Gas Flaring: Senate Threatens to Shut Down Oil Wells
From Sufuyan Ojeifo in Abuja, 02.20.2008
The Senate Committees on Environment, Petroleum (Upstream) and Gas Resources, sitting jointly at a public hearing on gas flare out, yesterday threatened to order shut down of oil wells that constitute health hazards to host communities, following the failure of multi-national oil companies to meet the January 1, 2008 gas flare out deadline.
The Committees also said that they would press the Senate to pass a resolution for application of necessary penalties on oil companies that have not stopped gas flaring.
Chairman of the Senate Committee on Environment and Ecology, Senator Grace Bent, said at the investigative public hearing that the “continued degradation of the environment and the health hazards attending the continued flare by oil companies will no longer be tolerated.”
According to Bent, “The January 1, 2008 flare out deadline is still sacrosanct and as such defaulting companies should now be made to face sanctions for continued flares.” She said that there was need to identify some of the oil wells owned by these multi-national oil companies that failed to meet the deadline and that were threatening the host communities .The identification,according to her,is to shut them down ahead of the final stoppage of gas flaring.
She declared:
“We will not hesitate in shutting oil wells that are particularly hazardous and that continually endanger the Nigerian environment and indeed the health of our people.
“This Senate will not watch helplessly while this trend progresses unchecked. We must pay a sacrifice now to ensure the existence and well being of our people and the environment; it is the expectation that this will spur these companies to adopt recommendations from the Kyoto Protocol.”
Chairman of the Senate Committee on Gas Resources, Senator Osita Izunaso, also said the Senate was worried that the oil companies could not meet the January 1, 2008 gas flare out deadline.
According to him, “We are also worried that oil and gas companies in Nigeria are operating under the misconception that the flare out deadline is now December 31, 2008.
“The recognised gas flare deadline is January 1, 2008. We have to borrow from other countries that have been able to achieve gas flare out. We are losing a lot of money and many people are dying as a result of gas flaring.”
A Director in the Ministry of Environment and Housing, Mr. Lawrence Ajibade who represented the Minister, Mrs. Alima Taiwo Alao, said July 1, 2008 was the date for gas flare out, pointing out that the agreement was reached at a meeting held on August 9, 2004 at the Sheraton Hotel and Towers in Abuja.
He said that the July 1, 2008 date was the authentic date the Ministry was working with, adding that efforts need to be geared towards perfecting strategies of implementation to ensure that the deadline was achieve able.
But a representative of the OPTS, Dr. Charles Adedeji, said the gas flare out deadline of 2008 was not realistic.
Adeniji said that the OPTS’s proposition of 2012 as a possible date for gas flare out should be considered by the Senate and the Federal Government.
He told the Committees that the oil companies were committed to the programme of gas flare out.
Adeniji, however, identified the operational difficulties being encountered by the operators to include the crisis in the Niger Delta, poor funding of NNPC shares and the implementation of the local content policy of the Federal Government.
Meanwhile, there were indications at the public hearing yesterday that Nigeria might need a whopping $20 billion investment to build infrastructure for gas utilisation.
Director of the Department of Petroleum Resources, Tony Chukwueke, who gave the indications, said that oil companies which still engage in gas flaring would, from April this year, pay a new tariff of $3.50 per cubic feet of gas flared.
Chukwueke said the penalty the tariff represented the first step towards achieving the deadline for gas flare out.
According to him, “Gas utilisation is an expensive venture. It would cost about $2.5 billion in utilising over 200 million cubic feet per day. We need an investment of $20 billion in investment to manage the daily production of gas.”
Chukwueke explained that the $3.50 tariff was the available price of gas at the local market.
According to him, “In 1990 there was a figure of 50k per 1000 standard cubic feet of flared gas and that slowly graduated to N10 to 1000 cubic feet being flared, now N10 in today’s market is something like eight Cents, if you look at eight Cents in comparison with what is obtained in the market today it is really ridiculous.
“The actual value of the gas today is about $3 or $3.50c and the international market, it would be about $7 or $8. You can see the value of gas that we loose from flaring 2.5 billion cubic feet every day. We can here understand the enormity of the problem.”
Chukuwueke told the Committees that it was as a result of the weak penalties by the government that had made the operators of the sector to be foot-dragging on the issue of gas flare out.
He spoke on a new gas policy by the Federal Government, stating that “Before you are allowed to export gas, you will put gas in the domestic market; would you not put that gas in the domestic market, you will have to pay for other people to do so at the rate which is commensurate with what gas is worth in the domestic market.
“This way you will provide that infrastructure because without putting in place a platform for which gas would be put into the domestic market there was no way gas flare would be put out.”
The Minister of State for Gas in the Ministry of Energy, Mr. Emmanuel Odusina told the public hearing that the domestic gas demand had reached 3 billion cubic feet annually.
According to him, “There is a need to grow the market as stimulation to the building of infrastructure for domestic gas utilisation. The way out of gas flaring is to establish an implementation programme for meeting the deadline.”
