Stepping on the gas to keep Singapore's lights burning

When completed, the monster on Jurong Island will be one of the world’s largest liquefied natural gas storage tanks – and a step closer to energy security for Singapore, as the programme Powering the Future finds out.
Desmond Ng and Daniel Heng Channel NewsAsia 30 Mar 18;

SINGAPORE: On June 2004, the unthinkable happened - a good part of Singapore went dark that evening in one of the largest ever blackouts here.

It resulted in some 300,000 homes left in the dark without electricity for two hours, costing businesses as much as S$6 million in losses.

The power outage - caused by a disruption to the natural gas supply from Indonesia - was an important wake-up call for Singapore.

Fast forward to today, and a behemoth is rising on Jurong Island that is the latest in the chain of developments since that fateful day.

Singapore’s fourth Liquefied Natural Gas (LNG) storage tank, when completed this year, will be one of the world’s largest – and a symbol of efforts to ensure the country’s energy supply would never again be so vulnerable.

“Imagine if we experience frequent or prolonged disruption to our import energy supply disruption,” said Mr Soh Sai Bor, the assistant chief executive of the Energy Market Authority’s (EMA) economic regulation department.

“The consequence will be that our lights may not turn on or stay on for long, and our economic activities will grind to a halt.”

More than 90 per cent of Singapore’s electricity is generated by natural gas largely imported from Indonesia and Malaysia.

Since then, the nation has been investing heavily on importing and storing LNG - which is natural gas in its liquid form - to safeguard its future energy needs, as the programme Powering the Future finds out. (Watch it here.)

MORE COST EFFICIENT

Why natural gas in the first place? While there are other energy resources such as coal and oil that Singapore can tap, natural gas is far cleaner and more energy efficient by mass, said Associate Professor Praveen Linga from the Department of Chemical and Biomolecular Engineering at the National University of Singapore.

Natural gas-based power plants emit “40 to 50 per cent less carbon dioxide” compared to coal as a fuel. Hence “it is also called the cleanest burning fossil fuel”, he said.

Currently, some 77 per cent of Singapore’s natural gas supply is delivered in gas form, via pipelines from Malaysia and Indonesia.

But when this gas is condensed into a liquid form or LNG, the volume can be reduced by as much as 600 times. This makes it far more cost-efficient to transport over long distances by ships.

In 2006, Singapore decided that LNG was the way to go, and decided to build its first LNG Terminal on Jurong Island.

Indeed, today, a quarter of the country’s natural gas supply comes in LNG form, from a diversified range of sources - such as Australia, the US and Qatar.

A key strategy to enhance our energy security is to diversify our energy resources.

“With our LNG Terminal, we are able to import LNG from all over the world, compared with piped natural gas where we are just importing from Indonesia and Malaysia," said Mr Soh,

Developed by the Singapore LNG Corporation, the S$1.7 billion LNG Terminal was finally launched in 2013.

It started off with two storage tanks that year, with a third tank the following year to increase its total output. The three tanks can store some 540,000 cubic metres of LNG.

But the fourth tank, currently under construction, will have an impressive capacity of 260,000 cubic metres alone.

Singapore LNG Corporation’s CEO Mr John Ng said: “Having the tank means that we are able to store energy for when demand picks up.”

A LNG TRADING HUB

The nation has grand plans to become a key trading hub for LNG in the region, given that the global demand for energy is set to soar because of population and economic growth.

The Asian economies will be the biggest driver of demand, with China set to be the biggest importer of natural gas by 2018. And Singapore is poised to make the right connections in LNG trade.

With the LNG terminal, traders can import large quantities of LNG, break it up into small pieces and sell it to regional countries, Mr Ng noted. Singapore’s geographical position makes it ideal to supply small-scale LNG to islands in Indonesia and Philippines.

Mr Satvinder Singh, assistant CEO of IE Singapore, pointed out that Singapore is one of the largest commodity hubs in the world and “it’s not unnatural for us to also aspire to be relevant to the energy development in Asia and for the rest of the world”.

It is located among some of the biggest consumers of LNG - Japan, India, Korea and China – and it is a significant global financing hub for commodities and is able to finance sophisticated financing to support such flows, he added.

CHEAPER ELECTRICITY FOR CONSUMERS

For consumers, the extra sources of natural gas and a more competitive market for LNG could potentially translate to cost savings and lower electricity bills.

On Thursday (March 28), it was announced that electricity tariffs would increase for the second time this year.

But most commentators expect that in the longer term, there would be a downward pressure on natural gas prices in Singapore, given a predicted increase in LNG supply over the next few years, said Mr Howson.

Japan's leading trading house, Mitsubishi Corp, had projected that the world's LNG market would grow 5 per cent year-on-year from 2017, almost doubling by year 2030 from 2017.

Mr Ng added that LNG could become a more liquid commodity here, as a result of more traders importing it from all over the world.

“When there’s an opportunity for bringing the cargo (LNG) in at a relatively cheap price, the traders can store in our tanks; and when the market is ripe, reload the energy out into the open market,” he said.

That will translate into competitive prices of energy coming into Singapore.

Consumers can also find savings in another way – come April 1, households and businesses in Jurong will have the option of buying electricity from a retailer under the Open Electricity Market initiative.

Since 2001, the EMA has been progressively opening up the electricity market by giving consumers the choice and flexibility to buy electricity from retailers.

This means that consumers will in future no longer be restricted to buying from SP Group at the regulated tariff.

“Consumers if they wish, can also shop around and buy electricity from their preferred retailers based on price plans that best meet their needs,” said Mr Soh.