Nigeria’s gas reserves are estimated at more than 168 trillion cubic feet (TCF), made up of 50 per cent each of associated and non-associated gases.
Besides, the country has more than 250 gas fields, giving experts the view that the nation’s reserves are capable of lasting for a hundred years.
More importantly, the gas reserves more than double crude oil reserves which the Group Managing Director of the Nigerian National Petroleum Corporation, Alhaji Abubakar Yar’Adua, puts at 33.6 billion barrels.
Until lately, Nigeria’s gas production was not a priority of most operators in the oil industry, hence most associated gas encountered in the course of oil production was flared.
Besides, gas was not reckoned with as an important source of energy at the time.
This accounts for the World Bank’s ranking of the nation as the largest gas flaring country in the world, even as it has the seventh largest deposits globally.
Various reasons were adduced for the past neglect of the gas sector.
These include the lack of domestic market for the commodity, the lack of gas gathering infrastructure and poor funding of gas flare reduction initiatives by government.
Until 1999, experts say that the infrastructure for collecting and exporting gas did not exist in the country, hence the operators preferred to flare gas rather than gather, utilise or monetise it.
Gas is one of the cleanest sources of energy with wide industrial applications, and has become an efficient source of energy and cheaper alternative to oil.
But why did the government allow gas flaring to continue unabated in spite of
all these advantages?
For instance, oil industry experts say that the 30 cents fine imposed for every 1,000 cubic feet of gas flared by the oil companies is too paltry.
Analysts argue that the measure, more than anything else, has encouraged flaring rather than serve as a punitive step.
It, therefore, makes economic sense for the companies to flare and pay the fine, given the huge capital outlay required to harness the resource.
Generally, gas flaring is seen by experts as both an economic loss and environmental pollution with serious health implications for the society.
There are no available data on the prevalence of health hazards associated with gas flaring.
But medical practitioners in the Ibeno and Eket oil producing communities of Akwa Ibom say there is an increasing incidence of asthma, bronchitis, skin and respiratory disorders in the areas.
On the international scene, environmentalists have established that gas flaring is a source of greenhouse gases that contribute to global warming and climate change.
The World Bank estimates that gas flaring in the Niger Delta region accountsfor some 35 million tonnes of carbon dioxide emitted annually into the atmosphere.
Mr. Emmanuel Nsa, Chairman, Gas Monitoring Committee, Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC), says Nigeria currently loses about 2.5 billion dollars to gas flaring annually.
But how far has the Yar’Adua administration gone to correct the ills of the past and place gas utilisation on the front burner?
Analysts say the formulation of a gas policy and the appointment of a Minister of State for Gas matters suggest a strong will by the Federal Government to tap the abundant gas reserves.
They say that government’s stand and resolve to develop and exploit the gas resource is commendable.
Government’s new approach to the sector is coming on the heels of the increasing global demand for energy.
According to experts, this is in view of the unstable oil prices and search for alternative energy sources which, they say, has unveiled the hidden treasure in gas.
Gas has suddenly become the ‘’beautiful bride’’ in the task of meeting the ever increasing global energy demand.
Chevron, a major player in the global oil industry, predicts that world energy demand is expected to grow at about 50 per cent by 2030.
Rex Tillerson, Chairman and Chief Executive, ExxonMobil, a U.S. energy giant, recently said that reliable and affordable energy was vital to economic prosperity worldwide.
‘’A wide variety of energy sources will be required to meet global demand which is expected to be one-third higher by 2030 compared to today, reaching close to the daily equivalent of 325 million barrels of oil, ‘’he said.
Mobil Producing Nigeria (MPN), an upstream subsidiary of ExxonMobil, in July began the second phase of the East Area Natural Gas Liquids Projects from its oil blocks about 28 km offshore.
The 1.3 billion-dollar project is expected to provide gas feeds needed for recovery and production of additional crude oil volumes, and reduce routine gas flares.
MPN sources say that the project will convert associated gas produced from the oil fields to generate about 275 million barrels of natural gas liquids (NGL).
A statement by
Mrs. Gloria Essien, MPN’s Executive Director, said the project would significantly reduce gas flaring, provide a new source of energy and yield economic benefits to the nation.
‘’The project will produce and sell natural gas liquids, providing a new source of energy and economic benefits, while reducing environmental impacts.
‘’The East Area Natural Gas Liquids II project involves the recovery of 275 million barrels of natural gas liquids from associated gas produced in East Area reservoirs from Blocks OML 67, 68 and 70,’’ the statement read.
However, industrial concerns have found diverse applications for petroleum gas in many processes, including steel making, fertiliser blending, pharmaceuticals, plastics and semi-conductors.
It is, perhaps, against this background that Mr. Ekanem Mfom, a petroleum engineer at the Qua Iboe oil fields, says the Federal Government’s plan to develop and encourage the use of gas is a step in the right direction.
“It is a win-win situation for the country. Gas is cheaper, cleaner and environmentally safer, and will drastically reduce, if not eliminate, gas flaring in the Niger Delta.
“If properly developed and channelled for the numerous power plants under construction and for industrial use to power factories, the energy crisis in the country will become a thing of the past.
‘’Gas is capable of changing the economic fortunes of this country.
There is so much wealth hidden in gas, but regrettably we have been wasting it for about 50 years,’’ Mfom said.
Available NNPC statistics show that 204.03 billion standard cubic feet (BSCF) of gas was produced, while 154.02 BSCF was utilised by the Joint Venture Companies, and 50 BSCF was flared in May this year.
Also, 99,683 metric tonnes of NGL was produced during the same month by both the Joint Venture and Production Sharing Contract Companies in the oil and gas sector.
NNPC puts the gas flared at 25 per cent, while environmental groups argue that the figure is somewhere between 40 and 60 per cent.
The Federal Government, through the Department of Petroleum Resources (DPR), has been engaged in running battles with international oil companies operating in the country over its gas flare deadline since 2001.
But industry watchers describe the zero gas flare deadline as a mobile target owing to the unending shift in dates.
Yet again, the government has moved the deadline to the end of this year.
But the oil companies, led by Chevron and Shell, say the new deadline is unrealistic, citing the lack of access to sites due to continuing unrest in the Niger Delta region and shortage of pipelines to transport the harvested gas.
Shell points to insecurity as the greatest obstacle followed by funding constraints by the Joint Venture Operators to complete ongoing gas utilisation programmes in the Niger Delta.
Meanwhile, oil producing communities in the region have lamented the inability of the Federal Government to wield the big stick and sanction the oil companies.
Analysts wonder how effective any sanctions could be when the government itself holds majority equity in the joint venture arrangement.
Can the DPR make good its threat to shut down oil production facilities of defaulting oil firms?
The Minister of State for Petroleum, Mr. Odein Ajumogobia, hinted in March that government was planning tougher penalties for gas flaring.
‘’We certainly will increase the penalty for gas flaring. However, we are more
interested in utilisation and monetisation of gas than penalties.
‘’The demand for gas is so significant and profitable; there is a need
to ensure a minimum threshold and that is what the penalty serves to effect,’’ Ajumogobia said.
The DPR had planned to increase the fine for flaring gas to 3.50 dollars per 1,000 cubic feet of gas on April 1, a measure that is subject to endorsement by the National Assembly.
Experts say that given the huge revenue loss which the RMAFC puts at 2.5 billion dollars annually, Nigeria ‘s energy crisis has forced many manufacturing concerns to close shop.
This, they say, has significantly increased the cost of doing business in the country.
As a solution, they opine that developing the gas sector to its full potential may well be a way forward for the country.
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