The Malampaya Deep Water Gas-to-Power project has proven to be the most important energy project in the Philippines in recent time, something which other energy schemes can learn from.
This is what Petroleum Association of the Philippines Chairman Rufino Bomasang stressed in a recent article.
In the article titled “Towards Philippine Energy Security: Learning from Malampaya,” the PAP Chairman penned how the outstanding success of Malampaya could serve as a lesson for future developers of upstream energy projects in the Philippines.
In it he also recalled the challenges that occurred during the first oil crisis in the 1970s in the Middle East. This turmoil pushed the Philippines to launch a comprehensive Indigenous energy program in 1976, lessening its heavy reliance on imported energy.
“This ultimately led to the reduction of Philippine dependence on imported energy from 92% in 1976 to about 40% by 2016,” Bomasang explained. He added that this is the outcome of different initiatives, among them being the discovery of small but commercially viable oil fields and the development of the world class Malampaya Deep Water Gas-To-Power Project.
Although it required over 500 kilometers of undersea pipeline to reach the Luzon market, Malampaya managed to generate 40 to 50% of the island’s power requirements.
Hence, Bomasang broke down the four key “ingredients” to Malampaya’s success. First of them being 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.
Second, Shell has been committed to sustainable development from the early stages of Malampaya in 1998 up until 2001, under David Greer as SPEX Managing Director. He says Greer’s strict management and leadership contributed to the project’s triumph.
Third, SPEX maintained the employment of Filipino engineers, technicians, and workers in the entire organization. The “Filipinization” process was further accelerated when Sebastian Quiniones was appointed as Managing Director. Don Paulino then took over as Managing Director and General Manager upon Sebastian’s retirement.
Finally, when it came to manage a large exploration project, Shell’s decision to allow PNOC-EC to participate enabled its managers and engineers to take notes from the oil giant. The PNOC-EC involvement further strengthened the public image of its multi-national affiliates, SPEX and Chevron.
He said that these ingredients could be a lesson for Malampaya’s successors. “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.
Despite being a complex initiative, Malampaya, which has an 850-meter water depth, was completed on time and under budget. This August, it’ll contribute USD11 billion to the government, save $8 billion in energy imports, meet 40% of Luzon’s power demands, and pave the way for fossil fuel as a cleaner alternative than coal.
Bomasang has also given credit to the Philippine 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 Project.
Shell Philippines Exploration BV operates the Malampaya Deep Water Gas-to-Power project on behalf of the SC38 consortium.