Cutting utilities costs and carbon emissions

RECENT news of in-house co-generation plant projects, both planned and underway, by oil refining/petrochemical players such as energy giant ExxonMobil and PetroChina/Chevron-owned Singapore Refining Company speaks volumes of the significance of utilities in their operations here. But it is not the reliability of power or steam supplies here which is in question. Rather, it is their relatively high costs - compared with those of more energy-blessed countries - that is bugging investors from Germany's Lanxess, Shell and Finland's Neste Oil to the many other Japanese players here.

One major plus of having in-house cogen plants is that they provide the refining/petrochemical complexes with utilities on-tap. Depending on operational needs, they also have the option to sell any excess power that they produce to the main electricity grid. Hyflux, for instance, is building a 411 MW cogen plant to power its Tuaspring plant, but expects to export some 300 MW to the grid. While accounting for a mere drop in the total electricity pool here, such supplementary supplies can help to keep power prices stable.

But smaller industry players may not have the capital, economies of scale or capability to have in-house cogen plants, although there are pharmaceutical companies in Tuas which have invested in smaller tri-generation units. The government however, has recognised that high utilities costs is an issue for the industry and is addressing this. While still early days, the Economic Development Board is developing a "heat integration" plan for plants on Jurong Island to share any excess heat or steam that they generate during their operations, with government playing an "honest broker" role in case of proprietary concerns by some companies about sharing and piping the steam or heat across fences.