Nigeria’s untapped gas reserves and declining crude oil fortunes

With 188 trillion standard cubic feet (SCF), of gas resources, making Nigeria the seventh most endowed gas nation in the world and number one in Africa, the nation could have been immuned from the plummeting crude oil business if strategies focus had been made on this strategic option

Oil and gas experts believed that Nigeria could even earn more from full utilisation of gas resources than what it is currently been realised from crude oil exports.

But the reverse is the case, as the country produces about 1.35 Tcf of dry natural gas, ranking among the world’s top 30 largest natural gas producers.

According the Department of Petroleum Resources (DPR), natural gas production in Nigeria is constrained by the lack of infrastructure to monetise natural gas that is currently being flared.

The United States Energy Information Administration, said in country analysis on Nigeria’s oil and gas sector, that a significant amount of Nigeria’s gross natural gas production is flared because some of Nigeria’s oil fields lack the infrastructure needed to capture the natural gas produced with oil, known as associated gas.

It disclosed that Nigeria flared 428 Bcf of its associated gas production, or 15 per cent of its gross production in 2013 alone.

Apart from lack of infrastructure and gas flaring, the country has not be able to benefit optimally from export of gas through the West African Gas Pipeline (WAGP) due to activities of vandals.

The WAGP links into the existing Escravos-Lagos pipeline and moves offshore at an average water depth of 35 meters. The pipeline has the nameplate capacity to export 170 MMcfpd (62 Bcf/y) of natural gas, although it’s actual throughput is about one-third of its capacity.

Also, the expected return from the Trans-Saharan Gas Pipeline, has remained elusive as the project is yet to take off several years after signing the memorandum of understanding with the various investors.

Nigeria and Algeria had proposed to construct the Trans-Saharan Gas Pipeline (TSGP). The 2,500-mile pipeline was expected to carry natural gas from oil fields in Nigeria’s Delta region to Algeria’s Beni Saf export terminal on the Mediterranean Sea and is designed to supply gas to Europe.

Brass LNG Limited, a consortium made up of NNPC, Total, and Eni LNG Liquefaction Complex, which is supposed to bring in foreign earning to the country, has also been put on hold. ConocoPhillips was a partner in the consortium but divested from the project in mid-2014 and transferred its shareholder interest to the other members.

At the yearly general meeting of the Nigerian Gas Association (NGA), Deputy Director, Gas Moni­toring and Regulation, DPR Engr. Antigha Ekaluo, disclosed that the latest reserves figures has placed Nigeria 7th in the world and number one in Africa in gas reserves base as at January 1, 2015.

Speaking on the theme“ Harnessing and monetizing the potential of stranded gas fields’’. Ekaluo, said that effective gas sector policies would give Nigeria the ability to harness opportunities in the sector.

Ekaluo said that such will also afford the country to enjoy its maximum value from its stranded gas resources.

According to him, Nigeria is endowed with abundant gas resources and the sector holds huge potentials for unprecedented growth.

He noted, “The existing legal and regulatory framework, written primarily for oil does not provide robust technical and commercial framework for gas.

There is therefore the need to pass the PIB into law, which will underpin the ongoing sector reforms. The gas sector policies will provide Nigeria with the opportunity to harness and get maximum value from its stranded gas resources”.

The DPR Deputy Director said that effective gas sector development remains a strong catalyst for growth and will have a multiplier effect on the Nigerian economy

He said that in harnessing and monetizing stranded gas, there is need to adopt new technologies geared towards harnessing stranded gas.

Ekaluo said that government should also deepen market penetration and sustain demand growth and also vigorously pursue the completion of gas gathering and utilization projects.

He said that there urgent need to address gaps in regulatory and commercial frameworks across the gas value chain.

Chairman, Society of Petroleum Engineering (SPE), Nigeria Council, Emeka Ene, suggested that for effective  strategy for monetising stranded gas there is the need  to Identify and secure country’s closest markets and develop an integrated flare-out model.

He advised that government should implement the pipeline network code, fast track captive power and inaugurate gas powered public transportation to ensure accelerating stranded flare gas monetisation.

President, Nigerian Gas Association,  Bolaji Osunsanya, said that Nigeria has prolific gas supply fields in the Niger delta, but most of the gas markets remain undeserved, adding that the onus is on the association to wreak the existing framework to mobilise all stranded reserves.

According to him, undoubtedly, the creative administration of cutting-edge technology to reach such resources and the holistic and integrated development and application of natural gas infrastructures are key enablers for Nigeria’s gas industry to realise its full potential.

“Enhancing the capacity of NGA to work in full synergy with other institutions by offering our members the best technical, faster the development of industrial growth and electricity generation amongst others.

Investment and business promoting activities that will add value to members and their businesses,” he said.