Malampaya pipeline the ‘toll road’ for all future gas out of WPS?

Why are some of the largest energy players in the country interested in the Malampaya deep-water gas-to-power project in Northwest Palawan, even if its reserves are nearing depletion?

The answer, according to Deputy Speaker and Surigao del Sur Rep. Johnny Pimentel, lies in the 504-kilometer, 24-inch diameter pipeline that delivers gas to landfall in Batangas, and the Sampaguita gas discovery in Recto Bank (formerly Reed Bank) some 250 kilometers southwest of Malampaya.

“The interest is clearly in Malampaya’s existing infrastructure, mainly its underwater pipeline, which could be used to transfer all the offshore gas in the West Philippine Sea to the onshore gas power plants in Batangas,” Pimentel said.

“Even if all of Malampaya’s resources eventually run out, the project’s pipeline could serve as the ‘toll road’ of all future gas that may be harvested from nearby reservoirs,” Pimentel pointed out.

Pimentel made the statement shortly after businessman Manuel Pangilinan’s PXP Energy Corp. said it is bidding for the 45 percent stake of Royal Dutch Shell plc in the Malampaya project.

PXP is in a bidding war with businessman Dennis Uy’s Udenna Corp., which earlier said it has the first crack at acquiring Shell’s interest, after buying the other 45 percent from Chevron Corp. last year.

State-owned PNOC Exploration Corp. holds the residual 10 percent in Malampaya.

In September, Shell bared plans to divest from Malampaya to streamline and strengthen its business, amid the collapse of oil prices due to the COVID-19 crisis.

The now 19-year-old Malampaya gas-to-power project still generates up to 3,400 megawatts (MW) of electricity for the Luzon grid.

However, Department of Energy officials previously told a congressional hearing that by 2024, Malampaya’s gas output would fall to just one-third of current capacity.

They implied that four years from now, Malampaya’s diminishing gas reserves would be able to produce just 1,100 MW of electricity for Luzon.

Based on an independent assessment by Weatherford Petroleum Consultants, the nearby Sampaguita field in Recto Bank “is estimated to contain 2.6 trillion cubic feet of in-place contingent resources and 5.5 trillion cubic feet of in-place prospective resources.”

The operator of the service contract that contains the Sampaguita gas discovery, Forum Energy Ltd., is controlled by PXP.