First Gen boosting Luzon grid’s capacity with 2 natural-gas plants

Business Mirror
by BusinessMirror - October 5, 2015

FIRST Gen Corp., the Lopez Group’s holding company in the power-generation business, is boosting the Luzon grid’s capacity by constructing additional natural gas-fired power plants in Batangas.

First Gen’s construction of two new natural gas-fired facilities—the 97-megawatt (MW) Avion open cycle and 414-MW San Gabriel combined cycle power plants—is progressing, First Gen President and COO Francis Giles B. Puno said in a recent talk with reporters.

In a related disclosure to the Philippine Stock Exchange, First Gen said that Avion will come online by the end of the year; and San Gabriel, in the middle of 2016.

First Gen further disclosed that the Avion and San Gabriel power plants will help provide incremental power supply to the Luzon grid.

Avion and San Gabriel will be owned by First Gen subsidiaries Prime Meridian Powergen Corp. and First Natgas Power Corp., respectively. Up to $600 million has been set aside for the San Gabriel plant; and up to $150 million for Avion.

San Gabriel will initially run on natural gas from offshore Palawan’s Malampaya field being operated by a consortium led by Shell Philippines Exploration BV.

Acknowledged as the cleanest form of fossil fuel, natural gas in commercial quantity was discovered in the early 1990s in the Malampaya field.

After the gas discovery, the Lopez Group stepped forward and signed contracts committing itself to use the Malampaya gas as fuel for two power plants—the 1,000-MW Santa Rita and 500-MW San Lorenzo—that were then in the development stage. Both power plants, the biggest off-takers of Malampaya gas, now supply a big chunk of the Luzon grid’s electricity requirement.

First Gen’s commitment to use Malampaya gas as fuel for its power plants opened the flow of more big-ticket investments for what is called the Malampaya-Gas-to-Power Project.

To date, the Malampaya-Gas-to-Power Project, estimated to be worth at least $4.5 billion, stands out as the largest-ever single industrial investment in the history of Philippine business.

Puno said First Gen is planning to put up an liquefied natural gas (LNG) terminal in Batangas for handling imported LNG.

“Our current gas-supply contracts from Malampaya will expire in about 10 years so we are already preparing for a post-Malampaya gas world to provide replacement fuel for our new and existing power plants,” Puno said.

LNG is natural gas converted into a liquid form for easy storage and transport. Once LNG reaches its destination in a receiving terminal, it undergoes a process—called regasification—to convert it back into gas form for eventual use as fuel.

The completion and operation of both Avion and San Gabriel power plants will assure First Gen’s leadership in the country’s natural-gas business. Aside from its natural-gas plants, First Gen’s existing portfolio also includes geothermal, wind and solar capacities. First Gen plans to add more power-generating capacity to meet the country’s growing demand for electricity. Under its program, First Gen will continue to pursue the buildup of a balanced portfolio of power plants. source