Gas power-infrastructure

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Developing Gas and Power Infrastructure: The Associated Gas Solution

Dr Raphael S. Awoseyin PhD MIMechE FNSEChief Engineering and Technology Officer

Oando PLC

Nigerian Oil & Gas ConferenceFebruary 2009

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Outline

• Gas Demand Distribution• Existing gas infrastructure• The Dilemma of Gas vs Power• The Problem with IPPs• Suggested Steps To Recovery

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Gas Demand Distribution By Location

Cement

Aluminum

Fertilizer Plant

Methanol

Manufacturing Domestic Industries

CNG

Power

GTL

Steel

LNG

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Nigerian Gas Master Plan Map

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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

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Traditional Utilisation Options for Associated Gas

Tank

TankTank

WATER

OIL $$$

GAS

LIQUID

3-phase

3-phase

3-phase

To LNG

Manufacturing

Power Distribution

POWERGEN

DEHYDRATION

CONDITIONING

ASSOCIATED GAS UTILISATION OPTIONS

OIL DEHYDRATION AND EXPORT

RE-INJECTION

FRO

M W

ELLS

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The Dilemma

• 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.

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A Further Option for Utilisation Options for Associated Gas

Tank

TankTank

WATER

OIL $$$

GAS

LIQUID

3-phase

3-phase

3-phase

To LNG

Manufacturing

Power Distribution

POWERGEN

POWERGEN

DEHYDRATION

CONDITIONING

ASSOCIATED GAS UTILISATION OPTIONS

OIL DEHYDRATION AND EXPORT

RE-INJECTION

FRO

M W

ELLS

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Transmitting Gas vs. Transmitting Power

Transmitting Gas: Advantages

Makes the gas available for other industrial uses besides power generationMore 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 timesEncourages over-centralisation of power generation, with more severe consequences of single outagesUsually uneconomic for associated gas utilisation

Transmitting Power: Advantages

Faster execution: An obvious strategy for “power emergency”Helps put out flares fast: Convertlow-pressure gas to power and transmitSpreads out power generation thereby improving overall power availabilityPreserves non-associated gas

Transmitting Power: Disadvantages

Does not address other industrial uses of gas besides powerEconomic only up to about 400km radius, due to transmission losses

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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!!!!

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Suggested Steps To Recovery• Demonstrate to Nigerians that running their diesel or petrol

generators costs several times what public power would cost at commercial gas prices

• Separate the functions of gas production, transmission and distribution and deregulate all sectors of the chain

• Create level-playing fields in all sectors for true competition. The producer must not be forced to sell to the transmitter

• Promote franchising of power generation and distribution to capable enterprises, starting with captive consumers (for example, housing estates)

• Decouple utilisation concepts for AG and NAG; emphasise AG as cheap source for localised power generation

• 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?

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Thank you!!!!