Developing Gas and Power Infrastructure: Franchises and Associated Gas as Solution

Transcription

1 Developing Gas and Power Infrastructure: Franchises and Associated Gas as Solution Nigerian Oil & Gas Conference Abuja, February 2009 Dr Raphael S. Awoseyin PhD MIMechE FNSE Chief Engineering and Technology Officer Oando PLC 1

2 Outline Gas Demand Distribution Existing gas infrastructure Dilemma 1: National vs. Localised grids Dilemma 2: Gas vs Power The Problem with Power Projects Suggested Way Forward 2

3 Gas Demand Distribution By Location Cement Aluminum Fertilizer Plant Methanol Manufacturing Domestic Industries CNG Power GTL Steel LNG 3

4 Main Gas Infrastructure in Nigeria Olokola LNG Sapele Power Sapele ELPS Ajoakuta Steel Jones Creek Oben Akri-Oguta SPDC/AGIP Escravos Forcados Yokri Odidi Delta Power Ughelli Cluster 2b Iseni-Ogara Gbaran &Ubie Biseni Obite Elf Obiafu AGIP Assa North Oguali Assa North Ogara Future NGC Bonga EA Southern Swamp Siebou Iseni Cluster 2a Nun River 4/5 Nembe Creek H-Block Nun River Diebu Creek Bayelsa Power OGGS Soku Belema Cawthorne Channel Awoba Awoba NAG NAG Obigbo NAF CON Alakiri NLNG Bonny NLNG Afam Okoloma Ibom Power ALSCON H Block UD 4

5 Nigerian Gas Master Plan Map 5

6 Dilemma 1 Integrated national grid? All power generating authorities deliver their power to an integrated national grid from where nationwide distribution is determined Or Localised franchises? Power is generated by franchise holders to supply defined geographical catchment areas. 6

7 Integrated Grid vs. Localised Franchises Integrated grid: Advantages Enables prioritisation of power allocation to areas of most need for overall national interest Assures support of areas that may not have generation capacity Integrated grid: Disadvantages Non-existent service relationship between power authorities and consumers Vulnerability to nationwide power crisis due to centralised control whereby a single-point system failure creates nationwide outages Localised franchises: Advantages Power is generated close to area of need: Smaller focus area enables more effective management Close client-customer relationship between power supplier and customers Could help reduce or even extinguish AG flaring Projects are usually faster to execute Localised franchises: Disadvantages Creates widely differing power tariffs due to differing generation costs across the country 7

8 Food for Thought Gaslink Nigeria Limited (an Oando company) operates a 100km network of gas pipelines supplying some 80 industrial consumers in Lagos area Could this model not be replicated for power generation and distribution to a defined geographical area? Benefits would include more efficient generation and hence lower cost for consumers, less environmental pollution 8

9 Dilemma 2 Transmit gas? Pipe the gas to where power is needed and generate the power Or Transmit power? Generate power where you have the gas and transmit the power to where it is needed. 9

10 Gas Streams Non-associated gas (NAG) Gas deliberately produced from gas reservoirs, for defined purpose Comes naturally at high pressure, enough to propel through processing and transmission to point of use Associated gas (AG) Gas produced with crude oil. Not intended to be produced Comes at low pressure. Requires compression to propel through processing and transmission. Costs 4 times NAG to transmit to a point of use 100km from source Often flared when processing and transmission to point of need is uneconomic 10

11 Transmitting Gas vs. Transmitting Power Transmitting Gas: Advantages Makes the gas available for other industrial uses besides power generation More economic for power generation far from gas source (typically beyond 400km) Transmitting Gas: Disadvantages Logistics of laying gas pipelines through complex terrains leads to longer project times Encourages over-centralisation of power generation, with more severe consequences of single outages Usually uneconomic for associated gas utilisation Transmitting Power: Advantages Faster execution: An obvious strategy for power emergency Helps put out flares fast: Convert low-pressure gas to power and transmit Spreads out power generation thereby improving overall power availability Preserves non-associated gas Transmitting Gas: Disadvantages Does not address other industrial uses of gas besides power Economic only up to about 400km radius, due to transmission losses 11

12 Traditional Utilisation Options for Associated Gas DEHYDRATION ASSOCIATED GAS UTILISATION OPTIONS To LNG GAS FROM WELLS 3-phase 3-phase 3-phase LIQUID RE-INJECTION CONDITIONING Manufacturing POWERGEN OIL DEHYDRATION AND EXPORT Tank Tank Power Distribution Tank OIL $$$ WATER 12

13 A Further Option for Utilisation Options for Associated Gas DEHYDRATION ASSOCIATED GAS UTILISATION OPTIONS To LNG GAS FROM WELLS 3-phase 3-phase 3-phase LIQUID RE-INJECTION CONDITIONING Manufacturing POWERGEN POWERGEN OIL DEHYDRATION AND EXPORT Tank Tank Power Distribution Tank OIL $$$ WATER 13

14 The Problem with Nigeria s Power Projects Power projects initiated on assumption that fuel gas would always be there did not recognise what is involved in getting the gas there NGC had a monopoly of gas dealership and distribution, purchasing gas at imposed low prices from gas producers Gas producers stopped developing gas resources because it was uneconomic; they demanded a commercial regime Government failed to create a commercial regime to support gas development, and assumed that threats would force gas producers to continue to develop gas and sell at a loss Power plants were being build but would not run because there was no fuel gas Everyone thought the Power Projects were a scam!!!! 14

15 Suggested Way Forward Demonstrate to Nigerians that running their diesel or petrol generators costs several times what public power would cost at commercial gas prices Pursue quick-wins by promoting localised grids based on franchises to capable energy companies supplying defined geographical areas Decouple utilisation concepts for AG and NAG; emphasise AG as cheap source for localised power generation for local grids and NAG more for cross-country transmission Create level-playing fields in all sectors for true competition. The producer must not be forced to sell to the transmitter Promote integration of gas and power businesses: Consider mandating PHCN to collaborate with associated gas producers towards decentralised power generation Speedy decision is absolutely essential: Endless political debates are inappropriate for the current situation. Where is the President s War Cabinet on power? 15

16 Thank you!!!! 16