Chevron and the Philippines APC Group Plan Geothermal Plant in Kalinga

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Chevron Kalinga Limited, a subsidiary of the Chevron Corporation (NYSE:CVX) (San Ramon, California), has signed two agreements with Aragorn Power and Energy Corporation, a wholly owned subsidiary of APC Group Incorporated (PSE:APC) (Makati, Philippines), for a $300 million geothermal power project in the Philippines.

Aragorn and partner Guidance Management Corporation (GMC), a consortium of Spanish, U.S., Australian and Philippines investors, holds a geothermal renewable energy service contract covering about 26,000 hectares of a prospective geothermal area in the northern province of Kalinga in the Philippines.

Chevron Kalinga and Aragorn have signed a joint operating agreement, which confirms that Chevron will be responsible for the development, exploration and operational aspects of the steam field and power production.

The second agreement allows Aragorn and GMC the option of taking up to 40% equity in the geothermal project at Batong Buhay in Kalinga.

The Philippines is the largest producer of geothermal energy after the United States. The country has 22 active volcanoes. Although the Philippines already has an installed capacity of 1,900 megawatts (MW) of geothermal energy production, government estimates put the untapped geothermal potential as high as 2,600 MW, and the government plans to expand geothermal capacity to 3,131 MW by 2013.

Chevron already has interests in geothermal production in the Philippines. The company develops and produces steam for a 289-MW geothermal plant in Tiwi, in the Albay province, and a 458-MW geothermal plant at Makiling-Banahaw (Mak-Ban). Together, these plants supply about 40% of the Philippines' geothermal energy.

The Philippines' government sold the Tiwi and Mak-Ban plants to the Aboitiz Power Corporation (PSE:AP) (Cebu, Philippines), but Chevron expects to sign a 25-year agreement with the government before the end of this year to continue operating the two geothermal fields and supply steam for the power plants.

Geothermal energy is produced from heat sources deep below the surface of the earth. In regions such as the Philippines and Indonesia, which are located on the so-called "Ring of Fire" of volcanic activity, water at depths of up to 3,000 meters is heated by the molten rock. Boreholes, similar to those drilled for oil and gas recovery, are drilled and the heated water and steam are brought to the surface. The water and steam is separated, and then the steam is cleaned and used to drive turbines to generate electricity. The Chevron Philippines operation at Tiwi has more than 150 such boreholes and 81 kilometers of associated pipeline, while the Mak-Ban operation uses 130 boreholes and 106 kilometers of pipeline.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.