The Shell Petroleum Development Corporation Limited (SPDC) Joint Venture (JV) has stated that it will achieve more than 80 per cent gas flare-out from its operations by next year from the current 60 per cent.
Its Director, Gas, Mr. Ubaka Emelumadu, stated that the gas flare-out would be achieved with three new gas projects being carried out by the Nigerian National Petroleum Corporation (NNPC)-SPDC JV, which will come on stream next year.
He said Shell has designed a methodology that is channelled towards ending gas flaring and also put the gas that would have been flared to better use.
Emelumadu spoke yesterday at the ongoing 32nd Annual International Conference and Exhibition of Nigerian Association of Petroleum Explorationists (NAPE) in Lagos. He said the new gas projects are in Forcados Yokri, Adibawa and Otumara/Saghara.
In his presentation titled: “Obstacles to Developing Gas Infrastructure in Nigeria,” Emelumadu stated that SPDC JV has made good progress by successfully reducing the volume of gas flared as well as gas flaring intensity by 60 per cent over the last decade.
He said: “While this means less threat to the environment, it also means more gas infrastructure for the country and increase in gas sales to the domestic economy.
“In the next one year, more of SPDC JV gas flares-out projects (Forcados Yokri, Adibawa and Otumara/Saghara) will come on stream as we intend to achieve more than 80 per cent reduction by 2015.”
He said Nigeria ranks next to Russia in countries with the highest volume of gas flared, adding that since 2000, there has been progress made in flares reduction. He said the industry has seen a year-on- year reduction that trails SPDC who has been reducing flares 12 per cent faster than the industry average.
He said past focus on small associated gas gathering infrastructure proved expensive and presented some challenges because the rate of return on investment was not competitive compared to development of huge reserves or oil development.
He noted that it must be acknowledged that Nigeria and other stakeholders have made considerable progress in reducing gas flaring in the past decade, surpassing countries such as Russia and Iraq, with Shell playing a key role despite the challenge of executing such infrastructure.
He said one of the key elements of achieving gas flare-out agenda in any country is availability of backbone gas infrastructure to produce, process, transport and distribute gas to final customers. He pointed out that lack of commercially attractive and sustainable investment model is another obstacle because government-led investment in domestic gas infrastructure is no longer adequate. He said government being at the commanding height of the gas value chain will continue to stifle the required investment by the private sector.
According to him, this does not necessarily mean zero presence of government in the chain because best practices models on how government can play role of investment stimulator through private public partnership (PPP) and ensuring conducive business environment abound with specific examples in Norway’s GASSCO and Netherland’s GASUNIE.