Shell to build floating natural gas unit by 2016
MANILA, Philippines - Pilipinas Shell Petroleum Corp., the local arm of global energy giant Royal Dutch Shell Plc., is planning to build the country's first floating liquefied natural gas (LNG) unit by 2016 to meet the country's increasing energy demand.
In a press conference presenting the feasibility study for a natural gas facility in the Philippines, Shell vice president for Global LNG Roger Bounds said the company is opting for a floating storage and regasification unit (FSRU) for LNG supply operations for now.
"FSRU is cheaper which will result to a lower retail price. It is also faster (compared) to a terminal (which) will take a much longer time to develop," he said.
In July 2012, Shell signed a deal with the Philippine government to conduct a joint feasibility study for a planned $1 billion LNG Terminal in Batangas.
The study, however, revealed that a more suitable alternative for now is the floating LNG facility for the 1st phase of the project due to its "faster delivery time, cheaper cost and smaller onshore footprint."
It is also a more viable option considering the weather patterns in the country, according to Bounds.
The planned FSRU facility will be about 170,000 cubic meters in volume and with a capacity of over 2,000 megawatts (MW).
According to Energy Secretary Jericho Petilla, Shell's decision to pursue the FSRU track is to align it with the completion of the pipeline of Batman, or the Batangas-Manila pipeline project, in 2016.
"The target for the feasibility on Batman is in February 2014. Within 6 months, it should be tendered. Completion date will be very dependent on the study. It could be around late 2015 or 2016," he said.
The FSRU facility will be supplying the Batman pipeline and the various industrial markets nearby. The Manila market is also in the radar of the natural gas project.
Secretary Petilla said the LNG project will improve the country's energy mix and may address the looming energy demand as the country continues to grow rapidly. The Philippines grew by 7.8% in the first quarter of 2013.
"Renewable energy sources cannot supply the deficiency and cannot compete in terms of prices. Geothermal and hydro is both limited. We need on-demand sources of energy like coal or diesel but less pollutant and cheaper if possible."
"We don't have anything to compete with that right now except Malampaya which is running out of gas by 2022. The only way we can actually improve the mix is LNG," he said.
He added the floating LNG unit can also supply a powerplant with a capacity of about 400 to 600 MW. He also emphasized that pursuing the project is "extremely important."
Despite the decision to pursue FSRU, the company is not dismissing the possibility of pushing through with the initially planned LNG terminal beside Shell's refinery in Batangas.
"We're maintaining the space (for the terminal) on our site because we think, ultimately, as the market does develop and the pipeline network is built, we will likely want to expand on a much larger scale in the future," Bounds said.
The company is set to make a final investment decision on the project in the next 12 months once technical and regulatory concerns are addressed, he added.- Rappler.com