1.4 Energy Resource Development

1. EXECUTIVE SUMMARY (Volume 1: National Energy Plan)

1.4 Energy Resource Development

1.4.1 Renewable Energy

1.4.1.1 Geothermal

Geothermal installed capacity will increase from 2,146 MW in 2005 to 2,206 MW by 2014. Gross generation, on the other hand is projected to increase from 10,384 GWh in 2005 to 13, 317 GWh in 2010 and 14,043 GWh in 2014. Expansion and optimization of existing fields/plants, as well as exploration and development of new areas will be undertaken to achieve the targeted capacity addition.

In generating investor interest, the government will intensify its efforts in facilitating farm-in agreements on the drilling of exploration and delineation wells, conduct of feasibility studies, subsequent development of the steam field and construction of corresponding power plant.

1.4.1.2 Hydropower

The DOE aims to double the current generating capacity from hydropower resources by 2013 as provided under the Renewable Energy Policy Framework (REPF).

Accordingly, the hydropower installed generating capacity is expected to reach 3,127 MW by the end of the planning period. Likewise, the country’s electricity generation from hydropower resources is expected to grow from 7, 617 GWh in 2005 to reach 8, 101 GWh in 2014.

For the planning horizon, the DOE will continue its campaign towards attracting greater private-sector participation in the development of the country’s hydropower potential.

1.4.1.3 Biomass, Solar and Wind

With the over-all goal of achieving a 100 percent increase in the country’s renewable energy-based capacity within the planning period, concrete measures include the installation of 130 to 250 MW of capacity from biomass and solar resources and about 417 MW of wind farms. Additionally, some 18 wind power projects will be available to investors during the planning period with a total installed capacity of 425 MW.

The DOE will pursue the aggressive development and utilization of renewable energy resources in the country through the implementation of various programs that include the UNDP-assisted Capability Building to Remove Barriers to Renewable Energy Development (CBRED) project. The DOE will also push for the passage of the
Renewable Energy Bill which will strengthen the directions for renewable energy development, as well as provide appropriate incentives to stimulate investments in the sector.

1.4.2 Fossil Fuels

1.4.2.1 Oil and Gas

The 2005 PEP envisions the production of 10.3 million barrels (MMB) of oil in 2005, 11.0 MMB by 2010 and 8.4 MMB by the end of the planning period. The steady increase in production from 2005 to 2010 hinges on the reactivation of the Cadlao field, the production of the Malampaya Oil Leg and a target discovery of a new oil field which is expected to produce 9.12 MMB by 2009. The Malampaya Deep Water Gas-to-Power Project is scheduled to produce 146 BCF of gas per year. The San Antonio gas field in Isabela, on the other hand, will produce 365 MMSCF annually from 2005 to 2006. The natural depletion of the field is seen by 2007. To explore the country €˜s petroleum proven reserves, a total of 51 wells is expected to be drilled in Luzon and Visayas, and 20 service contracts (SCs) are targeted to be awarded within the ten-year planning period.

The conduct of several petroleum public contracting rounds will be a continuing activity of the DOE to further encourage more investments in the sector.

1.4.2.2 Coal

Estimates show that the total in-situ reserves of the country stand at 343.4 million metric tons (MMMT). This level will slightly increase to 349 MMMT in 2005 to reach 360.3 MMT by the end of the planning period. Total coal production of 47.2 MMMT is expected to fuel the coal-fired power plants scheduled for commissioning within the ten year period.

In boosting local production, the DOE will conduct studies to identify additional coal exploration areas. The application of clean coal technologies will likewise be a continuing strategy to provide a market for low-rank domestic coal.

1.4.3 Downstream Sector Development

1.4.3.1 Oil

Over the planning period, the DOE will implement a three-pronged program to promote healthy competition among the industry players and at the same time safeguard consumer welfare.

These programs include:

a) Ensuring the country’s oil security through the pursuit of bilateral supply arrangements with other countries;

b) Improving fuel quality fuel standards and petroleum facilities; and,

c) Strengthening retail market monitoring.

1.4.3.2 Natural Gas

As a vital strategy to reduce dependence on imported oil, the government will expand the use of natural gas for transport and industrial use. The industries in the southern part of the National Capital Region (NCR) are expected to start using natural gas by 2007 for co-generation and cooling purposes. This will be synchronized with the completion of the approximately 100-km. Batangas-Manila (Batman 1) gas pipeline project in the same year, and expanding between 2007 and 2010 to the proposed 140-km.

Bataan-Manila (Batman 2) project for the sale of natural gas for power generation. The use of natural gas will be intensified in the transport sector having taken off with the currently implemented Natural Gas Vehicle Program for Public Transport (NGVPPT).

1.4.3.3 Coal

The government will continue to exert efforts in developing coal as a major fuel. Parallel to this move are implementation measures to address the environmental challenges in the sector. In compliance with CAA, the government has strengthened its advocacy campaign for the adoption of clean coal technologies.