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Sabah first to have ‘Virtual Pipeline’ gas supply

by Jenne Lajiun. Posted on April 1, 2011, Friday

KOTA KINABALU: Sabah will become the first state in the country to implement the ‘Virtual Pipeline System’ gas supply.

Sabah Energy Corporation Sdn Bhd (SEC) chief executive officer Dato Harun Ismail, who disclosed this yesterday, said they target to implement the system before the end of this year.

“The implementation of the RM20 million project would be a significant milestone for SEC as it would be the first organisation in the country to embark full scale on this system of safely delivering clean and competitively-priced compressed natural gas to users in the commercial and industrial sectors,” he said during a talk here yesterday on ‘Safe Supply of Clean Compressed Natural Gas via Virtual Pipeline System’.

The gas will be delivered to customers whose premises are located within a 70 km radius from the SEC station at Kota Kinbalau Industrial Park, he said.

It can be supplied to places such as Telipok, Menggatal and Inanam, as well as the city centre, he added.

Harun explained that the system is based on a mother to daughter station concept.

“It involves a combination of state of the art technology in natural gas compression and decompression.

“In simple terms, natural gas is compressed at the mother station and transferred to containers. The containers are then delivered to the daughter station at the customer’s premises and the gas is then decompressed to the working pressure required by the customer,” he said.

Delivery, Harun said, would be made directly and literally to the customers’ respective doorsteps.

“Neither their distance nor demand requires an investment in gas pipeline installations, thereby significantly reducing their capital costs,” he said.

More importantly, for the existing and future industries in Sabah, compressed natural gas supplied via the system is competitively priced in comparison to other energy sources such as diesel, medium fuel oil (MFO) and Liquid Petroleum (LPG).

Apart from cost advantages, it is also a safe and clean source of alternative energy, he said.

Harun said that in terms of cost, users can save up to 50 percent with the compressed natural gas as compared to any other type of energy sources.

For the first phase of the project, SEC would not require capital contribution from the early customers, he said.

“All that the customers need to do is to provide a suitable space in their compound to site the delivery containers and ensure their processes are ready to connect to the containers,” he said.

Besides, the system also allows for quick, easy and cost-effective construction of installations and future expansion to meet any increase in demand.

“These exclusive systems constitute a landmark in natural gas distribution and sales. It effectively brings to an end all limitations inherent in the gas distribution by way of traditional networks of underground gas pipelines,” Harun said.

He assured that SEC has a complete team of trained and competent engineers and that they will also be receiving technical support from the technology provider and owner of the system, GNC Galileo S.A.

“Galileo is an internationally reputable and well established manufacturer and technology provider of Virtual Pipeline System in Argentina. It has an operating history of over 20 years in the natural gas market. They are ISO 9001 and ISO 15500 certified, which means that their product manufacture and supply complies with accepted international standards. Galileo’s Virtual Pipeline System is a proven technology and their products are now successfully used in Argentina, Brazil, Bolivia, Columbia, India, the Philippines and Singapore,” he said.

Meanwhile, Resource Development and Information Technology Minister Datuk Dr Yee Moh Chai commended SEC for proactively pursuing the possibility of making natural gas accessible to industry players.

“With the pipeline in place, smaller industries and commercial enterprises would be able to access this clean, cheap and efficient energy source. This will undoubtedly translate into better efficiency and better bottom line for the industry players,” he said.

He added that SEC’s aggressive promotion of natural gas usage is in line with the government’s Five-Fuel Policy.

The main objective of the policy is to avoid over dependence on a single energy source and to counter the adverse effects of depleting natural energy resources, he said.

“The state’s gas reserve, which stands at 11 trillion cubic feet, will be gainfully utilized for liquefied natural gas (LNG), ammonia and other petrochemicals,” he said.

Apart from the 10 natural gas users in the KKIP area and one in Labuan F.T., not many small and medium scale enterprises have been able to directly benefit form this relatively cheap and clean energy, he said.

Yee urged industries to evaluate the benefits of using natural gas to their business operations.

“As a cheaper energy source, gas would undoubtedly enhance your competitiveness and also help to improve the quality of our environment as it is a clean fuel.”

He said that in the economic transformation programme, at least 71 entry point projects under 10 national key economic areas are to be implemented in Sabah.

“The Sabah oil and gas terminal project in Kimanis would provide natural gas for downstream oil and gas industries in Sabah.”

Yee said the State Government is happy that SEC has taken the lead to embark on the compressed natural gas project.

“As a key component of Sabah’s economy the oil and gas sector accounts for 8.2 percent of gross domestic product (GDP). In essence, the oil and gas industry plays an important role in the state’s economy and it would certainly expand rapidly in the future, bringing economic spin-offs that would benefit the state’s economy and the rakyat.”

SEC is a private limited company which is wholly-owned by the State Government of Sabah and entrusted as an energy utility entity.

It has been tasked to promote, facilitate and develop th energy resources in Sabah and to distribute natural gas to commercial and industrial users not only in Sabah but also Labuan.

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