Flared gas worth N696bn can power millions of households

Natural gas estimated at N696 billion and capable of powering millions of households was flared in Nigeria within the first 11 months of this year, according to BusinessDay findings.

Data obtained from the Nigeria Gas Flare Tracker, a satellite-based technology, created by the National Oil Spill Detection and Response Agency (NOSDRA), showed the country flared about 241.1 billion standard cubic feet of gas worth $843 million (N696 billion using an exchange rate of N824/$) from January to November.

Industry experts say the volume of gas flared can generate megawatts of electricity that will power millions of households. According to the United States Energy Information Association, one megawatt (MW) of electricity can meet the needs of 1,000 households.

Total electricity generation in Africa’s most populous nation stood at 4,212.86MW as of 6am on Wednesday, compared to an installed capacity of 13,014.14MW, data from the Nigerian Electricity System Operator shows.

As of 2021, over 85 million Nigerians lacked access to electricity, according to the World Bank.

“The demand or consumption rate for electricity in an average or typical Nigerian home depends on several factors, one of which is the location, either rural or urban area,” said Ayodele Oni, an energy expert and partner at Bloomfield Law Practice.

Experts have stressed the need for gas commercialisation, proper gas regulation, the development of floating Liquefied Natural Gas, and amendment of the Petroleum Industry Act (PIA).

“The optimal strategy would be a practical push for gas commercialisation, supported by a robust infrastructure network. A portion of the Liquefied Petroleum Gas (LPG) consumed locally is imported; although the exact percentage is uncertain,” Preye David Orodu, lead engineer at KEOT Synergy, said.

“By promoting gas commercialisation, we can attract investment, thereby lessening our reliance on imports,” he said. “The commercialisation process should stimulate investment in well-designed, efficient modular processing facilities.”

According to Orodu, these facilities would capture flared gas at well sites, creating profitable clusters both at well sites and flow stations. Success hinges on setting appropriate gas pricing for local consumption and capitalising on additional benefits throughout the value chain beyond LPG, he said.

Nigeria lost $22.9 billion to gas flaring in 10 years, from 2011 to 2021, according to NOSDRA.

In July, the House of Representatives vowed to recover the sum of over $9 billion in gas flaring fines imposed by the Federal Government on erring local and foreign companies operating in the 0il and gas industry.

Ahmed Munir, chairman of the ad-hoc committee investigating gas flaring, vowed that the 10th National Assembly will do everything within its powers to ensure the recovery of all unpaid levies as well as compliance with extant legislations and regulations.

For Kelvin Emmanuel, energy sector expert and co-founder/CEO at Dairy Hills, to commercialise the gas being flared, there is a need for the deregulation of gas prices.

“The reason this is critical is because if the cost of gas per standard cubic feet is lower than the cost of penalty for flaring, the operators will reject re-injection and opt for the fines,” he said.

He recommended “the development of floating liquefied natural gas (FLNG) vessels to minimise the cost of building standard trains, reduce the incidence of vandalisation that happens from hot pressure tapping as well as enable the easy offtake of associated gas from well-heads to eliminate the need for flaring or rejection of re-injection”.

Emmanuel said the government needs to amend the PIA to provide clarity to operators in terms of rights to associated gas in the deep offshore between the joint venture that forms NLNG and the joint venture that is forming emerging FLNG vessels.

“The NMDPRA (Nigerian Midstream and Downstream Petroleum Regulatory Authority) also needs to produce capability ratios to show the presidency the imperative of deregulating gas prices, which will incentivise the supply chain to invest in infrastructure to trap, pipe, transport, treat, separate, process, measure and deliver gas to generating companies midstream,” he said.