Oil & Energy
Gas Flaring: Can Oil Firms Meet 2012 Deadline?
It is no longer news that gas is becoming much more important to Nigeria’s economy since its production began years ago. Since its discovery, many companies have set up operations in the country but the flaring of the product has posed a very high challenge as it is not properly utilised for the benefits of the economy.
It is against this backdrop that the Nigerian government deems it necessary to develop gas resources to supply it for the provision of sufficient electricity for domestic and industrial use as well as for exportation. The nation’s power plants are not functioning adequately to generate required electricity and cannot meet domestic demand to end blackouts which now become a political priority.
The government is currently planning to produce enough gas to export as soon as gas flaring is ended in the country and also bring the President’s gas-to-power scheme to fruition.
The last House of Representatives before exist perfected the legislative framework pegging the deadline for gas flaring in Nigeria’s petroleum sector at December 31, 2012 in realisation of the government’s plan to develop and capture gas that is being flared or burned off in parts of the country, especially the oil producing areas. Some million cubic feet of gas resources are being flared daily and the quality is sufficient to generate about 4, 500 megawatts of power. The House also imposed stiff penalties on oil firms that may flout new regulation s on gas flaring.
The action of the House of Representatives followed the adoption of the report of its committee on gas resources on a bill for an Act to Amend the Associated Gas Reinjection Act No. 99 of 1999 Cap. A25 Laws of the Federation of Nigeria Further Amendment of the gas flare deadline is not among the many legislative responsibilities before the present House of Representatives.
Oil companies operating in the country had failed to meet the Federal Government’s umpteenth time shifted deadline for the anti-safety and environment Act, under which violators are meant to be penalised. The end of this year is the battle line for gas flaring to end in this country but the question now is, can the oil companies meet the deadline? It is gathered that the President Goodluck Jonathan-led administration which will be empowered by the Petroleum Industry Bill (PIB) may not allow the continuation of the flaring beyond this year, so it is in the best interest of oil companies to race towards meeting the deadline.
Nigeria is currently making progress towards optimising its gas and power industries and that has been the focus of the government. The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Austin Oniwon is quoted as assuring that the Gas Revolution programme for the country would not be abandoned and that to this end, two Memoranda of Understanding (MoU) had been signed. One between Xenel and NNPC and the other among India’s Nagarjuna Fertilisers, NNPC and Chevron as well as the award of the Akwa Ibom/Calabar area gas Control Progressing Facility (CPF) to Agip and Oando in Abuja, to show how serious and committed NNPC and government are to the Gas Revolution Programme.
In pursuance of the programme, the Brass Liquefied Natural Gas plant is put in place for the production of gas in greater quantity and transmission.
The president is very passionate about the project and the journey has started. We do know that we have large deposit of natural gas resources. Before now, most of the product was being wasted through flaring because of the system we adopted, but with what is happening now, that will change.
Just like the crude oil, natural gas is money, so there should be a concerted effort to commit this natural resources into money for the benefit of Nigerians. The status report of the Nigerian Gas Masterplan, if sincerely and optimally implemented in line with the gas-to-power framework, will support the president’s power agenda and make power available for many ‘dead’ industries to come back to life. Not only that, it will also provide gas as fuel for industries such as the textile mills in Kano and Kaduna that went down because of lack of fuel and they will be able to have clean, cheap and affordable fuel to run their business.
In its commitment to ending routine gas flaring and consolidating leadership position in the domestic gas market, the Shell Petroleum Development Company (SPDC) has said it will continue to make good progress in bringing projects that will reduce flares and boost gas supply to the domestic market as well as sustain economic growth and kick-start new industries that will provide jobs for Nigerians.
Ending gas flaring in the country should be a long-term programme and there must be continuing commitment on the part of the oil companies because the project will help the economy and generate billions of naira or dollars to enhance development funding. Nigeria holds about 8 per cent of global proven natural gas reserves and about 10 per cent of proven oil reserves but for Nigeria to continue to attract international investments, it needs to sustain confidence and stability and respect the sanctity of contracts.
There is ambition and expectation in the gas sector, but there is also uncertainty about who is going to gain and who is going to lose now that the federal Government is gearing efforts towards optimal utility of our gas resources. Nigerians are scared at the rate things are going in the country and people are no longer interested in the way funds are managed as they want to see practical things on ground.
Our social set-up has been shaken and we are yet to come to terms with it. Other countries use their funds to develop the people by providing infrastructure and social amenities but Nigeria’s case is different and not sure to understand. President Goodluck Jonathan has launched the “Roadmap for the power sector reform, so great majority of Nigerians are waiting for dramatic improvements to their quality of life. More gas and more power will raise living standards and support the economy, so lessons should be drawn from countries that have successfully executed gas-to-power and gas industry optimisation reforms with a view to enabling Nigeria learn from and possibly replicate the best practices of these countries.
Because the expectations of government and the societies they represent evolve over time, it is inappropriate to expect that what was obtaining when the oil and gas industry was at its infancy, 50 years ago would still be obtainable today. This follows that with both the socio-political climate and the oil and gas industry changing, the International Oil Companies/National Oil Companies relationship must also evolve. A lot of things are expected when changes occur. This is why the Federal Government should ensure that all recommendations made to it are fully implemented to engender growth and change in the oil/gas industry.
To make the whole dream come true, the partnership between international oil companies and national oil companies needs to be strengthened to enhance the full exploitation of natural resources and develop capability that will bring more value to the industry. The basis of mutual benefit should exist between the two or more parties.
Nigeria has been finding it difficult to maximize its gas-to power potential because of certain factors which create imbalances in the value chain, which include gas pricing. That is why the new price regime put in place by the federal government is commendable as it will give investors reasonable returns on their investments and allow those who build gas transmission infrastructure to achieve certain returns that would justify their investments. In Nigeria, the gas price before 2010 was put at less than $1 per million scf, but with the recent review of the price, which is about $2 per million scf for the domestic gas-to-power, the gap between the international and our local price has been narrowed and with that, people can now invest in gas development.
When there are opportunities for people to invest in gas development and power distribution and generation then the private sector would be able to take control of gas and power, and that will be the right way to guarantee power supply in the country.
The government should try to address the issue of regulation for the downstream gas sector which has become the bane of the sector’s development. The regulation must take into consideration the non and partial deregulation and closed access of gas infrastructure, while other issues bordering on security in operational communities should also be visited as well. There is the need to do this because it has been discovered that the problem of insecurity is causing extra expenditure for most oil and gas companies as most engineering, procurement and construction (EPC) contractors also use this as reason for their premium and prohibitive charges.
As soon as government’s increased focus on appropriate pricing is welcomed, it should further extend the focus to the full value chain rather than restricting it to the upstream argument alone. If there is gas in the country, which we know,we, the indigenes should benefit more than everybody else. The rate of economy growth is expected to double from what it has been over the years when gas flaring ends at the end of this year. Not just foreign or intentional oil companies should participate in the gas project but indigenous firms should be given priority consideration. The gas-to-power distribution is a boost the country badly needs, so there must be a corrupt-free national strategy for managing the gas revenues because the worry about monies generated from the oil and gas sector in the country is the ‘curse’ of embezzlement and misappropriation or mismanagement, ie, the judicious utilisation of funds accruing from the sector for the benefit of the ordinary citizens rather than using it to fuel conflict and corruption.
We hope we will avoid the mistakes.
Nigeria is a democracy and everybody is watching. So it is expected that there is going to be improvement when gas flaring will become a thing of the past by December 31, 2012.
With a proven reserves of 182 tonnes per cubic feet, Nigeria is adjudged the world’s seventh largest producers of high grade gas with zero per cent sulphur and rich in natural gas liquids. Though the huge reserve has not translated to abundant domestic supply, investment in gas distribution is capable of helping to achieve the gas-to-power aspiration of the federal government and make gas readily available to industrial consumers and guarantee accelerated growth of manufacturing and power sectors.
Shedie Okpara
Oil & Energy
Navy Nabs Six Oil Thieves, Dismantles Illegal Refining Site
The Nigerian Navy Units under the auspices of Operation Delta Sanity says it has recorded significant successes against crude oil theft and illegal refining sites in the Niger Delta.
The Navy, in an updated operations, said the successes were recorded between Thursday August 29 and Monday September 2, 2024.
According to the information, on 29th August, seven large cotonou and two fibre boats operated by heavily armed oil thieves loading crude oil from an illegal loading point around Botokiri axis of Nembe Local Government Area of Bayelsa State were seized.
Also, on 31st August, six suspected crude oil thieves with 109 sacks of illegally refined petroleum products, four fibre boats and two wooden boats were arrested and seized along Ogboinbiri-Kasama-Azama-Isoni of Bayelsa State.
Again, on 1st September, two wooden boats and 328 sacks of illegally refined automated Gas Oil were seized at Otuogori community’s river bank in Yenagoa, Bayelsa State.
Additionally, on 2nd September, 35 sacks of illegally refined Automotive Gas Oil in a wooden boat were seized at Gbaraun area of Southern Ijaw Local Government Area of Bayelsa State.
These successes indicate the effectiveness of Operation Delta Sanity, and the resolve of the Nigerian Navy to sustain current efforts to rid Nigeria’s maritime environment of the menace of crude oil theft and enhance crude oil production for the overall growth of the economy.
Oil & Energy
Security Agencies, MDAs Owe Eko DISco N42bn – BPE
The Eko Electricity Distribution Company Plc. has clarified that the Ministries, Departments, and Agencies of the Federal Government, including the military, owed the power distribution company N42billion as the cost of electricity consumed and not N144billion.
The Bureau of Public Enterprise(BPE), disclosed this in a Statement signed by the Head, Public Communications, Amina Othman, at the Weekend.
According to the Statement, the Disco affirmed that its total outstanding debt was N144billion, of which the MDAs and the military owe N42billion.
“The Eko Electricity Distribution Company Plc has clarified that contrary to earlier reports, the aggregate outstanding debt owed by consumers is N144billion, out of which, ministries, departments, and agencies including the military owe N42billion”, Othman stated.
The Statement said this was against prior reports that the MDAs, including the army, police, and other government agencies, were owing N144billion and had refused to pay.
The Disco said, “the clarification became necessary for proper reportage on the matter and to put the records straight”, it stated.
Recall that during a recent oversight visit by members of the House of Representatives Committee on Privatisation and Commercialisation, led by its Chairman, Ibrahim, the Acting Managing Director of the EKEDC, Mrs. Rekhiat Momoh, among other things, informed the members about the legacy debts owed the company by MDAs.
The committee had reported the acting MD as stating that the company was owed N144billion by MDAs within its operational area, saying she mentioned that the military, police, and various state government agencies failed to settle their debts, creating financial difficulties for the distribution company.
Oil & Energy
Unveiling Of Crane: Energy Infrastructure Set To Get Boost
Energy infrastructure, a crucial part of global oil and gas supply and the energy transition, are set to get a boost after a heavy lifting equipment provider unveiled the world’s strongest crane-equipment capable of lifting 6,000 tons, or 15 fully loaded Boeing 747 aircraft.
Dutch heavy lifting and transport services company Mammoet has launched a new type of crane, the SK6,000, which, the firm said, could be used for modules to be built faster and also “bigger than ever before”.
As oil and gas continue to be a key part of the world’s energy system—and likely will continue for decades to come—and as renewable energy developers aim for bigger wind turbines, the support equipment for installing oil and gas platforms, offshore wind equipment, and even nuclear power stations is becoming bigger.
Bigger cranes such Mammoet’s SK6,000 could remove some of the limitations of engineering and construction firms. These firms are generally limited by how much weight can be lifted when installed on a platform or turbine.
Cranes that can carry 5,000 tons and more can shorten the time of a project being erected on a site, onshore or offshore, Mammoet says.
“Limitations on lifting capacity force engineers to fabricate smaller modules than would be optimal; tying up site space and increasing the complexity and duration of projects,” the company notes.
“This limitation can also narrow the execution choices available during each project’s planning stage and the percentage of each project that can be executed locally.”
These days, energy companies and their contractors seek faster deployment of energy infrastructure, be it wind turbines or floating production storage and offloading (FPSO) vessels and platforms for oil and gas production.
“There are so many supply chain constraints at the moment that need to be de-bottlenecked,” Gavin Kerr, Mammoet’s director of global services, told Bloomberg, commenting on the new crane.
“The bigger everything gets, you need bigger cranes.”
Moreover, the SK6,000 is containerised and can be assembled quickly on-site. This feature allows it to deliver heavy lift capability wherever it is needed, giving contractors greater flexibility in where and how energy projects are completed” Mammoet said.
“With the innovation of the SK6,000 crane, our customers can think bigger than ever before; pushing modules beyond the 4,000t and even 5,000t barriers. Its low ground bearing capacity also means the crane can be used all over the world”, said Mammoet’s Sales Director Giovanni Alders.
“With its long outreach, small minimum footprint and relatively small site impact, the SK6,000 greatly reduces the topside integration time.
“Needless to say, with larger building blocks you spend less time connecting and testing, and more time producing” Alders added
Energy companies do need faster permit-to-production times in both oil and gas and renewable energy to provide the conventional and green energy sources the world will need.
Wind turbine technology is evolving and making the hub height increasingly taller. According to the Office of Energy Efficiency & Renewable Energy at the U.S. Department of Energy, the hub height for utility-scale land-based wind turbines has surged by 83per cent since 1998–1999, to about 103.4 meters (339 feet) in 2023. That’s taller than the statue of Liberty.
The average hub height for offshore wind turbines in the United States is projected to grow even taller from 100 meters (330 feet) in 2016 to about 150 meters (500 feet), or about the height of the Washington Monument, in 2035, DOE said.
In the oil and gas industry, new resource development is needed as demand for LNG grows and legacy oilfields mature and output declines.
If contractors can bring energy projects on stream faster, both oil and gas supply and the energy transition will benefit.
By: Charles Kennedy