Gas Flaring: Waiting For An End

The inappropriate use of gas in Nigeria is no doubt ‘killing’ the nation’s economy as about N156billion ($1billion) is being lost to gas flaring every year.

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 amount being lost, which is equivalent to about 40% of the total money budgeted for education in the 2012 national budget, could as well provide housing units for over 150,000 Nigerians yearly.

Since gas discovery and production began years ago, many companies have set up operations in the country but are yet to properly utilised the product for the benefits of the economy.

Environmentalists say gas flaring is one of the largest sources of greenhouse gases which cause global warming. These gases can also sicken those living nearby. Nigeria flared off the second most gas in 2010 behind only Russia.

The Group Executive Director, Gas and Power, Nigerian National Petroleum Corporation (NNPC), Dr. David Ige, said recently that about 15 per cent of the country’s 7.8 billion cubic feet gas wells production per day is currently being flared, while only 12 per cent of its liquefied natural gas (LNG) was consumed for power and industrial uses.

Dr. Ige, who spoke at the 2012 Annual Oloibiri Lecture Series and Energy Forum, said the country was currently exporting 41 per cent of its LNG, and was re-injecting the remaining 32 per cent.

Although the NNPC has said it will ensure the reduction of gas flaring by making sure all new developments in the oil sector have gas utilisation schemes, while it introduces regulation to halt growth in flares and penalise erring companies, it is however not certain that the harmful natural gas will end anytime soon due to previous promises that were never kept. 

The last House of Representatives before exit 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 in parts of the country. The House also imposed stiff penalties on oil firms that may flout new regulations 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.

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 Nigeria, but the question now is –can the oil companies meet the deadline?

It is also uncertain if President Goodluck Jonathan’s led administration, which will be empowered by the Petroleum Industry Bill (PIB), would be determined to disallow the continuation of the flaring beyond this year.

Government’s commitment

However, Nigeria seems to be making progress towards optimising its gas and power industries when the Group Managing Director of the NNPC, Engr. Austin Oniwon, noted that two Memoranda of Understanding (MoU) had been signed. One between Xenel and NNPC, while the other was among India’s Nagarjuna Fertilisers, the NNPC, and Chevron. He added that the Corporation also awarded the Akwa Ibom/Calabar area gas Control Progressing Facility (CPF) to Agip and Oando in Abuja recently, to show how serious and committed NNPC and government are to the Gas Revolution Programme.

Also in pursuance of the programme, the Brass Liquefied Natural Gas plant is currently said to be put in place for the production of gas in greater quantity and transmission.

Meanwhile, as the gas flaring deadline draws near, the Chief Executive Officer of Royal Dutch Shell Plc, Peter Voser, said his company is looking at investing a further $4billion in its operations onshore Nigeria in efficiency projects aimed at both raising production and minimising gas flaring.

Nigeria is Shell’s most important region, accounting for about 16% of its worldwide production of oil and liquid gas from 2006 to 2010; while production inched higher to 19% in 2010. Nigeria, a member of the Organization of the Petroleum Exporting Countries (OPEC), accounted for around 10% of Shell’s total global output in 2011.

Mr. Voser said that Shell’s investment in natural gas would support efforts to cut down on gas fires currently burning at oil wells. He said the company expects to complete those investments between 2014 and 2015, pending approval by partners and the tangible security environment.

Reports say the president is very passionate about the gas revolution project and that 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 these natural resources into money for the benefit of Nigerians,” an industry analyst said.

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.

Experts say 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 to enhance development funding.

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