‘Malampaya maintenance work is progressing well’

  • Oct 18, 2021
  • BusinessMirror

Maintenance work at the Malampaya gas facility is “progressing well” and will be completed on time, the operator of the gas field said.

According to Shell Exploration B.V. (Spex), completion rate on the offshore platform is already “more than 50 percent” while progress on the onshore gas plant is “almost 60 percent.”

When sought to elaborate, Spex said key engineering activities at the onshore gas plant and the offshore platform have been carried out.

“Critical activity is ongoing now…replacement of flare tip at offshore platform. Other works are progressing too,” the company said over the weekend.

The scheduled maintenance shutdown, which started on October 2 and will run up to October 22, will ensure continued reliability of the onshore and onshore facilities. During the period, the 1,000MW Sta. Rita, 500MW San Lorenzo gas plants and the 1,200MW Ilijan power plant will need to run on more expensive liquid fuel.

The costs incurred as to the use of liquid fuel when the Malampaya gas facility could not supply the gas plants are passed on to customers via the generation charge.

Based on its monitoring, the Independent Electricity Market Operator of the Philippines (IEMOP), operator of the Wholesale Electricity Spot Market (WESM), said spot market prices during the period of the Malampaya outage were still lower compared to the week prior to the shutdown.

From October 2 to 13, the WESM average price stood at P6.65 per kilowatt hour (kWh). This is slightly lower than the P7.27 per kWh recorded from September 26 to October 1.

“This is the average price applicable to the spot volume, which is about 10 percent. The 90 percent is settled based on contract price,” said IEMOP Chief Operating Officer Robinson Descanzo when sought for comment.

He said prices are projected to be steady since most of the gas plants continued to operate, albeit on liquid fuel. Also, there is a foreseen excess supply of around 2,000MW.

“We’re not seeing any problem in the supply adequacy,” said Descanzo. On WESM prices, he said the gas plants’ price offers are normally “not that high” even when they run on alternative fuel.

Descanzo said there were unscheduled plant outage incidents that coincided with the Malampaya shutdown “but these went on only for a few hours or days compared to those that are on scheduled plant shutdown. So, there is really no supply issue during the Malampaya shutdown.”

Pagbilao unit 2 was on shutdown until October 9. SLPGC (Southwest Luzon Power Generation Corp.) unit 1 is on emergency shutdown due to boiler tube leak until October 20. South Luzon Thermal Energy Corp. unit 1 was also on preventive maintenance until October 15.

But the Manila Electric Co. (Meralco) is expecting an upward adjustment due to the Malampaya shutdown. This will be reflected in the November bills of consumers. However, it has yet to provide figures since the shutdown of the gas facility will run until Friday.

There had been gas restriction incidents in the past months, which led to an increase of over P1 per kWh, Meralco said. Of this, P0.69 per kWh was due to re-pricing of Malampaya natural gas to reflect the movement of international crude oil prices. There was also a P0.36 per kWh adjustment due to the use of more expensive fuel.

“It should be noted that the use of alternative averts the detrimental effect of the plants’ non-operation, specifically, the impact of the 1,500MW of generation capacity that will be lost in the Luzon grid, which will likely lead to significant higher WESM prices and/or rotating power interruptions,” Meralco said.