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Republic of the Philippines Department of Energy Final Report on the Data Collection Survey on Utilization of Clean Alternative Energy in the Republic of the Philippines March 2012 JAPAN INTERNATIONAL COOPERATION AGENCY MITSUBISHI RESEARCH INSTITUTE, INC. OSAKA GAS CO., LTD. NIPPON STEEL ENGINEERING CO., LTD. THE INSTITUTE OF ENERGY ECONOMICS, JAPAN ILD CR(5) 12-031 BatMan 1 Proposed Pipeline and Facilities Overview Legend Facility Name Industrial Park Quirino Highway Pipeline Route Sucat Power Station 850MW (Presently No Operation) Malaya Pipeline Section 3 Power Station 650MW Alaban (Presently No Operation) g Valve Station #6 Carmona Valve Station #5 Cabuyao Valve Station #4 Calamba Valve Station #3 Power Station 1400MW (Future Plan) Santo Tomas Valve Station #2 Pipeline Section 2 Valve Station #1 Study Area Santa Rita Power Plant 1000MW San Lorenzo Power Plant 560MW Tabangao OGP Pipeline Section 1 LNG Receiving Terminal Ilijan Power Plant 1,200MW Photos of Project Sites IRIJAN natural gas fired power plant Gas Pipeline Route Section 1 Existing Malampaya OGP Facility Please convert to JPEG file Gas Pipeline Route Section 2 Gas Pipeline Route Section 3 LNG Terminal Candidate Site Industrial Park in Laguna Please convert to JPEG file Please convert to JPEG file Table of Contents Chapter 1 Introduction ................................................................................................................ 1-1 1.1 Background .................................................................................................................. 1-1 1.2 Objective ...................................................................................................................... 1-1 1.3 Study Area .................................................................................................................... 1-1 1.4 Scope of the Study ....................................................................................................... 1-2 1.5 Main Findings .............................................................................................................. 1-2 Chapter 2 Natural Gas Utilization Policy and Regulatory Framework .................................. 2-1 2.1 Current Situation of Natural Gas Production and Consumption .................................. 2-1 2.2 Outline of the Current Energy Policy ........................................................................... 2-5 2.3 Outline of the Existing Regulatory Framework ......................................................... 2-14 2.4 Review of JICA M/P (2002) and Necessity of Development of Natural Gas Infrastructure .............................................................................................................. 2-22 Chapter 3 Confirmation of Basic Information on Regulation and System for Environmental and Social Considerations .......................................................................................... 3-1 3.1 Regulations and System For Environmental and Social Considerations relevant to This Project .......................................................................................................................... 3-1 3.2 Environmental and Social Considerations Regarding the Pipeline Project ................ 3-12 3.3 Environmental and Social Considerations Regarding LNG Terminal Construction .. 3-20 3.4 CO2 Emission Reduction Effect Expected to Be Brought by the Proposed Project ... 3-34 Chapter 4 Natural Gas Demand .................................................................................................. 4-1 4.1 Review of JICA M/P(2002) ......................................................................................... 4-1 4.2 Current Situation of Gas Supply and Demand ............................................................. 4-4 4.3 International Trends of LNG Price ............................................................................... 4-5 4.4 Gas Demand for Power Sector ..................................................................................... 4-6 4.5 Gas Demand for Industry Sector ................................................................................ 4-13 4.6 Gas Demand for Commercial Sector.......................................................................... 4-21 4.7 Gas Demand for Transport Sector .............................................................................. 4-23 4.8 Gas Demand in Luzon ................................................................................................ 4-24 Chapter 5 LNG Supply-Demand System ................................................................................... 5-1 5.1 Global LNG Production and Consumption .................................................................. 5-1 Chapter 6 BatMan 1 Pipeline Plan ............................................................................................. 6-1 6.1 Natural Gas Supply Volume/Location ......................................................................... 6-1 6.2 Gas Pipeline Route ....................................................................................................... 6-3 6.3 Gas Pipeline Design Overview .................................................................................... 6-8 6.4 Related Pipeline Facilities .......................................................................................... 6-26 6.5 Consideration of Project Implementation ................................................................... 6-35 Chapter 7 LNG Receiving Terminal ........................................................................................... 7-1 7.1 Design Conditions for LNG Receiving Terminal ........................................................ 7-1 7.2 Main Facilities and Equipments of LNG Receiving Terminal ..................................... 7-3 7.3 Project Execution Study ............................................................................................. 7-16 7.4 LNG Cold Energy Utilization .................................................................................... 7-19 Chapter 8 Project Scheme ........................................................................................................... 8-1 8.1 Current Regulation ....................................................................................................... 8-1 8.2 Pipeline ......................................................................................................................... 8-1 8.3 LNG Regasification Terminal .................................................................................... 8-10 8.4 Economic Analysis ..................................................................................................... 8-12 Chapter 9 Implementation of BatMan 1 Pipeline Project ........................................................ 9-1 9.1 Development of a Physical Link between Sources and Offtakers................................ 9-1 9.2 Project Implementing Entity ........................................................................................ 9-2 9.3 Project Model to Encourage Participation of the Private Sector .................................. 9-8 Chapter 10 Recommendation for Project Implementation ...................................................... 10-1 10.1 Basic Understanding of DOE for Project Implementation ......................................... 10-1 10.2 Institutional Development for Legal and Regulatory Systems ................................... 10-2 10.3 Feasibility Study for Project ....................................................................................... 10-3 10.4 Project Model Scheme and Finance ........................................................................... 10-3 10.5 Procedures for Project Implementation ...................................................................... 10-4 Annex i Procedure and Schedule for promotion of BatMan 1 Gas Pipeline Annex ii BatMan 1 Route Map Annex iii Pipeline Model Annex iv The Philippine BOT Law Annex v Guidelines and Procedures for Entering into Joint Venture (JV) Agreements between Government and Private Entities List of Abbreviated Terms (Alphabetical Order) ADB Asian Development Bank BOG boil-off gas BIR Bureau of Internal Revenue BOI Board of Investment BOT Build Operate Transfer CAPEX Capital Expenditure CBR Cost Benefit Ratio CCGT Combined Cycle Gas Turbine CD Cathodic Protection CNC Certificate of Non-Coverage(CNC) CNG Compressed Natural Gas CPC China Petroleum Corporation DAR Department of Agrarian Reform DCF Discounted Cash Flow DCS Distributed Control System DENR Department of Environment and Natural Resources DILG Department of the Interior and Local Government DMS Dimethyl Sulphide DO Department Order DOE Department of Energy DOF Department of Finance DPWH Department of Public Works and Highways DSCR Debt Service Coverage Ratio ECA Environmentally Critical Area ECC Environmental Compliance certificate ECP Environmentally Critical Project EIA Environmental Impact Assessment EIRR Economic Internal Rate of Return EIS Environmental Impact Statement EMB Environmental Management Bureau EPC Engineering, Procurement and Construction EPRMP Environmental Performance Report and Management Plan ERA Energy Reform Agenda ERC Energy Regulatory Commission ESD Emergency Shut Down system F&G Fire and Gas System FERC US Federal Energy Regulatory Commission FIRR Financial Internal Rate of Return FPIC Free Prior Informed Consent FS Feasibility Study FSRU Floating Storage and Regasification Unit