Regional LNG: CLP Holdings mulls building Hong Kong's first LNG terminal: Report
Monday, November 1 2004 - 03:30 AM WIB
"We've been looking at a number of options and one preferred option is building a LNG terminal," Richard Lancaster, commercial director of CLP Power Hong Kong Ltd., told Dow Jones Newswires in an interview on Sunday.
CLP Power Hong Kong Ltd. is the listed company's Hong Kong operation arm which generated more than 30,000 gigawatt-hour electricity in 2003.
Hong Kong doesn't have any fuel resources. The power producers in the city have to import all of its fuel needed form overseas.
Despite coal having been the major source of energy in Hong Kong, CLP has implemented a balanced fuel mix strategy of having coal, nuclear and natural gas each contribute one-third of its total fuel needs since 1996.
But having introduced piped natural gas from Yacheng field at southern China as its natural gas source for just eight years, CLP found out two years ago that the reserve of its only gas source has been lower than the originally forecast, and is highly unlikely that it can meet the contracted twenty-year supply.
"This has brought forward the need to develop alternative sources of natural gas," said Lancaster, adding that the company has already started to reduce its offtake of gas from Yacheng field last year.
"We're still at a very early stage but we see a certain advantage of building a LNG terminal," he said.
Among all the options on the table, for example buying LNG from China's to-be- operated terminals, Lancaster pointed out three advantages of building its own LNG terminal in Hong Kong.
It is a cost effective method of providing LNG to its users; it provides control over Hong Kong's electricity and gas supply; and it ensures facilities are available in the city to support long term increased natural gas demand, said the executive.
He said two places have been located as possible sites for this unprecedented project - an area next to its Black Point Power Station, which has planned capacity of 2500 megawatts, or South Circle Island.
"The closer the terminal to the generating unit, the higher cost effectiveness it is," he added.
Lancaster said construction of a LNG terminal typically takes seven years and CLP has started preliminary discussions with related government departments.
But he stressed that details of CLP's LNG project, like the expected investment amount or the planned capacity, is subject to further study and there is no timetable for that.
"This was not a project of part of our (2005-2008) financial plan," he said.
"In the long term, LNG is a very viable and sensible gas energy," he said, adding international LNG industry has outstanding safety, reliability and environmental protection record.
In recent years, the city's two power producers, especially CLP, which is Hong Kong's largest air polluter, are under pressure to use more cleaner energy like LNG to replace coal in order to improve Hong Kong's air quality.
"To improve air quality, there's a lot more have to be done in Hong Kong, and a lot more have do be done outside Hong Kong as well," Lancaster said.
He pointed to an independent consultant's survey showing 87 percent emission in the Guangdong region actually originated from China, while CLP only accounted for 5 percent of the region's total emission.
"Improvement in regional air quality requires significant reduction in China's emission as well as continued improvement in Hong Kong," he said, adding that from 1990 to 2003, CLP's particulate emission has dropped 80 percent, nitrogen oxide down 75 percent, sulphur dioxide 50 percent less and carbon dioxide fell 40 percent.
Hongkong Electric Holdings Ltd., CLP's rival, will start to use natural gas, sourcing from China's first LNG terminal, Shenzhen's LNG terminal, for its generator in 2006.
CLP Holdings is a Hong Kong-based power company which has businesses in Hong Kong, China, Australia, India, Thailand and Taiwan. Its flagship CLP Power Hong Kong is an all-in-one electricity provider that supplies power to Hong Kong's 75 percent users. (*)