MikeLigalig.com

The privatization of geothermal power industry in the Bicol region will pave the way for more energy generation for Luzon.

With the partnership between Chevron Geothermal Philippines Holding Incorporated (CGPHI) and the Aboitiz Power Renewables Inc. (APRI), the expansion of the capacity of the geothermal field here is now underway.

From its present 175 megawatts (MW) power output, the partnership is working on the drilling of additional steam production wells that would expand Tiwi’s production to at least 200 MWs.

APRI senior vice president Luis Miguel Aboitiz said the plan is to invest an additional US$ 150 million over the next four to five years to rehabilitate and provide for additional steam supply for the Tiwi geothermal field and that of the Makiling-Banahaw (Makban) within Laguna and Quezon Provinces.

CGPHI intends to drill three more wells with a capacity of at least eight MWs each for the Tiwi steam field and hopes to start the project by the second quarter of 2010, its president and general manager Antonio Yee said in a statement here on Wednesday.

Yee said five to six more wells would be developed in the Makban field to expand its current output of 458 MWs to more than 600 MWs.

The development of each well would entail an investment of about US$ 6 million, Yee said.

Yee also said they are in the process of evaluating and discussing with APRI the project costs, where CGPHI is proposed to shoulder 45 percent of the drilling cost while APRI taking care of the 55 percent.

APRI has taken over ownership of the power generating plants of the National Power Corporation (NPC) here and that of Makban) following its acquisition of the facilities from the government for US$ 446.8 million in July last year.

Last May, Aboitiz turned over P8 billion to the government representing 40 percent down payment and the balance will be deferred in semi-annual payments over seven years.

A combination of the Tiwi and Makban power plants makes the present power output of over 637 MWs that is supplied to the Luzon power grid of the NPC, making APRI the dominant renewable energy supplier of the country.

The sale of the Tiwi-Makban power generating plants was facilitated by the Power Sector Assets and Liabilities Management (PSALM) Corporation which was created in 2001 to dispose the assets and liabilities of the NPC.

This was the 12th facility that PSALM has auctioned off as it also works on trimming down NPC's foreign obligations through either, bond flotation, power rate increases and other mechanisms.

In the middle of last May, it was able to generate billion of bond floats, the part of which will be used to pay off the debts of NPC totaling US$ 17 billion plus interests so that consumers are not burdened with power rate adjustments, Conrad Tolentino, PSALM’s chief of staff said.

Under the assets and liabilities management program of PSALM, part of the obligations are being passed to the consumers through either the ICERA (international currency exchange rate adjustments) or the basic fuel GRAM (generation rate adjustment mechanism).

The bidding for the Tiwi-Makban plants began in September 2005 with 15 prospective bidders participating.

The opening of the bids was first set for the second semester of 2006, which, however, was delayed because of the non resolution of the issue on the effectivity of the Geothermal Resources Sales Contract (GRSC) between PSALM and CGPHI.

The sale to APRI that emerged as the winning bidder was formalized in May 25 last year and the 40 percent down payment was paid to the PSALM.

The Tiwi geothermal energy field was developed more than 20 years ago by CGPHI under its former corporate name Philippine Geothermal Inc., a subsidiary of the Union Oil of California, USA. It started commercial operations in partnership with the NPC in 1979 with a power output of 350 megawatts.

Among the geothermal facilities sold by PSALM was the 150-MW BacMan (Bacon-Manito) geothermal project of the Philippine National Oil Co. - Energy Development Corp. (PNOC-EDC) within the boundaries of Sorsogon City and Manito, Albay. It was acquired for P58 billion by the Lopez-owned FirstGen Holdings in late 2007.

Under private ownership, EDC is now drilling two steam wells in the Rangas-Tanawon area of the vast geothermal reservation to produce at least 50MW power as part of its expansion program.

EDC is also eyeing another expansion project at the Kayabon sector within the municipality of Manito whose expected power output is 40MWs.

Some P20 billion have been earmarked for these expansion projects that would significantly boost the country’s geothermal energy production, according to EDC-BAcMan general manager Liberato Virata.

Yee explained that geothermal energy is created by the heat of the earth. It generates reliable power and emits almost no greenhouse gases.

When groundwater seeps below the earth's surface near a dormant volcano, the water is heated by reservoirs of molten rock, usually at depths of up to 9,800 feet (3,000 m). Wells similar to those used to produce crude oil and natural gas are drilled to recover the water, he said.

Once captured, steam and hot water are separated. The steam is cleaned and sent to the power plant. The separated water is returned to the reservoir, helping to regenerate the steam source, he added.

Yee also said only a small group of sites around the globe — primarily in the Pacific Rim region – provide the special conditions needed to generate geothermal energy.

At these locations, deep fractures in the earth's crust allow the molten rock to surge close enough to the earth's surface to heat water that goes underground, he said.

In addition to providing clean, renewable power, geothermal energy has significant environmental advantages. Geothermal emissions contain no chemical pollutants or waste — they consist mostly of water, which is re-injected underground.

Geothermal energy is a reliable source of power that reduces the need for imported fuels. It is also renewable because it is based on a practically limitless resource — natural heat within the earth.

By Danny O. Calleja, PNA

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=21212.0