ISLAMABAD: Engro Powergen Qadirpur Limited (EPQL) has urged the government to notify the Gas Depletion Mitigation Option (GDMO) at the earliest for the continued operation of the plant.
Engro Powergen was commissioned in March 2010 and with the PPA term till March 2035, with a capacity of 217.3 MW, the project utilizes fuel in the form of Permeate Gas from the Qadirpur Gas field.
Permeate Gas is produced as a by-product of the processing of raw gas and was previously being flared and wasted since 1995 when the field was developed. The plant was conceived with the idea of utilizing this indigenous resource, which has limited alternate uses, for power production.
The project has generated over 16 billion units and resulted in forex savings of over $ l billion by substituting power generation from imported fuel. Engro Powergen generated electricity by utilizing a fuel which was previously being flared and led to significant revenue generation (over Rs 80 billion) for the fuel suppliers and government through sale of permeate gas.
Instead of 10 billion units of projected generation on permeate gas before switching to alternate fuel, the power company generated 15 billion units so far and can produce another 6 billion units from available permeate gas.
At the time of feasibility study in 2006, it was noted that Qadirpur field will enter depletion phase after 2015 and a framework for finalization of alternate fuel was included in the Implementation Agreement (IA).
However, Qadirpur gas reservoir profile was better than the projections and EPQL entered Gas Insufficiency Phase in September 2018 when Qadirpur gas field production levels depleted to an extent that base load permeate gas supplies were not available, and the shortfall capacity was being made available through secondary fuel, ie, (HSD).
Engro Powergen has since then followed the procedure envisaged under the IA to work with the stakeholders (including PPIB , CPPA-G, SNGPL, NTDC and Nepra, etc) to identify and select an alternate fuel for EPQL power plant which can be used in conjunction with permeate gas.
EPQL submitted the initial Gas Depletion Mitigation Plan (GDMP in April 2019, an updated GDMP in October 2019 after incorporating comments from stakeholders, and again in November 2019.
EPQL wants gas allocation from Kandhkot field
The stakeholders identified RLNG as the most viable option for mitigation of gas depletion. Consequently, final GDMP was submitted by EPQL in September 2020. After extensive and exhaustive consultations, stakeholders finalized RLNG as the Gas Depletion Mitigating Option (GDMO) in March 2021. It was advised that PPIB will seek necessary approvals and notify RLNG as GDMO for EPQL at the earliest.
In a letter to Secretary Power, the company has claimed that implementation of GDMO will enable the plant to utilize indigenous permeate gas to its full potential and potentially produce electricity by utilizing permeate gas which will otherwise be wasted.
Compared to this it is power generated through imported sources of fuel which is not viable in the short- and long-term basis. Utilization of local sources can potentially provide forex savings of $700 million by way of using whatever permeate gas available from the reserves during the remaining term of the PPA.
Although the project’s security package allowed reimbursement of capex for implementation of Designated Mitigation Option (DMO), the company was informed that decision process will be expedited if EPQL agreed to incur capex required for plant to be able to operate on RLNG in the interest of time and resources being wasted due to delays, EPQL agreed to this and in July 2021 incurred capex. Subsequently, the matter was placed before Board Projects Committee of PPIB who then directed NTDC to carry out dispatch modeling for EPQL on RLNG.
After considerable delay, in May 2022, the PPIB Board’s Projects Committee offered a limited term GDMP/GDMO, instead of full term GDMO, to EPQL. A meeting was held on June 4, 2022 with PPIB to discuss the contents of the PPIB letter.
In the interest of progress and helping the decision, EPQL again agreed with the terms and requested PPIB to share its consent as required under IA so that work on implementation of GDMO may be expedited considering GDMO/GDMP has been offered for a timeframe of three years, up to December 31, 2025.
The company maintains that it has been more than three years that it has been working on this decision and which is being delayed for one reason or another whilst power purchaser is incurring cost on utilization of expensive fuels like RFO and HSD, adding that there is also the unintended consequence on the confidence of the market and potential investors in the energy industry regarding whether the government is committed to supporting indigenous fuel projects, and its ability to make timely decisions and fulfill its commitments which it made in its previous agreements.
M/s EPQL has requested the government that GDMO be notified at the earliest and immediate direction towards the continued operations of the EPQL plant. The approval is pending before PPIB board, and the company hoped that with Power Division support the approval process will be expedited for early implementation.
EPQL has identified a source of indigenous fuel, ie, gas from Bader Gas field operated by Petroleum Exploration Limited (PEt). PEL has agreed to supply 8 - 13 mmcfd of gas to EPQL, which will enable power generation from an indigenous fuel and substitute generation from imported fuels, saving $30 million in forex every year. The power company has applied for generation licence and in parallel started implementation to make it available before the end of the year.
Moreover, EPQL has also expressed interest in the allocation of Kandhkot gas as according to information Petroleum Division is planning to reallocate some volume of Kandhkot gas to other consumers to enhance the offtake of Kandhkot gas.
Copyright Business Recorder, 2022