gas utilization, challenges, prospect and the way forward
TRANSCRIPT
ONYIJE ISRAEL JACKSON
Emerald Energy Institute, University of Port Harcourt
OUTLINE
Nigeria Gas ResourcesGas UtilizationChallenges/Constraints to Gas UtilizationProspects for Gas UtilizationWay ForwardRecommendation
NIGERIA’S GAS RESOURCES
Nigeria is a gas-rich country(Gas province). Nigeria is a gas-rich country(Gas province).
Current estimates put the proven reserves Current estimates put the proven reserves at about 183Tcf at about 183Tcf
Probable gas reserves may be over 600Tcf.Probable gas reserves may be over 600Tcf.
This makes Nigeria the country with the This makes Nigeria the country with the highest gas reserves in Africa and the 9th in highest gas reserves in Africa and the 9th in the worldthe world
GAS
LNG (EXPORT) POWER PETROCHEMICALS
NGLs, LPGs & CONDENSATES
NH3/UREA FERTILIZER PHARMACEUTICALS MENTHANOL
ETC.
ANIMAL PROTEIN
GAS SECTOR VALUE CHAIN
GAS SECTOR VALUE CHAIN
TOP 10 GAS RICH COUNTRIES
…and an abundant natural resource in Nigeria
SOURCE: BP Statistical Review of World Energy June 2011
159
187
193
213
273
283
284
Algeria
NigeriaVenezuela
United Arab Emirates
US
Saudi Arabia
Turkmenistan
Qatar 894
Iran 1,046
Russian Federation 1,581
Proved gas reserves (Tcf)1
1
countries
POTENTIALS OF GAS UTILIZATION OPPORTUNITIES
SOURCE: OECD; US federal statistic office; Team analysis
Energy competitivenessMmscf gas used per m$ output, Nigeria
110
100
90
80
70
60
50
40
30
20
10
0
Total job impactTotal jobs created per mmscfd of gas used, 1
2,4001, 1001, 0009008007006005004003002001000
Power generationLNG export
Methanol
Cement
Petrochemicals (ethylene from LPGs)
Nitrogenous fertilizers
Pulp
Aluminium
Synthetic rubber
Iron & Steel
Corn
Paper
Downstream plasticsGlass
1 Estimate based on USA impact and x3 - 4 ratio for job creation and x1,2 energy efficiency between developed and developing count ries2. Ethylene feedstock in Nigeria would be LPGs, consumption of natural gas is only utility needed for conversion vs feedstock . D ownstream
plastics, only non - ethylene energy required is taken into account not initial feedstock needs.
Absolute import to Nigeria (2009, Mn USD)
Illustrative, relative mapping of Power and Export
GAS UTILIZATION
Current gas production in Current gas production in Nigeria is about 4.6bcfd Nigeria is about 4.6bcfd
The utilization of gas The utilization of gas currently produced goes currently produced goes to:to: Power generationPower generation Export projectsExport projects IndustriesIndustries Other domestic usesOther domestic uses ReinjectionReinjection FlaringFlaring
SECTORIAL DISTRIBUTION OF GAS UTILIZATION (JANUARY TO SEPTEMBER 2015)
CHALLENGES TO GAS DEVELOPMENT
Inadequate Gas Supply InfrastructureInadequate Gas Supply InfrastructureInappropriate/ unrealistic pricing of gas, Inappropriate/ unrealistic pricing of gas, especially for domestic useespecially for domestic useLow level of industrializationLow level of industrializationInadequate consumptive capacitiesInadequate consumptive capacities
THE GAS SECTOR: ISSUES & CHALLENGES
Continued flaring of gas
Inadequate investment in gas value chain
Limited institutional, legal and regulatory framework for gas, including associated gas use
THE GAS SECTOR: ISSUES & CHALLENGES
Gas storageSecurity of supplyUnderdeveloped domestic market for gas and gas products (LPG, CNG, fuel methanol, power etc) Funding constraints
MAIN CONSTRAINT: GAS FLARING
MAIN CONSTRAINT: GAS FLARING
The NNPC in its Annual Statistical Bulletin, for 2014, disclosed that oil and gas firms in the country flared 289.6 billion standard cubic feet, SCF, of gas, representing 11.47 per cent of the total gas produced in the country in that year.
At NGC’s price of $3 per 1,000 SCF of gas, at the current exchange rate realities, the flaring of 289.6 billion SCF of gas translated to a loss of $868.8 million, an equivalent of N173.76 billion.
… How much is the minimum requirement for Bank capitalization in Nigeria?
Gas flaring is Not only a waste of a valuable national resource, but an acknowledged
negative impact on the environment
PROSPECTS TO GAS UTILIZATION
FRAMEWORK FOR NIGERIA’S GAS INDUSTRY
The Gas Reform is anchored on a robust strategic framework that is focused on maximum economic impact through gas. Aims to drive linkages with agriculture, manufacturing and dispersed small enterprise through Power
GAS TO POWER“… By 2014, we would have positioned Nigeria firmly as the undisputed regional hub for gas-based industries such as fertilizer, petrochemicals and methanol.”
GAS BASED INDUSTRIALISATION HIGH VALUE EXPORT
STRATEGIC FRAMEWORK FOR NIGERIAN GAS
Consolidate Nigeria’s position and market share in high value export marketsTargeted LNG export opportunities
Regional gas pipelines that help consolidate nation’s footprint and influence
Deliver on President’s Gas Revolution Agenda to:Position Nigeria as the regional hub for gas-based industries such as fertilizer, petrochemical and methanol
Transform gas sector to value adding sector
Significantly increase gas supply to the Power Sector
Focused delivery plan to support existing and ongoing power plants by PHCN and NIPP
Deliver Gas for at least 12GW by 2015
LNGRegional Pipelines
PROSPECTS FOR GAS DEVELOPMENT
The prospects for gas development and The prospects for gas development and utilization is very bright in Nigeriautilization is very bright in Nigeria
International and local investors are International and local investors are interestedinterested
Appropriate regulatory and institutional Appropriate regulatory and institutional reforms to enhance investment reforms to enhance investment environment are on courseenvironment are on course
PROSPECTS FOR GAS UTILIZATION
Domestic- Oriented Domestic- Oriented ProjectsProjects
Power Projects – current Power Projects – current power projections show that power projections show that gas will be very prominent. gas will be very prominent.
Major oil companies are Major oil companies are planning or have already planning or have already established gas fired established gas fired Independent Power Plants Independent Power Plants (IPPs) (IPPs)
PROSPECTS FOR GAS UTILIZATION
Domestic- Oriented ProjectsDomestic- Oriented Projects
LPG ProgrammeLPG Programme
Establishment of NGLs, GTLsEstablishment of NGLs, GTLs
CNG/NGVCNG/NGV
Use of gas as Energy Source in Use of gas as Energy Source in Industries – Cement Plants, Steel Industries – Cement Plants, Steel Plants, fertilizers and Plants, fertilizers and petrochemicalspetrochemicals
PROMISING TECHNOLOGIES (DISTRIBUTED SCALE LNG PRODUCTION) -A SOLUTION FOR OTHERWISE FLARED OR STRANDED GAS
ONYIJE ISRAEL JACKSON
Paratransit & Shuttle Vans
OTHER GAS UTILIZATION OPTIONS
WAY FORWADReform of the sector – policy and market structure Appropriate pricing: is the existing framework delivering desired results?Design incentives for more market participants along the value chainEncourage freely negotiated bilateral contracts Investment in infrastructure and coordination in the use of existing infrastructureAddress Security of supplyOptimization of power plant location between gas source and power marketsAlternative ways for delivering gas to power plants
WAY FORWARD
Enforce gas flare down policy. Empower regulators to deal effectively with gas flaring and venting Regulators should be independent of the operators Clearly define circumstances for the approval of gas flaring Finalize all outstanding legal and regulatory framework initiatives for the gas sector.
RECOMMENDATION
• Regular monitoring of gas supply and enforcement of domestic gas supply obligations
• Downstream Gas Law needs be finalized to create a legal and regulatory framework for private investments in gas pipelines.
THANK YOU