PNG Biomass is Oil Search’s renewable energy and sustainable tree farming business. Subject to a final investment decision, PNG Biomass will be Oil Search’s first targeted investment into the energy transition.
Establishing a renewable energy and sustainable development project in the Markham Valley in Morobe Province is a strategic and sustainable diversification of the Company’s energy portfolio. Designed with a two-fold purpose, PNG Biomass will be powering PNG with domestic low-emission renewable energy and empowering communities by using an inclusive economic growth model.
PNG Biomass leverages the strengths and experience of Oil Search in delivering world class infrastructure projects. By building capability in environmental, social and economic responsible energy investments, Oil Search helps offset carbon emissions, develop attractive growth options at an acceptable risk level, and opens pathways to new global partnerships and financing opportunities for both Company and country.
The value created by PNG Biomass is shared between landowners, communities, women and youth, future generations, local and regional businesses, provincial and national government, and the Company itself. It is equally a sustainable investment for Oil Search and an investment in the people and prosperity of PNG.
Powering Papua New Guinea
As an integrated renewable energy project, PNG Biomass will offer biomass power, solar energy, and battery storage technology to generate clean, affordable and reliable energy for the Ramu Grid. This project demonstrates how modular, incremental, diversified and dispatchable energy can pave the way for a new power paradigm that diversifies the country’s energy mix, makes power supply reliable, and helps PNG transition to renewable energy by 2050.
Delivering 30 megawatt of electricity to the Ramu Grid, the biomass power plant is integrated with 16,000 hectares of dedicated, sustainable forestry plantations in the Markham Valley established and maintained by local landowners and communities. PNG Biomass will also oversee construction, operation and dispatch of an adjacent 11 megawatt peak solar farm and battery energy storage system, both grant-funded and owned by PNG Power. Together, the biomass power plant and solar farm will provide the Ramu grid with up to 40MW of renewable energy with the battery storage providing firming and grid stabilisation services.
By using renewable energy there will be significant carbon emission reductions as generation from diesel and heavy fuel oil (HFO) will be displaced. The battery storage technology will enable load-shifting of solar energy to the highest demand at peak hours and displace more diesel and HFO. As an integrated project there will be ancillary services benefits, including grid stabilization by providing baseload supply to the city of Lae – which represents about 90% of the Ramu Grid load.
Sustainable development
PNG Biomass delivers many benefits beyond electrification; it is designed to deliver sustainable development closely aligned with PNG development priorities and the Sustainable Development Goals.
When fully operational, PNG Biomass will have 500 ongoing local jobs and driving the creation of 2,000 indirect jobs across the region. In 2020 some 300 full-time equivalent (FTE) jobs were created for local in the Markham Valley. The majority of jobs (280 FTE) is contracted directly to community members and landowners through Community Business Groups.
With communities and landowners at the core of the project, they can realise the full potential of sustainable rural inclusive economic growth opportunities created by PNG Biomass. Throughout the Markham Valley, close relationships with communities have been built since 2011. Landowners participate actively in the Project by offering select areas of their land for the establishment of sustainable forestry plantations. Landowners come together in community-owned business groups to provide PNG Biomass with labour and services to prepare, plant and maintain plantations. This way PNG Biomass creates significant and diverse income streams for local communities.
Agroforestry
PNG Biomass encourages and supports women and youth to take advantage of business opportunities to generate substantial benefits and income streams. In particular the agroforestry practice commonly referred to by communities as ‘intercropping’ is popular. Markham Valley communities receive support to help them get started with growing small-scale and short-rotation cash crops in between the rows of trees on plantation land. A team from PNG Biomass regularly conducts intercropping training and field demonstration, focused on ensuring communities understand the basic requirements of weeding, distancing crops from trees and plough lines.
In early 2019 a baseline assessment was conducted on intercropping practices across the Markham Valley. The results included that best harvests and incomes are generated from pumpkins, melons and cucumbers. Women reported single harvest incomes of around K3,000 from intercropping on areas smaller than half a hectare. With, at the time, around 400 families involved in small scale intercropping, each harvesting twice a year, they generated together an increase in household income of K2.4 million a year – a number that communities themselves claim to be conservative as they assert the overall intercropping income stream is substantially higher. With more land opening up, more and more local farmers are taking up this agroforestry practice.
Local entrepreneurs
Entrepreneurs are also making most of opportunities arising; putting their forestry skills to work in the Markham Valley. Two former employees of PNG Biomass are leveraging the skills and experience they gained during their employment in the Company’s forestry division. Both have founded their own forestry businesses and are now suppliers of PNG Biomass, providing expert forestry services.
Community business group development
PNG Biomass provides ongoing support to landowners to organise themselves in formal community business groups. The Zif Faring Business Group, representing the business interest of communities around Chivasing village, provides employment opportunities for over sixty landowners contracting them to PNG Biomass.
In June 2020, Zif Faring Business Group was also awarded a contract for the provision of transport and delivery services to PNG Biomass. Management of the Zif Faring Business Group subsequently decided to purchase an Isuzu truck to dedicate to the transport services under the contract.
Native bee program
Switpela Bi Hani was established in 2018 by PNG Biomass as a native stingless bee community development program aimed at helping communities establish a local market for bee products in the Markham Valley. Community training was provided by PNG Biomass in 2018 and 2019, with community members driving expansion themselves in 2020 due to limited options during the COVID-19 pandemic for the continuation of training by foreign bee experts. Community uptake is extremely good, with hundreds of local hives established and new bee-hive materials trialled.
More and more communities are participating and together creating a thriving native bee industry. The beekeepers are predominantly subsistence farmers, family units, women groups, and small-scale entrepreneurs – some are involved already with PNG Biomass as tree farmers while others are non-tree farmers.
