• Saturday, February 24, 2024
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Modular refineries: Test the idea


I have been asked this question many times: Does the Government know what you are doing? The answer is clearly yes, of course. We have held two International conferences on Petroleum Refining & Petrochemicals (August 27th – 30th 2012 sponsored by Petroleum Technology Development Fund [PTDF], and August 28-29th August 2013 sponsored by Indorama Eleme Petrochemicals), and published Communiques in the Guardian Newspapers.  We have advocated and appeared on NTA TV, AIT, Channels, Radio Nigeria Diaspora.  We have published in newspapers, e.g., Guardian, ThisDay, Sunday Daily Trust, Nigerian Compass, Business Day, PM News, Point Blank News, Punch Newspapers, 234Next, The Union – Energy Today,  Lulu Briggs Lectures, Uniport Weekly.  We have published and presented papers on “Petrochemical Developent in Nigeria” at a professional conference of the Nigerian Society of Chemical Engineers, and students forums.  The internet (Afrinews, naijaupdate,onepetrol,energycorporateafrica,nigernews24,nigeriavillagesquare,elombahnews,chinaoilweb,nigerianews,energywcsrch,nigerianews,oilindustryheadlines,saharareporters, headlinenews,nigeria70news,yahoogroups, nigeriaworldforum,panafricanews,etc.);  is awash with our information on Refining and Petrochemicals.

1. As we strive towards the development of Nigeria’s indigenous technology for both economic and security reasons, we have also written the Presidency for support and approval, stating that “Petrochemicals” warrants an independent Research and Development Council in line with Raw Materials Research & Development Council, or Authority, as recommended in our 2012 Communiqué. We are yet to receive a feedback.

2. The Saudi Arabia’s Petrochemicals and Plastics Sector boasts of a combined $1.4 trillion worth of investment opportunities through 2020.  Saudi Arabia produces 49 unique petrochemical products, contributing 1.1 percent to Saudi’s GDP in 2011 and accounted for 11 percent of the manufacturing sector’s contribution to the GDP.  Saudi Arabia produces 49 unique Petrochemical products.  Of  the 59 petrochemicals projects currently in the pipeline and valued at approximately $48.5 billion, an estimated 7 percent are “Greenfield” projects.  Looking ahead, Saudi Arabia plans to spend approximately $91 billion over the next 10 years to build new plants, expand existing ones, and integrate refineries with new or existing petrochemical units.

3. Modular mini-refineries, from simple diesel production units to more sophisticated cracking refineries, are increasingly becoming a flexible and cost-effective supply option for crude producers in remote regions. This is particularly true where there is a need to adapt rapidly to meet local demand. Relatively low capital cost, speed and ease of construction are key advantages of a modular mini-refinery. Two 30,000 barrels-per-day (bpd), units producing high octane unleaded gasoline, LPG, diesel, kerosene and fuel oil can be installed in an 18 month time window, with a budget of 150-200 million dollars. Modules from 4,000 bpd up to 30,000 bpd primary distillation capacity can be added together with debottlenecking to create a refinery of 100,000 bpd or more, should demand dictate. The conditions required to make such an investment workable typically include: a location in close proximity and with access to crude supply; near to sizable markets with logistic advantages—decreases high distribution costs in remote regions; project finance on preferential terms from development credit agencies and almost certainly some government incentives to support regional development.

4. The overall economics or viability of a refinery depends on the interaction of three key elements: the choice of crude oil used or crude slate; the complexity of the refining equipment or refinery configuration; and the desired type and quality of products produced or product slate.

5. Refineries fall into three broad categories. The simplest is a topping plant, which consists only of a crude distillation unit and probably a catalytic reformer to provide gasoline. The next level of refining is called a cracking refinery. This refinery takes the gasoil portion from the crude distillation unit (a stream heavier than diesel fuel, but lighter than Heavy Fuel Oil (HFO) and breaks it down further into gasoline and distillate components using catalysts, high temperature and pressure. A more sophisticated modular mini-refinery can be configured in this way. The last level of refining is the coking refinery. This refinery processes residual fuel, the heaviest material from the crude unit and thermally cracks it into lighter product in a “coker” or a hydro-cracker. The addition of a fluid catalytic cracking unit (FCCU) or a hydro-cracker significantly increases the yield of higher-valued products like gasoline and diesel oil from a barrel of crude, allowing a refinery to process cheaper, heavier crude while producing an equivalent or greater volume of high-valued products.

6. Refineries can produce a wide range of products including: propane, butane, petrochemical feedstock, gasolines (naphtha specialties, aviation gasoline and motor gasoline), distillates (jet fuel, diesel, kerosene, and intermediate fuel oil), heavy fuel oil, lubricating oils, waxes, and asphalt. The last three products require a special refinery configuration and are not suitable for a modular mini-refinery.

7. Mini-refineries are typically available in units from 4,000 to 30,000 bpd. The different configurations available for modular mini-refineries, with increasing degree of sophistication include atmospheric (topping unit), gasoline train, vacuum distillation (cracking), and hydrocracker units (full conversion). Modular units are pre-fabricated in workshop conditions and shipped to site for assembly. Quality and speed of construction are key advantages of this approach.

8. Yes, we can.  Test the idea and witness how it will provide greater good to our society.

9. We have all seen it: Seeking investments here and there is commendable.  It is not productive if we do not have the work force to manage these sophisticated equipments and instruments.  They are deliberately calibrated to be sophisticated to make it difficult to copy.  Comparatively, it is akin to building a big hospital with all the medical devices without doctors and nurses, etc. to support your operation.

10. Technology plays a vital role  in the systematic transformation of the production systems and capacities. Development will always depend on the internal innovative capacities of a society, for it is man rather than machine that creates development. Technology transfer, therefore, becomes a myth for nonproductive nations, and a reality for the nations with new means of production, capital formation and technical knowledge. Sustained economic growth is then further ignited, accentuated and escalated by increasing technical wisdom.  Do we have that requisite innovative, financial, self-discipline for technology to thrive…..designing, making, producing, manufacturing goods to satisfy our needs before exporting?

11. No society has ever been greater than the products of its higher institutions of learning.  Therefore, deep thought is required in the way Government relates to its educational institutions as “laboratory think tanks”.  The University of Port Harcourt is a Federal Government institution with a Centre for Gas, Refining & Petrochemicals, Institute of Petroleum Studies, training the first batch of pioneer M.Sc.students in Petroleum Refining & Petrochemicals, yet there is no coordination or linkage between one arm of the government to the other in terms of resources or consultancy.  Government’s (PTDF) written obligations to fund  students’ tuition is yet to be redeemed, in spite of repeated requests.  With increasing high unemployment in the country and hyper-connectivity empowering the young ones, Nigeria, between 2020-2030, is expected to surpass the United States of America in population growth (Lagarde, IMF, Dimbleby Lecture Feb.8, 2014).  Government needs hard, deep, deep thinkers, in strategic sustainable terms, to create the environment where enough job opportunities will be available to satisfy our growing population. Why? Because we have heard and read from newspapers and other media outlets that:

12. “As more countries are discovering oil, our exports will begin to drop at some stage. In addition, with climate change,  development of alternative fuels, that is bad news for crude oil producers. Our case is even worsening because of frequent production outages and unprecedented oil theft despite the billion-naira contracts awarded to militants to safeguard the pipelines. We are  taking loans every day and our debts are piling up. The world’s biggest consumer of crude, the US, has now found a formidable alternative in shale oil.  So, the demand for our oil has fallen and will only continue to fall.  The new reality is that crude oil is no longer a monopoly.  As demand falls, the price will fall. As the price falls, production will fall. Many oil fields will become unprofitable to operate. They are likely to close down. In this event, the naira would crash.  A fall in foreign exchange inflow will hurt us since we are import-dependent. If we deplete our external reserves  to protect the naira, it would impact negatively on the general prices of goods and services, hence less money to build infrastructure,  less money for government overheads, leading to retrenchment and salary cuts. Money to fund fuel subsidy and petrol price will increase and as petrol price goes up,  mass unrest will ensue as cost of living rises”.

13. Therefore, to provide employment, we have to turn the ‘illegal refineries’ into “legal refineries”.  To make this to happen, we need to design a strategy and policy to set up an Energy Bank to provide financing, taxable at low interest rate.  Sell crude oil to them at subsidized price.  If you legalize, then you stop bunkering because it becomes unprofitable for their sponsors.  They will become proud “owners” of a business, and kerosene, petrol (gasoline), diesel, will be everywhere, satisfying the demand in the country.  Remember the British and our  illicit gin?  Yes, they turned round and sold  us Gordon Dry Gin. I will persuasively argue that offering them opportunity to set up their businesses will be a disincentive to break pipelines, hence becoming useful citizens.  If you think about it, who is the real loser in all these?  We, the people.

14. They already have the necessary raw production skills.  We just need to provide guidance and training. The knowledge gap in distillation processes will be provided on appropriate standards, codes, specifications, and catalysis.  This will in turn stop environmental pollution and degradation because all the refining fractions currently poured in rivers (depriving us of safe and reliable drinking water) will be fully utilized in some other process plants.  Stopping pollution is very important, because having money is no guarantee of good health. By providing jobs and reducing unemployment, the Federal Government and 36 States will then  have enough money to share.

15. Path forward, we need to stay focused.  We need to develop value systems that sees service above self interest.  The world is changing, where previously, hard men, now know when to be soft with their people.  There is potential for growth, and we should not under-rate human ingenuity and innovation.  So, the issue here is clear: a) Prioritize and test the idea of modular refineries; b) set up a Refining and Petrochemicals Authority, and c) let illegal become legal.  It is sound reasoning.  It is practicable.  It is demonstratively a true paradigm shift for the good.

By:  Godwin Igwe