Malampaya gas production significantly drops in 2020

By Myrna M. Velasco – January 29, 2021, 5:00 AM
from Manila Bulletin

The gas output of the Malampaya field was significantly down last year to 107.902 billion standard cubic feet (bscf) from an all-time high of 155.495 bscf in 2019 – and that was mainly attributed to demand crash because of slowdown in economic activity triggered by the Covid-19 pandemic.

According to Shell Philippines Exploration B.V. (SPEX), the operator of the gas field, “Malampaya was at steady state of production”, hence, it was the power demand side plunge that precipitated the decline in gas production.

“Demand had been low from power plant-customers, so we also produced low,” the company said.

Sources from the DOE echoed that the slump in electricity demand was the main reason behind the reduced gas production. As culled from the department’s data, the gas usage of the power sector within January-November 2020 had been at 101.347 bscf compared to the relatively hefty level of 146.365 bscf in 2019. The data released by the DOE on Malampaya’s gas production was as of November 2020.

To recall, electricity consumption in the country nosedived by more than 30-percent at the height of the lockdowns from March to May last year – with the demand of commercial and industrial users plummeting to all-time low levels.

And despite the easing of quarantine restrictions in the succeeding months, economic activities were still lackluster because people were mostly confined in their homes – either for work-from-home arrangement or the online classes of the students.

Shell similarly cited some incidents in the operation of power plant-users, which consequently contributed to lower demand for gas in electricity generation.

“For December 2020 to January 2021, San Gabriel and one unit of Santa Rita had been offline for scheduled maintenance shutdown, so gas demand was also low,” the Malampaya operator-firm emphasized.

The Malampaya field is expected to continually supply the fuel needs of gas-fired power generating fleets in the country until 2024, the expiration of its Service Contract 38 for the project.

The unresolved puzzle at this point is if the gas field’s operating license will be extended beyond that timeframe – as discussion on this matter is still pending with the Department of Energy (DOE).

Based on data that the DOE had submitted to the Senate last year, the assumption on the remaining gas resources that could still be extracted from Malampaya may top roughly half of its current capacity – hence, this could still power gas-generating plants of 1,500 to 1,600 megawatts in the next 6-7 years.

Nevertheless, such scale of reserves cannot be proven commercially if the license extension bid for Malampaya will not be acted upon by the government – because fresh round of investments on drilling the prospective gas wells cannot be carried out without a binding extended or new service contract.