GAS UTILIZATION, CHALLENGES, PROSPECT AND THE WAY FORWARD
- 1. ONYIJE ISRAEL JACKSON Emerald Energy Institute, University of Port Harcourt
- 2. OUTLINE Nigeria Gas Resources Gas Utilization Challenges/Constraints to Gas Utilization Prospects for Gas Utilization Way Forward Recommendation
- 3. 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 reservesCurrent estimates put the proven reserves at about 183Tcfat about 183Tcf Probable gas reserves may be over 600Tcf.Probable gas reserves may be over 600Tcf. This makes Nigeria the country with theThis makes Nigeria the country with the highest gas reserves in Africa and the 9th inhighest gas reserves in Africa and the 9th in the worldthe world
- 4. GAS LNG (EXPORT) POWER PETROCHEMICALS NGLs, LPGs & CONDENSATES NH3/UREA FERTILIZER PHARMACEUTICALS MENTHANOL ETC. ANIMAL PROTEIN GAS SECTOR VALUE CHAIN
- 5. GAS SECTOR VALUE CHAIN
- 6. 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 Nigeria Venezuela United Arab Emirates US Saudi Arabia Turkmenistan Qatar 894 Iran 1,046 Russian Federation 1,581 Proved gas reserves (Tcf) 1 1 countries
- 8. POTENTIALS OF GAS UTILIZATION OPPORTUNITIES SOURCE: OECD; US federal statistic office; Team analysis Energy competitiveness Mmscf gas used per m$ output, Nigeria 110 100 90 80 70 60 50 40 30 20 10 0 Total job impact Total jobs created per mmscfd of gas used, 1 2,4001, 1001, 0009008007006005004003002001000 Power generation LNG export Methanol Cement Petrochemicals (ethylene from LPGs) Nitrogenous fertilizers Pulp Aluminium Synthetic rubber Iron & Steel Corn Paper Downstream plastics Glass 1 Estimate based on USA impact and x3 - 4 ratio for job creation and x1,2 energy efficiency between developed and developing count ries 2. 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
- 9. GAS UTILIZATION Current gas production inCurrent gas production in Nigeria is about 4.6bcfdNigeria is about 4.6bcfd The utilization of gasThe utilization of gas currently produced goescurrently 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)
- 10. CHALLENGES TO GAS DEVELOPMENT Inadequate Gas Supply InfrastructureInadequate Gas Supply Infrastructure Inappropriate/ unrealistic pricing of gas,Inappropriate/ unrealistic pricing of gas, especially for domestic useespecially for domestic use Low level of industrializationLow level of industrialization Inadequate consumptive capacitiesInadequate consumptive capacities
- 11. 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
- 12. THE GAS SECTOR: ISSUES & CHALLENGES Gas storage Security of supply Underdeveloped domestic market for gas and gas products (LPG, CNG, fuel methanol, power etc) Funding constraints
- 13. MAIN CONSTRAINT: GAS FLARING
- 14. 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?
- 15. Gas flaring is Not only a waste of a valuable national resource, but an acknowledged negative impact on the environment
- 17. 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 markets Targeted 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 LNG Regional Pipelines
- 18. PROSPECTS FOR GAS DEVELOPMENT The prospects for gas development andThe prospects for gas development and utilization is very bright in Nigeriautilization is very bright in Nigeria International and local investors areInternational and local investors are interestedinterested Appropriate regulatory and institutionalAppropriate regulatory and institutional reforms to enhance investmentreforms to enhance investment environment are on courseenvironment are on course
- 19. PROSPECTS FOR GAS UTILIZATION Domestic- OrientedDomestic- Oriented ProjectsProjects Power Projects – currentPower Projects – current power projections show thatpower projections show that gas will be very prominent.gas will be very prominent. Major oil companies areMajor oil companies are planning or have alreadyplanning or have already established gas firedestablished gas fired Independent Power PlantsIndependent Power Plants (IPPs)(IPPs)
- 20. 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 inUse of gas as Energy Source in Industries – Cement Plants, SteelIndustries – Cement Plants, Steel Plants, fertilizers andPlants, fertilizers and petrochemicalspetrochemicals
- 21. PROMISING TECHNOLOGIES (DISTRIBUTED SCALE LNG PRODUCTION) - A SOLUTION FOR OTHERWISE FLARED OR STRANDED GAS
- 22. ONYIJE ISRAEL JACKSON Paratransit & Shuttle Vans OTHER GAS UTILIZATION OPTIONS
- 23. WAY FORWAD Reform 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 chain Encourage freely negotiated bilateral contracts Investment in infrastructure and coordination in the use of existing infrastructure Address Security of supply Optimization of power plant location between gas source and power markets Alternative ways for delivering gas to power plants
- 24. 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.
- 25. 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.
- 26. THANK YOU