Pilipinas Shell Petroleum Corp., the local subsidiary of Royal Dutch Shell plc, announced that it may build the Philippine's first floating liquefied natural gas (LNG) import terminal in the next 2-3 years, but has not made a final investment decision.
Roger Bounds, Shell's vice president for Global LNG told a press conference on Friday that the company is opting for a floating storage and regasification unit (FSRU) for LNG supply operations.
Building an FSRU is cheaper and faster than building "a terminal [which] will take a much longer time to develop," Rappler's Lean Santos reported Bounds as saying.
In July 2012, Shell signed a deal with the Philippine government to conduct a joint feasibility study for an LNG terminal near its Tabangao refinery in Batangas province. Shell could invest as much as US$1 billion to upgrade the refinery and add an LNG facility.
But the recently completed study suggested that floating LNG may be a better alternative, due to the faster delivery time, lower cost and smaller onshore footprint.
The potential FSRU facility will be about 170,000cu. m in volume with a capacity of more than 2,000 megawatts (MW).
According to Carlos Jericho Petilla, the Philippines' Energy Secretary, Shell's preference for an FSRU is to match the completion of the Bacman pipeline or the Bacon-Manito geothermal plant, in 2016.
"The target for the feasibility on Bacman 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," Santos reported Bounds as saying.
The FSRU facility will be supplying the Bacman pipeline, various industries, and perhaps the Manila market.
"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."
Petilla pointed out that the Malampaya project will run out of gas by 2022, and LNG imports are necessary to improve the country's energy mix.
J. Scott Porter, senior business development manager for Shell’s Upstream International business, said, “If all the permits are in place, we could be making a final investment decision in the next 12 months.”
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