• Thursday, February 22, 2024
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BusinessDay

Oil: How North can avoid Niger Delta pitfalls

Gas flaring: A history of missed deadlines

As Nigeria expands its oil and gas reserves, through the Ebenyi-A Exploration Well, the first oil drilling well located in the Benue Trough in Obi Local Government Area of Nasarawa State, the government must take measures to prevent mistakes that have occurred in the Niger Delta region, analysts say.

The Nigeria Delta region has suffered severe environmental damage caused by mismanagement, crude oil theft, illegal refining, and sabotage, causing oil spills that pollute farmland and other ecosystems.

Also, oil companies burn gas found in wells when producing oil because they are unwilling to invest to harness it. The process fouls the environment. The government imposes fines, but they are cheaper than making investments to harness the gas.

Analysts have advised the state to prioritise environmental protection measures, such as regular environmental impact assessments, during exploration and production to prevent such mistakes. They have also urged the government to sanction oil companies if they fail to adhere to regulations.

Uwaye Omijie, a petroleum production engineer at Midwestern Oil and Gas Company, Delta State, told BusinessDay that environmental contamination and hazards are inevitable in the oil and gas industry, even overseas. However, it can only be contained and managed with proper regulations and sanctions if companies fail to adhere.

According to him, when oil is produced, the gas must follow, and thereafter, oily water is called produced water, and the gas is called associated gas. If you do not have end-users for that produce, they will become flared gas or contaminated water polluting the environment.

Omijie also said that if liquefied natural gas companies are around, the produced gas can be piped and sold to them, or the gas can be reinjected into gas wells for reservoir pressure maintenance back into the well bore for gas lifting.

“Either way, all this process involves a huge project to accomplish. So many companies extract the oil, sell it quickly and make money. This process is just for gas,” he said.

“While for water, before you can reinject it or dispose of it properly, it must be treated to below 50 ppm, which is the government standard, but building the treatment plant is very expensive. Disposal wells must be drilled and pumps procured if it needs to be injected into the aquifer. Either way, it is all expensive, so companies dispose of it and pollute the environment.”

Experts have also suggested that the government should increase the money oil companies will pay if gas is flared without utilisation. According to the National Oil Spill Detection and Response Agency, companies producing more than 10,000 barrels per day (bpd) pay $2 per 1,000 standard cubic feet of gas flared, while companies producing less than 10,000 bpd pay a fine of $0.5.

“The amount of money oil companies pay for gas flaring by the Ministry of the Environment is less than the amount they will use to capture the gas,” said Okoka Darlington, an electrical design consultant.

“If the penalty for flaring gas is higher, oil-producing companies will find a way to convert the gas to electricity. It should be compulsory for companies that flare gas to pay a lot of tax for polluting the environment.”

According to the World Bank, oil producers face significant challenges capturing, storing, transporting, and distributing associated gas, and the cost of ending all routine flaring could be as much as $100 billion.

“The traditional approach to flare gas utilisation – collecting associated gas and transporting it through a gas pipeline – heavily depends on achieving scale. To be viable, operators must typically capture a large quantity of associated gas from many flare sites, ideally located close to one another, and then transport the gas for productive use,” World Bank said.

“Oil operators can also re-inject associated gas back into the ground or build the infrastructure to capture, store, and transport the associated gas to market. Meanwhile, governments can implement effective regulations and policies to incentivise and encourage gas flaring reduction.”

Another measure that can be taken is ensuring that the communities affected by oil drilling are involved in the decision-making process. The state government must consult with local communities and consider their interests, concerns, and needs before granting oil drilling licenses. This can help prevent conflicts and ensure communities benefit from oil drilling activities.

Read also: Nigeria loses N16.25trn to crude oil theft in 12 yrs – NEITI

“The lack of proper community engagement between oil companies and the host community should be avoided. The youths should be carried along regarding asset security to avoid oil theft,” Etulan Adu, an oil and gas production engineer, said.

Adu said the security architecture and agencies should be properly monitored with technology, citing to the use of drones for surveillance and central reporting facility for monitoring.

“Also, a general memorandum of understanding with the host community based on the Petroleum Industry Act should be adequately managed to avoid looting of funds which could lead to poor development in the nearby communities,” Adu said.

“The proposal is to build an integrated complex where oil refinery, petrochemical facilities are located nearby the production facilities to avoid large footprint of pipelines which would encourage oil theft.”

To prevent environmental pollution due to oil theft, Adu said that sensitisation on the effects of oil pollution on the environment and farmland in a community campaign style would help increase awareness.

“Projects like health care facilities and community-based cooperatives for locals are solutions to make a friendly host community,” he said.

Adu said modern technology for power generation from flared gas can be adopted for gas flaring reduction. “Technology such as carbon capture and storage are viable options.”