With the increasing utilisation of associated gas, flared gas has dropped from over one billion standard cubic feet per day (bscf/d) to 750 million standard cubic feet per day (mmscf/d) as at the end of last year.
The Managing Director of Seplat Petroleum Development Company Plc, Mr. Austin Avuru stated this at the 2016 Business Forum of the Nigerian Gas Association (NGA) in Lagos.
Avuru, quoting the Nigerian National Petroleum Corporation’s (NNPC), said at the end of 2015 that gas flaring stood at 0.75bscf/d, while domestic consumption, taken largely by the power sector and industries, was 1.3bscf/d.
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Avuru further noted that exported liquefied natural gas (LNG) accounted for 3.05bscf/d while re-injection and other operational usage accounted for 2.9bscf/d bringing the total gas utilised daily in 2015 to 8.0bscf.
In his paper titled: “Re-evaluating the development of the Nigerian gas industry: A prerequisite for re-energising and maximising its potential”, the Seplat chief said historically that gas discoveries have been incidental to oil exploration and development, adding that flare penalty of N10/mmscf has proved ineffective in dissuading gas flaring as Nigeria ranks second in flare volumes, accounting for 10 per cent of total global flares in 2011, following Russia.
According to him, to ensure future growth by closing the gaps in the industry, players should do something different. He said power sector reforms, licensing of more independent power projects (IPPs) and the gas master plan (GMP) have resulted in increased potential demand for domestic gas.
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He said 6.5 gigawatts (Gw), which is 67 per cent of gas-fired power capacity, is in Western Delta and reliant on Escravos Lagos Pipeline System (ELPS) for feedstock, and 45 per cent of feedstock is associated gas, transported mainly via Trans-Forcados pipeline.
He noted that if the stakeholders do things different, the industrial sector including the downstream, electricity generation (gas to power), petrochemical industry, construction industry (cement), agricultural industry (fertilizers) can take between 10-12 bscf/d.
In the power sector, Avuru noted the importance of infrastructure, highlighting the constraints on gas transmission and distribution.
He also stressed the difficulty in accessing funds, adding that when funds are available, they are expensive.
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Regulatory framework, he said, is not encouraging because of the extensive and bureaucratic processes for obtaining licenses.
Other issues that need to be addressed to optimise gas resources, according to Avuru include pipeline/infrastructural vandalism and theft, and gas pricing. He stated that gas revenue in naira is not as attractive to some investors.
Avuru said $5 billion per year can be saved from aggressive gas development, the downstream sector transformed from cost centre to revenue centre, oil and gas grown from raw revenue earnings to an economy enabler, and the development would lead to domestic energy security.
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