Revised First Interim Report

Detailed Assessment on ESPs (Wind for Power)

Detailed Assessment of

Local Engineering Firms

A. Philippine National Oil Company –

Energy Development Corporation

B. Goodyear Steel Pipe Corporation

A. PHILIPPINE NATIONAL OIL COMPANY – ENERGY DEVELOPMENT CORPORATION

I. Background on PNOC-EDC

PNOC–Energy Development Corporation is a wholly owned subsidiary of Philippine National Oil Company (PNOC) and is primarily engaged in the business of developing and operating geothermal energy projects and geothermal power projects in the Philippines. EDC currently operates geothermal energy projects on the Philippine islands of Leyte, Luzon, Negros and Mindanao with a total installed capacity of 1,148 MW. PNOC–EDC is the sole active developer of geothermal energy and geothermal power projects in the country and at present accounts for approximately 60% of the total installed geothermal energy capacity in the Philippines.

PNOC-EDC is also developing the Northern Luzon Wind Power Project which consists of building 40 MW capacity wind farm facilities and laying down 42-kilometer transmission lines to link them up with the main transmission lines in northern LuzonIsland. A Company Profile is attached as Annex C-1.

II. Detailed Business Process Map for PNOC-EDC

The following figure presents the activities of PNOC-EDC from Marketing up to Operation & Maintenance.

CBRED Project: RE Engineering Service Industry Development (ESID Subcontract)

Subcontractor: International Resources Group – Philippines, Inc.

Revised First Interim Report

Detailed Assessment on ESPs (Wind for Power)

Figure 1. General Business Process Map for PNOC-EDC

CBRED Project: RE Engineering Service Industry Development (ESID Subcontract)

Subcontractor: International Resources Group – Philippines, Inc.

Revised First Interim Report

Detailed Assessment on ESPs (Wind for Power)

III.Assessment of Weaknesses and Recommended Interventions

The detailed needs assessment conducted on PNOC-EDC, yielded several areas of weaknesses/gaps that may require enhancements/improvements. A survey sheet (Annex C-1) was also used to identify these weaknesses. The following matrix (Table 1) presents these gaps/weaknesses, and the recommended intervention.

TABLE 1. DETAILED PROFILE OF ENGINEERING SERVICE PROVIDER – PNOC EDC

Activity / Elements / Specific Area of Strengths / Specific Area of Weakness / Recommendation
1. Marketing
a. People and skills / Has own Business Development Department that handles marketing of services
b. Hardware / N/A / N/A
c. Software / N/A / N/A
d. Others / Has been in the renewable energy business (geothermal) for 30 years; substantial contacts within the industry, both local and abroad / Limited local market due to limited wind farm development in the country / DoE to aggressively pursue its wind development program to further encourage the private sector to invest in and develop wind farms in the country
2. Pre-Feasibility Study
a. People and skills / Highly-trained project engineers with 5 years of experience in site assessment / Limited training in GIS-based wind farm area delineation / Provide training in GIS-based wind farm area delineation
b. Hardware / Has sufficient level of survey equipment such as GPS, camera, clinometer and compass. / Needs rangefinder to estimate the location of inaccessible facilities such as transmission towers. /

Provide rangefinder

DoE to provide access to coordinates of relevant facilities like transmission towers, communication towers, radar stations, etc. This can be facilitated by inter-agency memoranda and the data kept in a DoE database.

CBRED Project: RE Engineering Service Industry Development (ESID Subcontract)

Subcontractor: International Resources Group – Philippines, Inc.

Revised First Interim Report

Detailed Assessment on ESPs (Wind for Power)

c. Software / Uses AutoCAD in digitizing paper maps and locating relevant facilities
d. Others / Difficulty in identifying land owners and/or classification /

DoE assistance in interfacing with LGU’s and/or DENR

DoE to identify land classification for areas in Wind Contracting Round/s

3. Feasibility Study
a. People and skills / Inter-disciplinary team with sufficient training in wind measurement campaigns, wind resource assessment, micro-siting, financial analysis and engineering design / Needs training in long-term wind prediction methods such as MCP (measure-correlate-predict) to quantify risks associated with long-term energy production of the project / CBRED or other capacity-building programs to organize a training program for long-term wind prediction using experts from institutions such as Risoe, DEWI, Garrad-Hassan and ECN.
b. Hardware / Owns various sizes and models of towers, sensors (anemometers, wind vanes, etc.) and loggers /

Pays significant amount of money for import duties for met. mast systems

No local calibration facility for anemometers

DoE to arrange with DoF exemption from duties of imported met. mast systems and/or components

DoE and DOST to set-up, maintain and operate, perhaps in cooperation with a major university, a wind tunnel for the calibration of anemometers

c. Software / Uses WAsP, WindPro, AutoCAD, STAAD, AutoCivil, Surfer and other engineering design software / Limited program for MCP / CBRED or other capacity-building programs to provide software for performing MCP analysis
d. Others / Needs reliable long-term wind data for MCP correlation / DoE to set up, operate and maintain permanent long-term wind measurement systems (met. masts) for use in validating wind resource. This may be done in cooperation with PAG-ASA or the LGU’s.
Data accumulated should be maintained in a DoE database for access by relevant groups.
4. Bidding
a. People and skills / Inter-disciplinary team with substantial experience in bid documents and technical specifications preparation, tendering, and bid evaluation using WB, JBIC and FIDIC procurement guidelines
b. Hardware / N/A
c. Software / N/A
d. Others
5. Construction
a. People and skills / Extensive experience in project management, project control and QA/QC mostly from its geothermal projects
Extensive knowledge (by application) of international standards, e.g. ASME, ANSI, ACI, AISC, ISO, NEMA, IEEE, etc. / Limited experience in actual construction of wind farms / CBRED or other capacity-building programs to provide training on wind farm construction through consultants like COWI, DECON, Lahmeyer, Elecnor, etc.
b. Hardware / Uses standard PC’s and laptop computers
c. Software / Uses MS Project for project tracking
d. Others
6.Testing & Commissioning
a. People and skills / Trained personnel in power plant, switchyard and steam field testing and commissioning / Limited experience in actual wind farm testing and commissioning
No training in WTG power curve testing (IEC 61400-12) /

CBRED or other capacity-building program to provide training on wind farm testing and commissioning

CBRED or other capacity-building program to provide training in WTG power curve testing (procedures)

CBRED and/or DoE to conduct a seminar on the general provisions of IEC standards (IEC 61400 series) relevant to wind turbines

b. Hardware / Relevant hardware not yet identified / Hardware identification may be part of training mentioned above
c. Software / Relevant software not yet identified / Software identification may be part of training mentioned above
d. Others
7. Operation & Maintenance
a. People and skills / No experience in operating and maintaining a wind farm / CBRED to provide internship programs in operational wind farms abroad to transfer O&M knowledge and skills
b. Hardware / None / Typically part of SCADA (CMCS) of wind farm
c. Software / None / Typically part of SCADA (CMCS) of wind farm
d. Others

CBRED Project: RE Engineering Service Industry Development (ESID Subcontract)

Subcontractor: International Resources Group – Philippines, Inc.

Revised First Interim Report

Detailed Assessment on ESPs (Wind for Power)

B. Goodyear Steel Pipe Corporation (GSPC)

I. Background on GSPC

Goodyear Steel Pipe Corporation is currently the largest steel and plastic pipe manufacturer in the country.GSPC produces steel pipes of varying sizes for the water, construction, and telecommunications industries. It was established in 1962, with production facilities in Quezon City and China. A Company Profile is attached as Annex C-2.

II. Detailed Business Process Map for GSPC

The figure below presents the activities of GSPC from Raw Material Reception to Installation.

III. Assessment of Weaknesses and Recommended Interventions

The detailed needs assessment conducted on GSPC, yielded several areas of weaknesses/gaps that may require enhancements/improvements. Table 2 presents these gaps/weaknesses, and the recommended intervention.

CBRED Project: RE Engineering Service Industry Development (ESID Subcontract)

Subcontractor: International Resources Group – Philippines, Inc.

Revised First Interim Report

Detailed Assessment on ESPs (Wind for Power)

Figure 2. General Business Process Map for GSPC

CBRED Project: RE Engineering Service Industry Development (ESID Subcontract)

Subcontractor: International Resources Group – Philippines, Inc.

Revised First Interim Report

Detailed Assessment on ESPs (Wind for Power)

CBRED Project: RE Engineering Service Industry Development (ESID Subcontract)

Subcontractor: International Resources Group – Philippines, Inc.

Revised First Interim Report

Detailed Assessment on ESPs (Wind for Power)

CBRED Project: RE Engineering Service Industry Development (ESID Subcontract)

Subcontractor: International Resources Group – Philippines, Inc.

Revised First Interim Report

Detailed Assessment on ESPs (Wind for Power)

CBRED Project: RE Engineering Service Industry Development (ESID Subcontract)

Subcontractor: International Resources Group – Philippines, Inc.

Revised First Interim Report

Detailed Assessment on ESPs (Wind for Power)

TABLE 2. DETAILED PROFILE OF POTENTIAL WTG TOWER MANUFACTURER

Goodyear Steel Pipe Corporation

Activity / Elements / Specific Area of Strengths / Specific Area of Weakness / Recommendation
1. Marketing
a. People and skills / Has secured substantial supply contracts for major companies in the country like MWSS, DM Consunji, DPWH, etc.
Went into export production in 1974, initially supplying in Indonesia and Hongkong
b. Hardware / N/A
c. Software / N/A
d. Others / Not enough volume required locally to warrant additional investment for WTG tower manufacturing /

DoE to aggressively pursue its wind power development program and continue to encourage private sector investment in developing wind farms locally.

DoE and CBRED (or other capacity-building programs) should closely coordinate with other ASEAN countries/ territories and pursue a regional wind industry so that a local WTG tower manufacturer will have sufficient market and contribute to the country’s economic growth through exports.

2. Fabrication
a. Tools and Equipment / Has plasma cutters, steel rollers and painting facilities / May need to retrofit/ upgrade existing machines or purchase new ones to accommodate WTG tower projects (depending on scope and volume) / DoE to assist in acquiring new equipment duty-free. In case the market is really not substantial to justify the cost of new purchase, DoE can assist in an equipment consignment arrangement (project-based) where such equipment is re-exported after completion of project.
b. Materials / All materials undergo strict QC procedures and tests / WTG towers may be eligible for tax exemption when imported (BOI incentives), but steel sheets imported for purposed of fabricating the towers locally may be subjected to taxes / DoE to coordinate with DoF to ensure that the materials are not taxed if used for WTG tower fabrication
c. People and Skills / Employs highly skilled local machinists, welders and painters. / No specific experience in fabrication of tapered cylindrical towers / CBRED or other capacity-building programs should sponsor an educational tour of WTG tower manufacturing facilities abroad and include an orientation/seminar on design and manufacturing standards and practices
d. Facilities / Steel plant located in Baesa, Quezon City is capable of handling WTG tower jobs if necessary / No assessment done yet on the impact to existing production of additional WTG tower fabrication jobs / CBRED or other capacity-building programs should, after the conduct of an educational tour and orientation/seminar, conduct a detailed assessment on the existing capacities of the plant vis-à-vis the potential market demand for WTG towers

Systems, policies and procedures

/ ISO 9002 Certified
Adopts ASTM and British Standard (BS) / CBRED or other capacity-building programs to organize (locally) an orientation for potential WTG tower manufacturers on the applicable codes and standards used in WTG tower fabrication
f. Other resources / Has another operating steel plant in China
g. After-sales service / Facilities and human resources are local, hence reaction time is faster compared to foreign-based companies
3. Delivery to Site
a. People and skills / Can provide local support from plant to site / Transportation of the towers to the site may be best left to local logistics companies with sufficient experience, equipment and knowledge of local laws on shipment, e.g. MOF in Subic

CBRED Project: RE Engineering Service Industry Development (ESID Subcontract)

Subcontractor: International Resources Group – Philippines, Inc.

Revised First Interim Report

Detailed Assessment on ESPs (Wind for Power)

company profile of

philippine national oil company – energy development corporation (PNOC-EDC)

THE COMPANY

PNOC–Energy Development Corporation is primarily engaged in the business of developing and operating geothermal energy projects and geothermal power projects in the Philippines. EDC currently operates geothermal energy projects on the Philippine islands of Leyte, Luzon, Negros and Mindanao with a total installed capacity of 1,148 MW. PNOC–EDC is the sole active developer of geothermal energy and geothermal power projects in the country and at present accounts for approximately 60% of the total installed geothermal energy capacity in the Philippines.

PNOC–EDC is a wholly owned subsidiary of Philippine National Oil Company (PNOC). PNOC, which was established in 1973, is a holding company which, through its subsidiaries, engages in the development and production of various forms of energy resources in the Philippines. EDC is one of the two principal subsidiaries of PNOC. PNOC and EDC are both government-owned and controlled corporations (GOCCs) and as such, the Government mandates the strategy and key policies of PNOC and PNOC–EDC. However, in contrast to many of the other GOCCs which receive budgetary assistance from the Government, PNOC–EDC operates in many respects like an independent power producer.

World's 2nd Largest Geothermal Energy Producer

The Philippines is currently the second largest producer of geothermal energy in the world after the United States. PNOC–EDC expects to benefit from existing and proposed Government policies and legislation encouraging the development of indigenous, economic and environmentally friendly energy resources, such as geothermal energy, to meet the country’s increasing demand for power and to reduce dependence on imported energy sources. Geothermal energy is a sustainable energy source and releases significantly lower levels of harmful emissions than energy generated by fossil fuels. PNOC–EDC’s geothermal plants also have lower operating costs per megawatt of installed capacity than most fossil fuel power plants in the Philippines. EDC believes that this advantage will increase as fuel oil subsidies are eliminated in 1996 as part of the deregulation of the Philippine oil industry. National Power Corporation (NPC), the state-owned power generation and transmission company, estimates that from 1996 through 2000 energy sales in the Philippines increased at a compound annual rate of 12.8% and that installed capacity of power plants in the Philippines increased by approximately 4,4000 MW (a 7.6% compound annual rate).

Since its first project began operation in 1983, EDC has developed sophisticated techniques and technology to locate, extract and deliver geothermal energy. The company has extensively explored and surveyed undeveloped geothermal sites and has entered into contracts with the Government for the exploration and development of possible future geothermal sites throughout the Philippines. In addition to the sites already being developed by the company, the Philippine Department of Energy (DOE) estimates that 35 sites with up to 1,600 MW of potential capacity remain available for development in the Philippines. The company relies primarily on its own resources for exploration and development, and it operates the largest and most experienced drilling contractor in the country, which enables EDC to develop and maintain geothermal wells at significantly less cost than if it used international contractors. The company also has a research and development center that conducts research regarding geothermal energy, energy conservation and alternative energy systems. The International Bank for Reconstruction and Development (the World Bank) and the Asian Development Bank have certified EDC as having special expertise in geothermal steam field exploration and development.

VISION
Life, energy, and progress
through teamwork
and social responsibility.
CREDO
"We are a company born out of crisis, a breed of new citizens molded out of discipline through the rightness of our mission; committed to give our best as a vehicle for progress while caring for our environment and serving the interest of both the company and the community where we live and operate; together moving forward for the betterment of the Filipino."
MISSION
To accelerate the exploration, delineation, development, and exploitation of economically viable indigenous resources to reduce dependence on imported fuels and contribute to the country’s sustainable economic growth

BRIEF HISTORY

The Philippine Government first became interested in the nation’s vast geothermal reserves during the mid-1960s but the economics of this new business venture in the absence of government incentives barred the development of the country’s indigenous and sustainable energy source. After 1973, however, the government quickly chose Union Oil of California to pioneer the Tiwi and Makiling-Banahaw fields, which now contribute 660 MW to the Luzon grid.