Siân Green

In the early 1990s, development began on the Philippines’ giant Malampaya-Camango natural gas and condensate field off northwest Palawan Island. By 2002, production from this field will be in full swing, bringing gas to the mainland via a subsea pipeline to supply new generating capacity totalling nearly 3000 MW.

Figure 1. Kepco broke ground on the Ilijan power project in March 1999, and by the end of 2000 will have started commissioning, start-up activities and performance testing on the plant
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The $5 billion gas-to-electricity project is the Philippines’ most ambitious energy project, and one that will help the government meet its objectives of improving energy security. Along with other coal and hydro-based power projects, it will also enable the Philippines to meet future electricity needs — power demand is expected to grow by almost nine per cent per year until 2009, necessitating the installation of almost 10 GW of new capacity.

Three independent power projects (IPPs) — Santa Rita, San Lorenzo and Ilijan — will use the gas from Malampaya-Camango and deliver power to the National Power Corporation (Napocor) and Meralco, the Philippines’ two main electricity companies. The 1000 MW Santa Rita project, developed by Siemens for First Gas Power Corp., was recently completed. First Gas also selected Siemens to build the 500 MW San Lorenzo power plant on which work has already started. San Lorenzo, adjacent to Santa Rita, will come on-line in 2002.

Ilijan, the largest of the three projects, is also due to start commercial operation in early 2002, by which time natural gas production from Malampaya will have started. At 1200 MW, Ilijan will be the largest IPP in the Philippines and also one of the largest combined cycle plants in Asia. All three of the power plants are situated in Batangas, 120 km south of the capital city of Manila.

BOT contract

Ilijan is being developed by Kepco Ilijan Corporation (Keilco), a subsidiary of Korea Electric Power Corporation (Kepco), which was awarded the contract to develop the power plant by Napocor in December 1996. Kepco will develop Ilijan on a build-operate-transfer (BOT) basis, operating the plant until 2022 when it will be transferred to Napocor’s ownership.

Under the BOT agreement, Ilijan will be operated as a baseload power plant with all electricity sold to Napocor under a 20-year energy conversion agreement (ECA), which was finalized in late 1997. Napocor will take or pay for the project’s power based on a firm offtake commitment. It has provided the site under the BOT contract and will build and operate the transmission line connecting the plant to the grid. Napocor will also provide the fuel for testing.

Operation and maintenance (O&M) on the project will be carried out by Keilco with some support from Kepco. Kepco will provide non-financial technical resources to help Keilco meet its obligations under the ECA.

Figure 2. The plant consists of two power blocks, each comprised of two gas turbines, two HRSGs and one steam turbine. The plant will meet all Philippine environmental standards
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Fuel will be supplied to Ilijan by Napocor under a fuel supply agreement between Napocor and Kepco. The natural gas will be transported to the mainland through a 500 km pipeline – Asia’s longest subsea pipeline – running from Malampaya-Camango to Batangas on Luzon. Shell Exploration Philippines BV, one of the partners developing the offshore field, is responsible for conveying the gas to shore, while Napocor will construct and operate the pipeline bringing the fuel from the onshore gas plant to Ilijan.

In March 1999, Keilco awarded the engineering, procurement and construction (EPC) contract to a consortium consisting of Washington Group International and Mitsubishi Corporation. Washington Group – formed in July 2000 by the takeover of Raytheon Engineers & Constructors by Morrison Knudsen Corp. – is primarily responsible for the EPC work while Mitsubishi Heavy Industries is supplying the major equipment and will be responsible for equipment performance. Washington Group’s portion of the contract is worth approximately $260 million, and will be implemented by its own Power operating unit.

Also involved in the project is K&M Engineering of the USA, which is serving as Owner’s Engineer, providing services such as technical assistance, risk mitigation and negotiation support for the EPC and ECA contracts.

Attractive investment

In spite of the Asian financial crisis, Ilijan has attracted financing from three export credit agencies: the US Export-Import (Exim) bank; the Korean Exim Bank and he Japan Bank for International cooperation (JBIC). The total cost of the project is estimated to be $700 million, $500 million of which is being financed by the export credit agencies on a limited recourse basis. Keilco holds a majority equity interest in the project, and its equity partners include Mitsubishi and Kyushu Electric Co.

Figure 3. In March 1999, Keilco awarded the engineering, procurement and construction (EPC) contract to a consortium consisting of Washington Group International and Mitsubishi Corporation
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Kepco broke ground on the Ilijan power project in March 1999, and by the end of 2000 will have started commissioning, start-up activities and performance testing. First firing of the gas turbines will take place in early April 2001 and the plant will enter full commercial operation in January 2002.

The Ilijan power plant is a combined cycle power facility consisting of four Mitsubishi Heavy Industries gas turbines, four natural circulation heat recovery steam generators (HRSGs), two condensing reheat steam turbine generators, a reverse osmosis desalination system and associated balance of plant equipment.

The plant consists of two power blocks, each comprised of two gas turbines, two HRSGs and one steam turbine. Operating on diesel fuel, it is designed for a net output of 1243 MW at a heat rate of 6729 Btu/kWh at 35°C and 50 per cent relative humidity. Firing natural gas, its main fuel, the plant will produce a net output of 1251 MW at a heat rate of 6051 Btu/kWh at 35°C and 50 per cent relative humidity.

Each gas turbine generator incorporates 16 dual-fuel dry low NOx combustors. Water injection will also be used to limit NOx emissions when firing diesel fuel. The plant will meet or exceed all Philippine environmental standards.

No supplementary firing capacity has been included in the design of the HRSG, and there is no bypass stack. The HRSGs are specifically designed to operate in conjunction with the gas turbines and steam turbines in order to match their operating characteristics while operating in sliding pressure mode. This will achieve the highest possible plant efficiency for the project.

Power generated from the Ilijan facility will be wheeled to the Napocor power grid via a 500 kV transmission line to be built and operated by Napocor.

Work underway

The four gas turbine generators being installed at Ilijan are Mitsubishi Heavy Industry M501G units. The gas turbines are water injected and consist of a 17-stage axial flow compressor and 16 dry low NOx combustors. The gas turbines are connected to 60 Hz generators which are totally enclosed, hydrogen-cooled synchronous machines rated at 270 MVA and 19 kV.

Mitsubishi Heavy Industries is also supplying the steam turbine generators. These consist of a combined high pressure/intermediate pressure (HP/IP) reheat section and a double-flow low pressure (LP) section with 1016 mm last stage blades. One hundred per cent bypass of the HP, IP and LP systems are provided for use during start-up and emergencies. The generators for the steam turbines are rated at 305 MVA and 19 kV.

Hitachi Babcock has supplied the four HRSG units for Ilijan. These are unfired, three-pressure reheat natural circulation units with horizontal gas flow and vertical fin tubes in all sections.

Figure 4. Civil works at the Ilijan site are nearing completion, and the mechanical and electrical installation is well underway
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The power plant control system is a digital control system (DCS) supplied by Bailey Controls. It is a microprocessor-based system that provides both analogue and sequential control capabilities. The DCS system will monitor, alarm, log and trend selected power station input signals, such as power station consumption and generation of energy, and provide a status report of plant equipment. Other parameters that will be monitored include natural gas quality and on-line efficiency.

The operator interface of the control system consists of nine stations, each including a dual colour graphics monitor. Displays replicating the power process flows and equipment are available to the operators. Data processing is accomplished by a high speed 32-bit dedicated microcomputer, an associated arithmetic processing unit and a custom logic solver.

The transformers are being supplied by Hyosung Corporation. One three-winding main step up transformer, rated at 334/445/556 MVA, is being provided for each of the two power blocks. In addition, one two-winding transformer is to be provided for each of the two steam turbine generators, rated at 182/243/303 MVA. All of the transformers are oil-filled. The switchyard is being provided on a turnkey basis by Korea Power Engineering Company Ltd.

Civil works at the Ilijan site are nearing completion, and the mechanical and electrical installation is well underway, according to Washington Group.

The Malampaya-Camango story

The Camango field was discovered in 1989 with the Camango-1 well. Further drilling by a Shell/Occidental joint venture over the next three years uncovered the larger Malampaya structure. Development of the field began, and in 1998 contracts were awarded to Kepco and First Gas Power Corp. for the development of three power stations.

Malampaya-Camango remains the Philippines’ only significant hydrocarbons discovery. The country has 2.8 trillion cubic feet (853 billion m3) of proven natural gas reserves, of which Malampaya-Camango accounts for an estimated 2.5 tcf (762 billion m3). The reserves are considered large enough to supply power generating capacity of 2700 MW for more than 20 years.

The upstream part of the development project includes gas production, processing and transport to the mainland. Mitsubishi is responsible for construction of the 500 km pipeline from Shell’s processing platform near the gas field to Batangas on Luzon. Foster Wheeler is building the onshore gas processing plant in the Tabango area on Luzon. This plant will deliver 14.15 million m3/day to the power generators via onshore pipelines. The government hopes that the development of this infrastructure will encourage further exploration offshore.

While in the past, the Philippines’ natural gas sector has not been extensively developed, the government has now made the expansion of natural gas use a priority. In 1999, fuel oil-fired power plants accounted for nearly 50 per cent of capacity in the Philippines. As the country imports most of the oil it consumes, this is a major drain on foreign currency reserves and also has implications for security of supply.

The development of Malampaya-Camango and the three IPP plants has therefore been driven largely by long-term government strategy rather than electricity demand growth alone. It is estimated that these three plants could replace as much as 50 per cent of the oil that the Philippines currently imports for power generation. In addition to these plants, the construction of coal and hydroelectric plants is underway, such as the 470 MW Quezon coal-fired plant and four small hydropower plants in Mindanao.

Philippines: weathering the crisis

The Philippines weathered the Asian financial crisis far better than many of its Asian neighbours. Compared to Indonesia and Thailand, for example, the decline in economic growth in the Philippines was much less severe. The country’s real gross domestic product (GDP) shrank just 0.5 per cent in 1998, grew 3.2 per cent in 1999, and according to the US Energy Information Administration, is predicted to grow by 4.8 per cent in 2000. The current increase in oil prices could impact this growth, however, as the country imports most of the oil it consumes.

On balance, however, the Philippines exports far more goods than it imports. Merchandise exports grew by almost 20 per cent between 1998 and 1999.

This robust economy, together with strong governmental policy objectives towards the development of natural gas reserves, has helped the Malampaya-Camango gas-to-electricity project proceed unscathed throughout the financial crisis.