MANILA, Philippines – A group of Australian, Icelandic and Filipino investors have committed to invest at least $450 million to develop geothermal power plants of up to 40 megawatts each in Luzon, Visayas and Mindanao, which could make the Philippines the biggest producer of geothermal energy in the world.

One group called Guidance Management Corp. (GMC) will initially spend $8 million to conduct geological surveys before drilling exploratory wells at the Amacan geothermal prospect in Compostela Valley province in Southern Mindanao, GMC Chairman Joaquin Rodriguez told reporters Thursday.

“We will spend roughly around $300 million to develop the initial 40-megawatt capacity of the area, but we’re hoping that it could be more than 40 megawatts,” he added.

Meanwhile, another group, Biliran Geothermal, Inc. (BGI) expects to spend an initial $1 million for surface exploration, $15 million for drilling and $150-$450 million for a geothermal plant in Biliran province in Eastern Visayas.

A third company, listed Basic Energy Corp., will spend an initial $3.15 million for the exploration of a geothermal site in Mabini, Batangas in Luzon. It was not clear how much the company will be spending to build the plant.

Basic Energy is the former Basic Petroleum Corp., which has a long experience in energy exploration and development. It has participated in almost all oil discoveries in the country since 1978.

“With the awarding of these contracts, we could climb to the no. 1 spot,” said Energy Undersecretary Ramon Alan V. Oca.

He said the Philippines is just 70 megawatts behind the US in terms of geothermal production. The Philippines, the world’s second-largest producer of geothermal energy after the United States, has 22 active volcanoes and sits on the seismically active Ring of Fire.

Mr. Oca said geothermal potential of the country is around 4,400 megawatts. “Right now we already have 2,000 megawatts, so 60-120 megawatts of added capacity are quite significant, as this could already power some cities and towns,” he added.

The Philippines wants to raise its geothermal capacity to 3,131 megawatts by 2013. Geothermal power currently accounts for around 18% of energy needs in the Philippines.

GMC and BGI are targeting to provide power to the mining industry in Compostela Valley and Biliran, while Basic Energy is seeking to boost tourism in Batangas through cheaper power.

The Energy department awarded GMC a 50-year contract to explore geothermal projects in an area totaling nearly 47,500 hectares in Compostela Valley. GMC also operates two coal mining projects in the central province of Negros, holds a geothermal service contract in the northern Kalinga province, and a $150-million biofuel project.

GMC is a synergy between a Filipino mining group and Australian mining and energy players.

Another company that received a service contract from the government was BGI, which plans to develop a geothermal project covering 22,394 hectares in Eastern Visayas. The area is estimated to have at least 100 megawatts of geothermal energy.

BGI is a joint venture company formed by Filtech Energy Drilling Corp. and Envent Holding Philippines, Inc. Envent’s key shareholders are Reykjavik Energy Invest and Geysir Green Energy, both based in Iceland and leaders in the renewable energy sector with focus on geothermal energy. All three companies are targeting to produce 20-40 megawatts of power from the areas. A 40-megawatt plant can power up the entire province of Ilocos Sur. The companies will be given seven years to explore geothermal potentials of the areas.

Energy Secretary Angelo T. Reyes said the geothermal projects would “provide economic opportunities for the country and bring us closer to our goal of becoming the largest producer of geothermal energy in the world.”

He also said the development of geothermal energy in the country would help avert an energy crisis amid rising international oil prices. Growing concern about greenhouse gas emissions released by conventional power plants, high oil prices and growing power demand have fueled the popularity of geothermal power. — Ava Kashima K. Austria, BusinessWorld

Source: http://www.gmanetwork.com/news/story/106283/economy/finance/three-groups-to-invest-in-rp-geothermal-plants