O.T N’Delta: Shell Restarts $2bn Gas Project
•Conoil discovers gas reserve in the region
By Ejiofor Alike, 05.20.2010
The relative peace in the Niger Delta following the Federal Government Amnesty programme has prompted Shell Petroleum Development Company (SPDC) joint venture to restart work on gas gathering projects previously delayed by funding and security problems.
Also, Conoil Producing Limited, Nigeria’s indigenous petroleum, exploration and production company, has discovered huge deposits of gas in the central part of its Oil Mining Lease 136 (OML-136) in offshore Niger Delta.
The projects covering 26 flowstations in the region is expected to cost $2 billion. On completion, more than three quarters of the company’s production potential will then be covered by associated gas gathering (AGG) facilities to reduce gas flaring in the country.
The scope of the projects include upgrading or replacing existing gas gathering facilities, or installing AGG equipment at flowstations that are not yet covered.
The gas will then be available for use in power stations while SPDC is also working with interested third parties that require gas for power and industrial purposes.
Shell had earlier complained that its inability to meet the December 31, 2008 deadline for oil companies to end gas flaring in the country was due to funding issues and militant attacks on oil workers and installations. This, it said, disrupted work on the various gas gathering projects in the region.
But confirming the resumption of work on these projects in a statement made available to THISDAY yesterday, the Managing Director of SPDC, Mr. Mutiu Sunmonu, said the company was pleased to restart work on delayed projects and added that they would play a dominant role in the efforts of the Federal Government to end gas flaring in the country.
Sunmonu also said that SPDC had already spent more than $3 billion on installing associated gas gathering infrastructure at 32 flowstations, covering about half of the company’s production potential.
“SPDC is pleased to be able to restart work on delayed projects and begin new ones to further reduce gas flaring in our operations to the lowest practical volume. Security and funding conditions permitting, we have a real chance to progress our flaring reduction plans through these key projects," he explained.
The AGG facility is an equipment installed so that gas produced with oil that would otherwise have been flared is captured and put to use; by installing compressors and pipelines to bring gas to market to generate power and for other domestic uses.
Of the 26 flow stations covered, 18 are in the West and eight are in the Eastern Niger Delta.
Following the failure of oil companies operating in the country to meet various previous deadlines given by the Federal Government to stop the flare of gas, the House of Representatives had early this year set December 31, 2012 as the new deadline and also imposed stiff penalties on oil firms that flout the new regulation.
The deadline had been shifted several times from the January 1st 1984 date provided in the relevant regulation, which was later amended to December 31, 2008. The lower House also adopted an amendment substituting the earlier penalty fee of N410.00 per standard cubic feet of gas flared.
An oil company is however permitted temporarirly to flare gas in a particular filed or fields if the company pays the sum of $5.00 per 1,000 standard cubic feet of gas flared while a processing fee of $1000 is payable for every application for permit to flare gas during pre-commissioning and commissioning operations, equipment maintenance and operation upsets.
But any company that declares an incorrect gas flared volume is liable to pay a penalty fee of $100,000 in addition to the payment of the difference of such declared volumes at the prevailing gas market price.
Also every emergency gas flared as a result of equipment failure problems or any other reason thereof, must be reported to the regulating agency within 24 hours, failing which a fine of $500,000 is imposed on the defaulter.
However, the new law is yet to be ratified by the Senate.
Meanwhile, Conoil's gas discovery in the Niger Delta was made in Agge-3B. T1 well while appraising an undrilled compartment of the Agge field complex. The well was located in a water depth of 140 metres and reached a total depth of 2,710 metres, below mean sea level. The newly discovered gas reserve has a gross thickness in excess of 160 metres.
Reports said that the production test over the lower intervals of the new pay zones yielded an impressive volume of 24.2x MMScft/d on a 36/64” choke. Further ongoing studies will assess the impact of the Agge-3B, T1 results on the field reservoir and in addition to other discoveries, provide available options for the development of the block.
Conoil Producing Limited is the operator of the Joint Venture in which Total Exploration and Production Nigeria Limited (TEPNL), a subsidiary of TOTAL S.A owns a 40 percent working interest in the license.
Conoil was awarded the oil block OML 136 (formerly OPL 458) in 1992, after the company had successfully proven itself as a major indigenous player in a sector that was hitherto dominated by foreign companies.
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