ERHC Energy Inc (ERHE)

[midtieroil]

The main reason gas is still being flared in Nigeria is because they have to shut down a producing well and make significant capital expenditures in order to start capturing the gas. So you lose revenues for a period and you spend money on collecting the gas so it is a double whammy. It's difficult to say what the payback period is for the revenues you would get from the sale of the gas plus the increased revenues from additional oil due to injection versus the temporaty loss due to the shut down but it is apparently a long time period or not at all or more companies would be doing it. Nigeria has been trying to make flaring illegal or expenisve for years but the truth of the matter is they don't really care. International pressure is forcing them to pretend they are doing something.

Newer projects are now being designed to either capture the gas or to reinject it to get more oil production. So new deepwater gas projects are really a different animal than existing flaring. Each would have very different economics.

I will say flat out that I did not invest in this company for gas because the ROI on that is a small fraction of what you would get with an oil or condensate discovery. Plus the current time frame for any production from Block R where they would have to build a new train for the LNG plant is I believe 2016 and Ophir is already pretty far along in their exploration phase.