Singapore blackout forces supply rethink : Report

Extensive blackouts caused by the failure at a gas pumping station operated by US-based ConocoPhillips are likely to move Singapore faster down the path of alternative energy sources, including liquefied natural gas (LNG), in the search for greater energy security, Business Times reported.

ConocoPhillips, the largest US oil refiner, operates a critical gas intake valve on Jurong Island that receives natural gas from Indonesia's West Natunas fields. Three power stations here - Tuas Power, PowerSeraya and SembCorp Cogen - are supplied from the fields.

The failure on Tuesday night was the fifth at ConocoPhillips but the second to cause a major blackout. In three other incidents, gencos had successfully switched from gas to other fuel sources and continued operations.

Said Khoo Chin Hean, chief executive at power regulator Energy Market Authority (EMA), yesterday: 'One of the things EMA is studying is the possible use of liquefied natural gas (LNG).'

'We used to be only dependent on oil but the answer to systems security is to diversify supply,' he said.

The failure saw energy prices peak to $4,500 per megawatt hour over the one-and-a-half hours of blackout, which began at 10.30pm. This compares to the average wholesale price of $300 per MWh for the whole day and $90 per MWh by 1am after power was fully restored.

Gas from Indonesia and Malaysia currently powers some 60 per cent of the total electricity generating capacity in Singapore as it's about 8 per cent cheaper than oil in generating the same output of electricity.

With its cost advantage over oil, gas is likely to take an even greater role in the future as gencos switch out of oil-fired plant and into gas, thus potentially increasing the exposure to future outages should ConocoPhillips fail again.

Tuesday's blackout affected more than 300,000 households, or about a third of all homes here.

Affected areas included densely populated housing estates like Clementi, Choa Chu Kang, Crawford, Jalan Eunos, Aljunied, Jurong, Bishan, Bukit Batok, Changi, Mandai, Marina Centre, Serangoon North, Telok Blangah and Hougang.

Khoo said that EMA had no authority to penalise ConocoPhillips because the company had existing contractual agreements with SembCorp's gas division which in turn contracts individually with the gencos and not with the EMA.

'Under the gas purchase and gas sales agreements, there are remedies . . . with regard to shortfalls in the supply of gas whatever the reason is, but there are remedies that are spelt out,' said Francis Gomez of SembCorp's gas division.

ConocoPhillips spokesman Kevin Pewitt declined to say whether the remedies include financial damages when ConocoPhillips fails to ensure an uninterrupted supply of gas, as it has in the last five incidents.

The latest failure at ConocoPhillips happened despite design changes mandated by EMA to increase reliability at the station, following the first failure in August 2002.

ConocoPhillips could not identify the cause of Tuesday's failure but said that an investigation team from Indonesia and Singapore had been sent to investigate.(*)