NEDO —1C —00ER35 0 4 Feasibility Study on Energy Saving and Environmental Improvement via Utilization of Residual Oil at Petron Bataan Refinery March, 2001 New Energy and Industrial Technologies Development Organization (NEDO) :o Mitsui Engineering & Shipbuilding Co., Ltd. 020005044 I"Feasibility Study on Energy Saving and Environmental Improvement via Utilization of Residual Oil at Petron Bataan RefineryJ Mitsui Engineering & Shipbuilding Co., Ltd. March, 2001 Study purpose; Toward the target of digging out projects leading to joint implementation and CDM in the future for the purpose of reducing the emission of greenhouse gases, we conducted a feasibility study regarding possibility of reduction of greenhouse gases at Petron Company’s Bataan Refinery in the Republic of the Philippines. The contents of this survey include an evaluation for the reduction amount of emission of carbon dioxide as greenhouse gasps by assuming the installation of the high efficient low-speed 2-stroke cycle diesel engine combined cycle in Bataan Refinery, with the effective utilization of residual oil, the demand for which is expected to stagnate in the future. N EDO- I C — 00ER35 FeasibiIity Study on Energy Saving and Environmental Improvement via Utilization of Residual Oil at Petron Bataan Refinery March, 2001 New Energy and Industrial Technologies Development Organization (NEDO) Entrusted to Mitsui Engineering & Shipbuilding Co., Ltd. Introduction The present report summarizes the results of the "Year 2000 Basic Survey for Joint Implementation Promotion: Feasibility Study on Energy Saving and Environmental Improvement via Utilization of Refinery Residual Oil at Petron Bataan" entrusted to our company as operation for the year 2000 by New Energy and Industrial Technologies Development Organization (NEDO). The protocol adopted at COP 3 (The 3rd Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change) held in Kyoto in 1997 stipulates "joint implementation" among advanced countries, "trade in international permits" with developing countries, "clean development mechanism (CDM)", etc., to prevent global warming due to greenhouse gases. The Japanese government also expressed its wish and determination to achieve the targets by positively utilizing those systems. In the present survey, we conducted a feasibility study regarding possibility of reduction of greenhouse gases through high-efficiency utilization of residual oil at Petron Company's Bataan Refinery in the Republic of the Philippines, for the purpose of paving the way for eventual joint implementation and CDM, toward the target of digging out projects leading to joint implementation and CDM in the future in the reduction of emission of greenhouse gases. The contents of this survey include a study of optimal energy supply facilities in the case considering effective utilization of residual oil, the demand for which is expected to stagnate in the future, and eventual reinforcement of the refinery facilities, for the reduction of emission of carbon dioxide from the energy (electric and steam) supply facilities installed in Bataan Refinery. While the current facilities are boilers and steam turbine power generation systems using heavy oil C as fuel, we conducted technical study and evaluation of facilities having the possibility of reducing carbon dioxide which is a greenhouse gas through installation of high-efficiency optimal equipment using residual oil as fuel, and also made an assessment of economical efficiency of such facilities. It is our wish to make further study on the basis of the results of this feasibility study and materialize highly economical products, so as to achieve effective utilization of residual oil fuel and reduction of emission of carbon dioxide that is a greenhouse gas. Lastly, we would like to express our heartfelt thanks to all parties concerned for their kind cooperation to this survey, and we shall be very happy if the results of survey given in this report will be useful as reference materials for the respective parties concerned. March 2001 Mitsui Engineering & Shipbuilding Co., Ltd. Feasibility Study on Energy Saving and Environmental Improvement via Utilization of Residual Oil Table of Contents Introduction ......................................................................................................................1 Outline ........................................................................................................................1 Chapter 1 Basic Matters for the Project ...................................................................... 1-1 1. General situation in the country.......................................................................... 1-3 1.1 Political, economic, and social conditions ....................................................1-3 1.2 Energy situation in the Republic of the Philippines ....................................1-26 1.3 Needs of CDM project ................................................................................ 1-45 2. Necessity of introduction of energy-saving technology in object line of business.................................................................................................. 1-51 3. Significance, needs and effects of the project and diffusion of achievements to similar industries, etc...............................................................1-68 Chapter 2 Materialization of the project plan.............................................................2-1 1. Project plan..........................................................................................................2-3 1.1 Situation of the area forming the subject of the project ................................. 2-3 1.2 Contents of the project ........................................... 2-6 1.3 Object greenhouse gas, etc.............................................................................2-7 2. Outline of implementation site............................................................................ 2-8 2.1 Level of interest of implementation site........................................................ 2-8 2.2 Situation of relative equipment and facilities on the implementation site ...2-10 2.3 Project execution capability of implementation site...................................2-24 2.4 Contents of the project on implementation site and specifications after modification of related equipment .............................................................. 2-31 2.5 Scope of supply of fund, facilities & equipment, services, etc. by both parties for the implementation of the project ..........................................................2-46 2.6 Preconditions for implementation of the project, and problems .................2-48 2.7 Schedule for implementation of the project ................................................2-50 3. Concretization of fund plan................................................................................2-57 4. Task and Prospect for realization of CDM........................................................ 2-61 4.1 Tasks for realization of CDM...................................................................... 2-61 4.2 Prospect of realization of CDM................................................................... 2-65 Chapter 3 Effects of the project ..................................................................................3-1 1. Energy-saving effect............................................................................................3-3 1.1 Technical ground for production of energy saving effect...............................3-3 1.2 Base line serving as foundation for the calculation of energy-saving effect..3-3 1.3 Concrete amount, period of production and accumulated amount of energy saving effects..................................................................................... 3-8 1.4 Concrete method for checking energy saving effects...................................3-11 2. Greenhouse gas reducing effects....................................................................... 3-12 2.1 Technical basis of production of greenhouse gas reducing effects..............3-12 2.2 Base line serving as basis for the calculation of greenhouse gas reducing effects...........................................................................................3-12 2.3 Concrete amount, period of production and accumulated amount of greenhouse gas reducing effects.............................................................. 3-13 2.4 Concrete method for checking greenhouse gas reducing effects.................3-14 3. Influences on productivity........................................................................ 3-15 Chapter 4 Profitability................................................................................................. 4-1 1. Economic investment pay-back effects................................................................4-1 1.1 Amount of investment.......................................................................... 4-1 1.2 Reduction of cost by investment................................................................... 4-4 1.3 Expenses produced in connection to implementation of the project.............. 4-5 1.4 Economic effects for recovery of investment.................................................4-6 2. Cost-project effects............................................................................................4-10 2.1 Cost-energy saving effect............................................................................4-10