzon and northern Mindanao, will undoubtedly switch to gas as the price becomes
competitive and as the country's emission standards get even more stringent. They will
likewise need partners who have expertise in gas conversion and utilization. Finally, a
potentially large market is the transport sector. A major shift to gas in this sector would
substantially reduce the current heavy pollution in Metro Manila. Currently, the Department of
Energy is conducting studies towards formulating a definitive policy on the utilization of
natural gas in this sector. VI. SUMMARY In summary, the most abundant gas occurrence in
the Philippines is associated with oil. Although the discovered reserves are still insufficient to
supply future demand, LNG and gas supply from a projected Trans-ASEAN pipeline provide
necessary assurances for the sustainability of the Philippine Gas Industry Development Plan.
This plan is, of course anchored on the Camago-Malampaya gas development at the
moment. To provide more indigenous gas resources to the natural gas industry, the
government promotes very strongly the exploration, development and utilization of natural
gas. The establishment of a nationwide gas infrastructure is expected to work towards
maximizing the gas potential of the country through extensive exploration, coupled with
development of local gas markets sparked by a galloping economic growth. Opportunities for
investment are wide open under strong government commitment for a private sector led
natural gas industry development from upstream to downstream. Source: Journal of the
Geological Society of the Philippines, Centennial Issue, January - June 1998
13. 13.
PRIMARY
ENERGY MIX FORECAST 2003-2012 POWER FORECAST (generation)
14. 14.
POWER
FORECAST (Luzon grid)
15. 15.
POWER
FORECAST (Capacity Additions) UPSTREAM SECTOR
16. 16.
Camago-
Malampaya Deep Well
17. 17.
Camago -
Malampaya Gas Deposit One of the first petroleum explorations took place in Northwest
Palawan in 1971 wherein Pag-asa 1 was drilled. This venture however was unsuccessful, as
well as other wells in the location. It was the drilling in Nido 1 wherein the first oil reserves
were discovered. The other sites such as Destacado A-1X and San Martin which were
excavated in 1982 were merely branded as sub-commercials. It was the triumphant
discovery of natural gas reserves in Camago 1 in 1989 that acted as a catalyst for the
creation of Malampaya 1 in 1991. Five wells were drilled in the Camago-Malampaya site
wherein a total amount of 2.5-3.2 TCF of gas was unearthed. San Antonio Gas Deposit The
San Antonio gas exploration-Ipil 1 venture was put into action 1958. Three wells were drilled
in Cagayan Valley however, it was abandoned because of failure to encounter hydrocarbon.
The project however was revisited in May 1980 wherein the drilling of San Antonio 1
produced around 0.0063 to 0.010 TCF of gas which was did
18. 18.
not seem
profitable during that time. A seismic study took place in 1981 which increased the amount of
reserves to 0.024 TCF of recoverable gas. Presently, the San Antonio Gas site is producing
1 MMSCFG a day which supplies energy to a three megawatt power plant in Echague,
Isabela. Libertad Gas Deposit Another site was a prospect for natural gas exploration was
located in Northern Cebu. Exploration ventures were headed in 1958 which resulted to 21
drilling sites in the Libertad deposit. Libertad 13 which was excavated in September 1993
 produced an amount of 2.5 MMCFG a day. Four other wells which were tested yielded 8
MMSCFG per day. Iloilo Basin The Iloilo Basin was drilled in 1953- Oton 1 wherein out of the
eight wells which were excavated, five released an amount of gas. Due to this discovery, a
research was conducted in order to study the feasibility of the gas in Iloilo. The result of the
survey determined a high amount of methane in the discovered gas. Central Luzon Basin A
venture took place in the Central Luzon basin which was drilled in 1979. A rather small well
was found in an area near Tarlac. In 1995 however, a well was punctured in Manila Bay
being that a survey conducted affirmed the possibility of gas discovery. 1 However, the
natural industry is heavily dependent on the Malampaya-Camago reservoir such that it
provides 40% of power in Luzon. The researchers will further expound on the history behind
the discovery of Malamapy. In the year of 1989, a subsidiary of Occidental Petroleum
Corporation called Occidental Philippines, Inc. (Oxy) unraveled a natural gas reservoir in
deep water well in Camago. It was detected within a 350,000 hectare area which was 75
kilometers offshore the Palawan province and 500 km south of Luzon. Despite this promising
discovery in the 1980s, this event was not the impetus for the establishment of the natural
gas industry in the Philippines, it was however the location of natural gas in Isabela, Northern
Luzon. The Philippine National oil Company Exploration Corporation (PNOC-EC) unearthed
a pool of natural gas which was said to be adequate enough to generate around 3MW of
power. This paved the way for the development of the Natural gas industry in the Philippines.
The expansion of this discovery ignited the transformation of Oxys exploration contract into
a service contract (SC38) with Shell Philippines Exploration B.V.
(SPEX). 1
Guillermo R. Balce, D.Sc. and Eric F. Pablico. PHILIPPINE NATURAL GAS RESOURCES :
MAXIMIZING
19. 19.
In order to
further maximize their returns, SPEX decided to take control of the field operation and
excavated three more wells. Of the three, the second would be the finding of the Malampaya
gas field in the year 1992 which was linked with the Camago structure. In two years, SPEX
uncovered feasible reserves of gas around 2.5 trillion cubic feet and 85 barrels (MMB) of
condensate. In 1998, not only was the Malampaya gas field declared as an official
commercial find but SPEX was able to gain full ownership of SC38. In line with this SPEX
also established an alliance with Texaco Philippines, Inc (also known as Chevron Texaco)
and PNOC-EC. The said SC38 coalition aims to create the largest single foreign investment
in the Philippines by materializing the Malamampaya gas field project. Parallel to this would
be the laying of a 504 km pipeline on an on-shore gas facility in Tabangao, Batangas
Province in Souther Luzon. This success acted as an impetus for former President Gloria
Macapagal-Arroyo to inaugurate the Malampaya Deep Water Gas-to-Power Project in
October 16, 2001. The said project now equips gas to fuel three combined cycle gas turbine
(CCGT) power plants which provides 2,760 MW which contribute around 19 percent of the
countrys installed capacity in the year 2002. However the gas field is capable of providing up
to 4.3 TCF of gas for our country. 2 In around three years, the project was finally
accomplished; natural gas was now legitimately commissioned for power plants in January
2002. The completion of the project paved the way for the future of the natural gas industry
in the Philippines. Downstream
Sector 2
"Natural Gas." DOE Portal website. http://www.doe.gov.ph/ER/Natgas.htm (accessed
September 12, 2011).
20. 20.

21. 21.
Expanded
Use of Natural Gas
22. 22.
GROWTH
AND DEVELOPMENT Batman 2 Project The Integrated Bataan Liquefied Natural Gas (LNG)
Terminal, Power Plant and Natural Gas Pipeline Project (BATMAN 2) involves (1) the
development of an LNG terminal in Limay, Bataan, (2) the conversion to gas-firing of the
Limay Power Plant and/or development of greenfield gas-fired power plants as anchor loads
and (3) the construction and operation of the associated pipelines to transport the gas to the
target markets. The LNG Terminal will serve as the receiving, storage and regasification
facilities for imported LNG. A pipeline coming from the Terminal will transport natural gas to
the Limay and greenfield power plants. Aside from supplying fuel for the power plants, the
regasified gas can also be made available in Central Luzon, to the various industries in the
economic zones of Bataan, Zambales and Pampanga provinces. Via the Bataan to Cavite
offshore pipeline (BAT-CAVE) traversing Manila Bay, the LNG Terminal will secure and
sustain the gas supply in the country, including BATMAN-1 and its future demand, beyond
the life of the Malampaya Gas Field. Bataan Gas Receiving Terminal The proposed gas
receiving terminal at the PNOC Alternative Fuel Corporation (PNOC AFC) industrial complex
is envisioned to accomodate multiple liquified natural gas (LNG) suppliers and gas
customers. Consisting of on-shore and off-shore facilities, the terminal will be receiving
regassified LNG from abroad. LNG carriers will deliver and unload ("ship to ship") LNG to
another vessel, a Floating Storage and Regassification Unit (FSRU) which will be
permanently moored. The regassified gas from the FSRU will be conveyed to an on-shore
gas facility before being transported via pipelines to varoius customers. The gas terminal can
be a catalyst in the development of the proposed Bataan to Manila Gas Pipeline Project
(BATMAN 2) and augment, secure, and sustain gas supply in the country, including the
Batangas to Manila Gas Pipeline Project (BATMAN 1). With the gas terminal, natural gas
can be extended to supply to the three (3) power plants in Batangas, namely Ilijan, San
Lorenzo, and Santa Rita.
23. 23.
Initial
identified gas offtakers are the 600 MW Limay power station running on diesel and 480 MW
Pyongtaek power plant fueled by natural gas. The Pyongtaek plant is planned for relocation
from South Korea to Bataan. PNOC EC completed a pre-feasibility study for this project. The
company has options to sell natural gas, and earn from terminal and pipeline tariffs.
Depending on LNG supply, the project can be operational in three (3) years. GAS Demand
Forecast Gas demand of existing facilities estimated to increase from 103 bcf (2003) to 198
Bcf (2012) assuming 5.4% annual GDP growth rate (High growth rate) Additional Gas
demand expected - Power Gas-fired power plant could fill new capacity requirements by
2008 including the conversion of 500MW Sucat, 300 MW Malaya and 620 MW Limay plants
- Transport Up to 1,300 public transport vehicles running on CNG by 2003 - Industry up
to 20 Industrial parks located along Batangas - Metro Manila corridor are potential industrial
gas markets - Residential natural gas can potentially replace LPG as cooking fuel LNG
Importation Options Additional gas demand to increase from 23 BCF in 2008 to 194 BCF in
2012 to meet gas deman for power and non-power users Importation Options - LNG from
Bruner, Indonesia or Malaysia - Piped gas thru possible pipeline interconnection with the
Trans-ASEAN Gas Pipeline System (TAGPS)
24. 24.
UPSTREA
M PROFILE
25. 25.
DOWNST
REAM INFRASTRUCTURE
 26. 26.
Growth
and Development
27. 27.
Proposed
Trans-ASEAN Gas Pipeline System , TAGPS Prospects and Opportunities Emerging Market
Philippines Future new terminals in discussion - Philippine National Oil Co has been given
responsibility to organize LNG import and gasification of the country (2010) 1.5Mtpa FSRU
at Bataan, Luzon island 2015? Another project proposed to feed power stations on
Mindanao - Currently with World Bank re funding EWE (Australia) LNG Hub: - Integrated
with 300MW closed-cycle power station development Pagbilao Grande Island, Quezon
80,000 t/a Single 130,000m tank (2nd tank in expansion)
28. 28.
June
2013 INVESTMENT OPPORTUNITIES UPSTREAM 25 TCF of natural gas in undiscovered
resources in 16 petroleum basins ADDITIONAL GAS REQUIREMENT 23 BCF in 2008 to
194 BCF in 2012 DOWNSTREAM 80-100 km Batangas-Manila Pipeline Project (BatMan 1)
130-150 km Bataan-Manila Pipeline Project (BatMan 2) 40-km Bataan-Cavite Undersea
Pipeline Project (BatCave) Spur lines such as the 35-km Sucat-Malaya Pipeline LNG
terminals in Batangas and Bataan Conversion of thermal power plants to natural gas (Ex.
Pagbilao Thermal Power Plant Batangas) Natural gas demand of 20 Industrial parks
along the Pipeline route Potential natural gas demand of commercial buildings and
complexes in Metro Manila area Refilling stations in Metro Manila for Natural Gas Vehicles
CNG Vehicle

Pipelines in the pipeline

0

BY THE MANILA TIMES ON MARCH 3, 2014FEATURED COLUMNS, OP-ED COLUMNS

Running fuel products through a pipeline is a simple matter of practicality and economics.
Pipelines are still the most cost-effective way to move a large volume of fuels over long
distances.

In the US, there are more than 200,000 miles of oil pipelines that operate with minimal
safety problems.

Closer to home, there are major pipeline projects under construction in Southeast Asia in
order to provide the vast energy requirements needed to supply the growing economies of
the region.

There is the Trans-ASEAN Gas Pipeline (TAGP) project, which is designed to interconnect
the gas pipeline infrastructure of Asean member states and which would enable the
transportation of gas across national borders.

The Philippines has 529.5 kilometers of natural gas transmission pipelines that transport
gas from the Malampaya Gas Field to fuel three power plants: the 500 MW San Lorenzo,
1,000 MW Sta Rita and 1,200 MW Ilijan power plants in Batangas province.
Nine other natural gas pipeline projects are in the construction pipeline for Luzon from 2017
to 2022.

According to the governments Philippine Energy Plan (PEP) these are the Batangas-Manila
1 (BatMan 1), BatMan 2, Bataan-Cavite (BatCave), Subic Pipeline, Clark Pipeline, Subic-
Fort Bonifacio Pipeline, Sucat-Malaya, Sucat-Quirino lines and a city gas distribution
networkthe EDSA-Taft Gas Pipeline.

The 105-kilometer BatMan 1 Project is a high-pressure gas transmission pipeline from

Batangas to Sucat that will service the gas requirements of the economic zones located
along the route from Tabangao, Batangas to Sucat, Paranaque and the transport sector for
the CNG-fuelled buses and taxes.

This is the main project of the Energy department and it is expected to operate
commercially by 2017.

The supply of natural gas for the BatMan 1 pipeline will come initially from the production of
the Malampaya gas field and will be supplemented by LNG (liquefied natural gas)
importation.

The 140-km BatMan 2 will serve possible markets such as the Limay combined cycle power
plant, which can be converted to natural gas-fired plant, and economic zones, notably Subic
and Clark, including industries located along the route.

BatMan 1 and BatMan 2 will be connected via another infrastructure project, the 40-
kilometer undersea Bataan-Cavite and through the 35-kilometer Rosario, Cavite, Laguna
(RoBin) line.

The 40-km Subic pipeline will be linked with BatMan (2021) and the 25-km Clark pipeline
will start from BatMan 2 going to Clark (2022).

The 35-km Sucat-Malaya pipeline (2017) will connect Sucat, Paranaque to the Malaya
Power Plant in Rizal.

The 15-km Sucat-Fort Bonifacio pipeline will provide the energy requirements of commercial
establishments inside the Bonifacio Global City (2017).

There is also the 117-kilometer Batangas-to-Manila white oil pipeline that had been closed
since 2010 by a temporary environmental protection order issued against it by the Supreme
Court, after a segment of it leaked oil into the basement of West Tower condominium in
Barangay Bangkal in Makati City.

The Supreme Court needs to settle once and for all whether this important pipeline would
be allowed to operate again.

The entire stretch of the pipeline, according to news reports, had been inspected and tested
by the DOE and its integrity and safety ascertained by various experts.
After more than three years of litigation it is about time this matter is settled.

Before it was shut down, the pipeline provided around 60 percent of the fuel supply in Metro
Manila through the Pandacan depot, the countrys largest oil depot.

The fact that the Philippine government has more than a few pipeline projects under
construction and is also pushing for the passage of the Oil and Gas Pipeline Regulation Act
only shows that pipelines are still preferred over other modes of transporting oil products.

There is even a World Bank (WB) study that showed the potentials of natural gas in solving
the power supply woes in Mindanao, again through the use of pipelines that will run along
certain industrial zones in Mindanao.

Pipelines are faster, safer and more cost-effective compared to using barges, lorries and
trucks. You eliminate incidents of hijackings of fuel trucks, for instance. A pipeline is also not
affected by weather disturbances like typhoons and floods. It helps reduce traffic
congestion. Also, there is a lower risk of product contamination and pilferage and a lower
carbon footprint.

We just need to review, expand and improve existing regulations on our pipeline systems to
ensure their safety and reliability, and this is why Congress should work on the passage of
the Oil and Gas Pipeline Regulation Act.

Pipeline transport is the mode of transportation of goods or material through a pipe.Liquids and gases are
transported in pipelines and any chemically stable substance can be sent through a pipelinePipelines exist for
the transport of crude and refined petroleum, fuels - such as oil, natural gas and biofuels - and other fluids
including sewage, slurry,water and beer. Pipelines are useful for transporting water for drinking or irrigation
over long distances when it needs to move over hills or where canals or channels are poor choices due to
considerations of evaporation, pollution, or environmental impact. Pneumatic tubes using compressed air can
be used to transport solid capsules.