Energy Transition for Oil, Gas and Coal Sectors
by Marcelle P. Villegas - November 24, 2022
According to the Exec. Director of Philippine Chamber of Coal Miners, Inc., Semirara Mining and Power Corporation has become the template for coal mining in the Philippines due to their best practices in environmental protection and restoration. Is the Philippine oil, gas and coal sectors ready for the energy transition for reduced greenhouse gas emissions? (Photo credits: www.semiraramining.com)
Most industries are dependent on fossil fuels to operate. However, in response to climate change, there is a global trend that encourages countries to join in the energy transition of using green technologies. While in theory, this strategy looks promising and feasible. However, in some countries, like in the Philippines, this is a major challenge.
This was the scope of the roundtable discussion (RTD) last 4th of May 2022 during PH-EITI Conference with the Department of Finance and Department of Energy. The theme of the event was "Preparing the Extractives for Energy Transition".
To tackle the issues behind energy transition, PH-EITI and the Department of Energy- Energy Policy and Planning Bureau (DOE-EPPB) organised this RTD to provide energy stakeholders with information on existing policies and future government programs that will lead to the shift to a sustainable and low carbon economy. “Using the PH-EITI platform, the RTD intended to elicit stakeholder perspectives on energy transition and thresh out issues on the implications and effects of the transition on various sectors.”
Moreover, the of goal of the RTD this year is to inform the participants and involved industries about the Philippine's progress in implementing transition plans, policies and commitments, as well as the rollout of government programs to sectors that will be affected by the shift.
In the RTD, the different presenters and speakers discussed how the various sectors intend to address the issue of climate change in order to prevent future environmental problems.
On our previous article about this event, we reported the views of the mining industry about the energy transition, where most mining companies are ahead in taking proactive steps to achieve environmentally friendly operations and proper waste management.
This time, we shall highlight the reaction of the oil, gas and coal industries about the global transition.
Dir. Dona Minimo, Director, International Finance Group, Department of Finance, reported that the Philippines greenhouse gas emissions are currently a minor contributor to global warming at approximately 0.33% of the world share of greenhouse gases (GHD) emissions. “However, due to its economic development and rapidly growing population, the Philippines is projected to have sharp increases in CO2 emissions over the incoming decades. GDP growth is expected to strengthen seven to 8% in the medium term.”
Dir. Michael O. Sinocruz, OIC-Director, Energy Policy and Planning Bureau, Department of Energy, said that the Philippine Energy Plan 2020-2040 is connected with the goals of Ambisyon Natin 2040 which represents the collective long-term vision and aspirations of the Philippines in the coming years. In support of these aspirations, he shared that the DOE formulated the 9-point energy agenda, among these are providing access to electricity for all Filipinos, promoting energy efficiency, and establishing a pro-consumer framework.
According to the report in the RTD, “The mining, oil, gas, and coal industries are among industries directly affected by the global shift to net-zero emissions. As the energy transition progresses, fossil fuel producing or dependent communities and countries will face challenges sustaining revenues and the national economy in general. Communities that rely on revenues and jobs generated by fossil fuel production are among the most vulnerable to the transition.”
Therefore, in order to cope up with the difficulties that the transition will bring, producing communities and countries will have to find alternative revenue sources to replace the lost income.
“On the other hand, increased deployment of modern renewable energy and energy-efficient technologies also mean an increased demand for rare earth elements and other mined inputs. This will require a substantial ramp-up of existing production capacity. This means transition to a sustainable low carbon economy will definitely reshape the extractive industries.”
Director Arnulfo A. Robles, Executive Director of the Philippine Chamber of Coal Mines, Inc. (PHILCOAL) reported the perspective and achievements of the coal sector on the energy transition. He mentioned that Semirara has become the template for coal mining in the Philippines. Regarding environmental restoration and biodiversity, Semirara Mining and Power Corporation (SMPC) has conducted reforestation and biodiversity conservation goals, and reforestation and wildlife species propagation.
The company is currently studying and developing a concrete carbon transition roadmap. Part of SMPC’s strategy is to continuously monitor new and emerging climate-change legislation measures. They also assess its impact on business sustainability and future growth. SMPC bagged the Special Submission Category in the 2021 ASEAN Energy Awards.
For oil and gas sector’s perspective on energy transition Atty. Jose Ma. Emmanuel A. Caral, Secretary of the Petroleum Association of the Philippines. He disclosed that while companies remained focused on exploring, developing and producing the conventional oil and gas business, other companies have already started to diversify, and have made explicit commitments to achieve net zero emissions by 2050.
Atty Caral noted that there is a relatively slight growth in energy mix for power generation particularly in the wind and solar energy. He mentioned that oil and gas companies should choose to support the UN-Paris Agreement, it can significantly reduce emissions and energy consumption; lower carbon energy, reduce investment in traditional oil and gas. Unfortunately, he said that the Philippines continues to be heavily dependent on conventional fuels for transportation (by land, air or sea). He concluded that energy security is the replacement of affordable energy source to consumers.
PHEITI Website at https://pheiti.dof.gov.ph/resources/
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Philippine Resources - March 17, 2022
Semirara Mining and Power Corp earns P16.2b net income in 2021, highest in its 41-year history
Photo: Integrated energy company Semirara Mining and Power Corporation (SMPC) ended 2021 with a net income of P16.2 billion, the highest in its 41-year history. The 393-percent leap from P3.3 billion the previous year was mainly attributable to an 8- percent rise in coal production, 16-percent jump in coal shipments and 71-percent surge in average coal selling prices. “Our results reflect the hard work of our people. They rose to the challenges of the pandemic and delivered exceptional value to our stakeholders,” said SMPC president and COO Maria Cristina C. Gotianun. Contributions from the coal segment grew by 535 percent from P1.8 billion to P11.4 billion while both power subsidiaries delivered improved performances. Sem-Calaca Power Corporation contributed P3.3 billion, a 154-percent upturn from P1.3 billion the previous year. Meanwhile, Southwest Luzon Power Generation Company recorded a 1,563-percent rise in contributions from P87 million to P1.4 billion. For the fourth quarter alone, SMPC saw its net income expand by nearly twenty times from P297 million to P5.9 billion, its highest profit level for any given quarter. Average selling prices from October to December rallied by 229 percent from P1,354 to P4,452 as global supply disruptions and accelerated demand from China, India and Europe pushed index prices to record levels. Elevated coal prices offset the impact of lower shipments, which was nearly halved (46%) from 4.6 million metric tons (MMT) to 2.5 MMT owing to weather-induced coal production drops in the third quarter. Article courtesy of the Philippine Stock Exchange
Philippine Resources - May 04, 2022
SMPC completes mine rehab of largest open pit in PH
Integrated energy company Semirara Mining and Power Corporation (SMPC) has completed its backfilling operations in Panian, once the largest open-pit mine in the Philippines. SMPC spent 11.5 million man-hours to fill the pit with over 452 million bank cubic meters (bcm) of earth material, which is enough to fill 217,000 Olympic-size swimming pools. “We are mindful of our twin role as stewards and government contractor. What we accomplished in Panian is proof of that,” said SMPC president and COO Maria Cristina C. Gotianun. Located in Semirara Island, Panian mine spans 400 hectares with topographic elevations that ranged from 300 meters below sea level (mbsl) to 30 meters above sea level (masl) during its mine life. 300 meters is roughly the height of a 90-story building. SMPC fully covered the pit in six years, way ahead of the original 10-year mine rehabilitation plan. Mine rehabilitation refers to the repair of land that was disturbed by mining activities. The company is now developing a science-based plan to reforest and restore the biodiversity in the area. Panian had a mine life of 16 years and generated P12.7 billion in royalties for the government and SMPC host communities. Of the total amount, P7.6 billion went to the national government while the Municipality of Caluya and Brgy. Semirara received P2.3 billion and P1.8 billion, respectively. P1 billion went to the Province of Antique. In September 2021, SMPC won in the ASEAN Energy Awards (Special Submission category) for its accelerated rehabilitation of South Panian pit, which is considered as the fastest of its kind and scale in the Philippines. SMPC completely filled North Panian with earth material last January, four months ahead of its committed date to the Department of Energy.
Philippine Resources - January 07, 2022
Ensure stable power supply amid Indonesia coal export ban: solon
Photo credit: Dimas Ardian/Bloomberg A lawmaker on Thursday called on the government to ensure that the country's power supply derived from the consumption of coal would not be adversely affected following Indonesia's decision to ban the export of coal to secure its local supply. In a statement, Senator Sherwin Gatchalian, chair of the Senate Energy Committee, called on the Department of Energy (DOE) to prepare for contingency measures on the country’s supply of coal for power plants which, if insufficient, could lead to widespread blackouts. “Part of the contingency measures should be to ensure the adherence of coal-fired power plants to the 30-day minimum inventory requirement,” Gatchalian said. While the country is slowly attempting to promote alternative and sustainable sources of energy, the Philippines still derived 57.17 percent of power generation from coal as of 2020. Aside from Indonesia's ban on coal exports, the global demand for coal has surged following higher consumption in countries that experience cold winter months. Among the countries severely affected by Indonesia's move are Japan, China, India, and South Korea, which imported 73 percent of Indonesian coal last year. “The government should also consider looking for other suppliers, especially in the coming weeks, given the possible decline in stockpiles coming from Indonesia, which could result in soaring coal prices,” Gatchalian added. In October 2021, the Philippines acquired 96.88 percent of its imported coal supply from Indonesia, the world's top exporter of thermal coal. “This could be a wake-up call as well. The government should probably start rethinking and be more committed to reducing the share of coal by further diversifying our generation mix,” Gatchalian said. By Benjamin Pulta Article courtesy of the Philippine News Agency
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Philippine Resources - May 23, 2023
MEMORANDUM OF AGREEMENT SIGNED WITH TVI RESOURCE DEVELOPMENT (PHILS.) INC.
Photo credit: TVI Resource Development The Board of RTG Mining Inc. is pleased to announce that a comprehensive settlement of all outstanding issues with the Villar Family controlled Sage Capital and TVI Resource Development (Phils.) Inc. (“TVIRD”) has been reached and a binding Memorandum of Agreement signed. On execution of the final documents, expected in the next month, all litigation that RTG had launched will be withdrawn as part of an agreed restructuring of the Mabilo Project. The Villar Family is one of the most prominent families in the Philippines and RTG is pleased to partner with them in the development of the Mabilo Project, which is a significant mining project for the country. The key terms of the agreement for RTG include the following: RTG (through SRM Gold Limited) will retain a 40% interest in Mt. Labo Exploration and Development Corporation (“Mt. Labo”) with the project also developed by Mt. Labo, in line with Philippine regulatory requirements, with Sage Capital (which is owned by TVIRD) holding the remaining 60%; RTG will have a 2% net smelter royalty (“NSR”); RTG’s debt together with interest, currently in the order of US$27M (subject to audit) will be repaid out of the proceeds of Stage 1 of the project, the Direct Shipping Operation subject to customary requirements to address liquidity and ongoing operations of Mt. Labo; Funding arrangements for the project as between the major shareholders of Mt. Labo have been successfully renegotiated, (relieving RTG of a sole funding obligation) and replaced with a pro-rata funding obligation, together with a disproportionate funding obligation of Sage Capital, as set out below; With debt repayments in full and the NSR, RTG will be entitled to approximately 57% of the proceeds of Stage 1, the Direct Shipping Operation; RTG will be entitled to 40% of the operating cashflow of the project, together with the 2% NSR and repayment of its debt, which is currently in the order of US$27M; The first US$5M of expenditure for Mt. Labo (or 12 months of expenditure, whichever occurs the earlier), will be funded pro-rata between the two shareholders (ie RTG will provide 40%) and thereafter, Sage Capital/TVIRD will sole fund the next US$5M of expenditure, with all additional funding thereafter to be provided on a pro-rata basis; All parties are required to act in the best interests of the project and not compete; A shareholders’ agreement will be finalised which will provide typical minority interest protection clauses including reserve matters for voting including annual budgets and appointments of key personnel; Any disputes will be resolved by the Singapore International Arbitration Centre; and On completion of final signed documents, all litigation matters will be withdrawn and settled in full. With the restructuring of the Mabilo Project now agreed, over the balance of this year, the remaining permitting matters and financing plans will be finalised, a review of the 2016 Feasibility Study will be completed, together with finalising the acquisition of surface rights, following which, a commitment to development will be formalised by the Board of Mt. Labo. RTG is pleased with the outcome of the discussions and the co-operative and constructive approach adopted by the Villar Family representatives. RTG believes they can be a strong and positive partner to work with to take the Mabilo Project forward, with both a near term development and future exploration activities to expand the project, which will start to unlock the value of the project for all stakeholders, not only the local communities but for the country as a whole.
Philippine Resources - May 22, 2023
Mining Operational Excellence Through Digital Transformation
Part 1: Mining Operation Challenges and Mine Operations Management Domains 1 & 2. By Mae Ann Cabasag, EM Mining companies encounter numerous challenges throughout their operations. However, initiatives to mitigate these challenges and improve efficiency are often limited. Most of these limitations emanated from a common factor: the challenge of “poor visibility” in mining operations. A viable solution is to adopt digital transformation in mining operations by incorporating available real-time data into an integrated system— capable of ensuring automatic updates and reliable source of information. Through this, mining companies not only understand simulations and plans developed but also anticipate potential outcomes. Various mining industry analysts have found that using non-digital methods in the mining operations can lead to a 27% reduction in production time and 25% increase in data inaccuracy. For a mining company to remain competitive in an industry susceptible to operation challenges, i.e. production processes, workers’ and equipment performances, ore quality and quantity, compliance to regulations, and inter-departmental collaboration, it needs to embrace digital transformation. Dassault Systèmes Mine Operations Management provides transformative digital solution for mining companies to achieve excellence in their operations. Mine Operations Management (MOM) equips mining companies with an integrated system for their mining operations, enabling them to achieve efficient plan and schedule. This system integrates entire operation data into a single repository source of information, known as the “single source of truth”, ensuring complete transparency of the company’s processes from mine to port. By leveraging MOM, we can address the following global mining industry challenges: Maintaining competitiveness amidst market volatility. Eliminating waste materials, poor communication, and error duplication. Improving site productivity and efficiency. Utilizing assets and sharing best practices across the value chain. Ensuring an utmost level of safety. Reducing environmental impacts and achieving sustainable operations. The transformative digital solution, Mine Operations Management, is composed of eight work packages, split across four domains, namely: Data Management, Material Reconciliation, Operational Control, and Assets Performance. These domains help generate valuable insights from integrated operational data for rapid and informed strategic decision-making. The Data Management consists of Master Data Model and Integration Framework packages essential for material tracking, stockpile management, task and workforce management, machine performance, and asset maintenance. It enables users to manage master data objects such as Site, Material, Location, Equipment, and Operator through manual data entry or third-party source systems. With this, mining companies can ensure efficient and integrated management of critical data required for seamless operations. Material Reconciliation, on the other hand, consists of Material Tracking and Stockpile Management packages. Material Tracking enables us to track material movements across different stages, i.e. from the least accurate grade estimated in geological model to the most precise information on shipped material quantity and quality, to account for any inaccuracies. While in the Stockpile Management, users not only can calculate daily stockpile balance, add Survey or Sampling data, analyze inventory levels and trends, create graphical representation of the stockpile balances and movements, calibrate stockpile using volumetric survey and sampling, enables comparison of different models, track movement genealogy and review stockpile slices for stockpiles with LIFO and FIFO calculation type but can create a different type of analysis such as actual vs plan vs model. In the upcoming article, we will explore the two remaining domains of Mine Operations Management to where assigning operational tasks, tracking compliance to plan, monitoring equipment down to workers’ performance are feasible in the mining operations. To know more about MOM, mining innovations and solutions, contact Dassault Systèmes Value Solutions Partner: Paramina Earth Technologies Inc. through firstname.lastname@example.org References: Make it happen for mine execution excellence: Dassault Systèmes®. MEGATrends. (n.d.). https://events.3ds.com/make-it-happen-for-mine-execution-excellence Dassault Systèmes. (2021, August 12). Digging deeper: The virtual solution for Mining Operational Excellence. Dassault Systèmes. https://discover.3ds.com/virtual-mining-operational excellence dassault3ds. (2022, June 16). The mining industry needs to adapt, but how? Dassault Systèmes blog. https://blog.3ds.com/brands/delmia/the-mining-industry-needs-to-adapt-but-how/
Philippine Resources - May 22, 2023
Customer’s First Choice: Sandvik Philippines Delivers 11th and 12th Pantera DP1500i Drills to Filminera Resources Corporation
Sandvik Philippines has successfully commissioned and delivered to loyal customer Filminera Resources Corporation (“Filminera”) their 11th and 12th Pantera DP1500i Top-hammer Surface Drills last 25 January 2023 at the Masbate Gold Project (MGP) located in Masbate Island, Philippines. Photo shows Sandvik Technician Larry Lugnas (second from left) and Service Operations Manager Jorge Cabello (third from left) handing over the drills to MGP representatives. Located 360 km southeast of Manila, the Masbate Mine is operated by Filminera, the Philippine subsidiary of TSX- and NYSE-listed B2Gold with headquarters in Vancouver. In 2022, the mine produced a record-setting 212,728 oz of gold out of 7.93M tonnes of ore milled at an average grade of 1.11 g/t. B2Gold also operates the Fekola Mine in Mali and the Otjikoto Mine in Namibia. Their projects under development include the Anaconda Area in Mali and the Gramalote JV Project in Colombia. The Masbate Mine started operating in 2008 initially using 4 x Atlas Copco ECM660 Drills owned and operated by the erstwhile mining contractor, Leighton. When the opportunity for re-fleeting came about in 2012, Sandvik succeeded in winning the tender which came packaged with a full maintenance contract for 24,000 service meter hours of five years. Ironically, the said maintenance contract almost led to the cancellation of the order for the first 4 x DP1500i due to a dispute with the rates. Eventually, both Leighton and Sandvik were able to arrive at a mutually acceptable arrangement, and Sandvik ran the service contract for five years without incurring penalties in the availability guarantees. The contract was so profitable, Sandvik even had to share some of the residual profit at the end with Filminera under the pain-and-gain proviso of the contract. The next re-fleeting opportunity came in 2017, with the Masbate Mine. This time, there was no service contract attached to the equipment and Leighton was no longer the mining contractor; the mine has shifted to owner-miner operation. Sandvik managed to secure the repeat order for another batch of 4x DP1500i, banking on the proven performance and reliability of the first four. That brings the total to 8 units. Drill numbers 9 and 10 were ordered in July 2020 and delivered in 2021. Numbers 11 and 12 in the photo above were ordered in January 2022 and are now handed over to the customer. Filminera ordered two more DP1500i’s in November 2022; these machines are now awaiting completion in Tampere, for delivery later this year. That should bring the total to 14 x DP1500i units spread over 11 years for our most loyal Pantera DP1500i customer in the Philippines – Filminera Resources Corporation!
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