Nigeria has joined a small group of nations including Qatar, South Africa, Malaysia and Australia that operate hi-tech Gas to Liquid (GTL) plants, as the Chevron owned Escravos GTL has produced its first liquids, after being behind schedule for several years.
The plant would allow Nigeria to perform a leading role in an advanced sector of the energy and fuel market.
“We recently achieved a major milestone at our Escravos gas to liquids plant with the production of GTL diesel and naphtha. We anticipate continued ramp-up in first product lifting later this year,” said George Kirkland, Vice Chairman and Executive Vice President-Upstream and Gas, at Chevron Corp., during the company’s Q2 Earnings conference call.
Chevron partnered with the Nigerian National Petroleum Corporation (NNPC) to build the GTL plant designed to convert 325 million cubic feet of natural gas per day, into 33,000 barrels of liquids—principally synthetic diesel.
When completed, the plant is expected to supply clean-burning, low-sulphur diesel fuel for cars and trucks.
The key component of the gas-to-liquids conversion is the Fischer-Tropsch reaction, pioneered by German scientists Franz Fischer and Hans Tropsch almost a century ago.
The Escravos GTL project had been severally delayed and capital expenditure on it is approaching $10 billion, according to Chevron.
This compares with the $1.2 billion that was spent on the 34,000 bpd Oryx GTL in Qatar, a similar project in terms of technology and capacity, which was inaugurated in 2006.
The Slurry Phase Distillate technology developed by Sasol and utilised at the Oryx project is also in use at the Escravos GTL project.
The Escravos GTL project will also produce kerosene and LPG – with the kerosene providing the nation with premium transportation fuel to produce jet fuel for aviation.
The products are expected to offset some oil product imports.
Nigeria spent N192 billion ($1.18 billion) to import refined petroleum products in the first quarter of 2014, according to data from the National Bureau of Statistics (NBS).
The business rationale behind the GTL project is based on the wide differential between gas and liquids (crude oil) pricing, which Chevron believes will persist over the long-term.
Global GTL production has the potential to deliver the equivalent of 32 billion barrels of liquids, or about a year’s worth of global oil demand, Bernstein analysts wrote in a November report titled “What if Small-Scale Gas to Liquids Was the Next Shale Gas? Are We on the Verge Of Another Energy Revolution?”
A pre-feasibility study of Escravos GTL was conducted in April 1998, followed by an engineering feasibility study.
The Front-End Engineering and Design (FEED) were completed in 2002.
The same year, agreements between Chevron Corporation, Sasol, and NNPC were signed.
The construction contract was awarded in April 2005 to a consortium of JGC, KBR and Snamprogetti.
Chevron Nigeria Limited has a 75 percent stake in the GTL projects, the NNPC 15 percent and Sasol 10 percent, while there are plans to expand the EGTL capacity to 120,000 b/d within 10 years.
PATRICK ATUANYA
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