How Seplat is advancing sustainable energy transition
As the world marches towards energy transition, Seplat Energy Plc seeks to produce energy with less greenhouse gas emissions. At the just concluded Nigeria International Petroleum Summit (NIPS) in Abuja, Roger Brown, CEO of Seplat, shared insights on what Seplat is doing to build a sustainable business and ensure competitiveness, production, profitability, cost reduction in line with global yearnings, and his company’s road map towards energy transition sustainability.
As an indigenous oil giant with a rich portfolio of producing oil and gas assets, with eight onshore blocks in the prolific Niger Delta, ideally located for oil exports and internal gas demand centers, Seplat is making huge investments to increase gas production to support Nigeria’s gas-to-power programme.
Brown in his keynote address said that Seplat, as an indigenous company, recognises the pivotal role gas would play in Nigeria’s energy transition journey following the global move for cleaner sources of energy.
According to him, in line with the Federal Government’s declaration of the Year 2021 to Year 2030 as the “Decade of Gas Development”, there is a need to create a free market pricing for domestic gas. He said that fiscal incentives should also be granted to investors in the gas sector to drive domestic gas utilisation, the autogas scheme as well as supply of gas to power plants.
Brown also called for massive investment in gas infrastructure to reduce greenhouse gas emissions and intensification of efforts to reduce gas flaring in the country.
He disclosed that Seplat currently supplies a third of the gas needed to provide electricity in Nigeria and would continue to work assiduously towards the objective. He identified opportunities in lowering carbon emissions and harnessing Nigeria’s gas resources as key enablers in complementing the new approaches to future of hydrocarbons in the Nigerian oil and gas industry in the post COVID-19 era.
Brown affirmed that the global community has continued to scale up the collaboration towards lower carbon emissions, adding that Seplat supports international efforts to reduce carbon emissions and is actively investing in operations to improve environmental performance while also working with industry to develop new innovative technology and best practices to achieve these objectives.
On digital technology
The Seplat CEO said that the deployment of digital technology is highly imperative for optimum cost reduction and profitability in oil and gas production and will play a key role in ensuring Nigeria stays cost competitive in today’s oil market
This as stakeholders affirmed, will help in streamlining engineering and design process with a data-centric platform to enabling a real-time 360 degrees view of operations across the value chain, and enable predictive operations and maintenance; whilst full digitalization will help reduce risks of capital project delays and cost overruns and improve production at a lower cost.
With the International Energy Agency (IEA) setting out a road map to what it believes is required to achieve net carbon zero 2050 coupled with oil prices rising on COVID-19 pandemic recovery, traders betting on sustained revival in oil demand and the activities of OPEC/OPEC+, Brown noted that the end consumers, suppliers of energy, governments / regulators and providers of capital could be said to be in control of market outcomes.
“According to a research by McKinsey, effective use of digital technologies in the oil and gas sector could lead to reducing capital expenditures by up to 20 per cent and operating costs in the upstream by three to five per cent.
“Therefore, digital technology should be placed at the core of the business strategy in the industry, ” Brown added.
Also, given the current market realities, he said Seplat has identified cost savings initiatives, flexibility to scale projects, promotion of innovation and gas resource development as major value drivers for all its stakeholders.
Brown therefore urged operators and other stakeholders to heighten their priority to increase operational efficiencies and reduce costs, ensured the implementation of high caliber remote working technologies, and adopt new systems, new habits and new patterns that have emerged and impacting work processes.
The Seplat CEO added: “There is the need for pursuit of strategic new opportunities and streamlining operations . Portfolios have been reshaped and capital reallocated to the highest-return opportunities, that is, those best aligned with future value creation and sources of distinctiveness.
On asset development
“Our assets are strategically placed close to end markets, positioning Seplat to capitalise on the domestic gas opportunity and we believe the ANOH development at OML 53 is one of the largest greenfield gas and condensate developments in the Niger Delta,” Brown said, adding that the company was also investing in infrastructure development within its host communities and creating employment opportunities for Nigerians. He said the Company’s key assets – OMLs 4, 38 & 41 have access to export routes through the Forcados Oil Terminal (FOT) and at the Warri Refinery; OML 40 export via the Trans Escravos Pipeline (TEP) to FOT, and the completion of the AEP will further diversify export routes.
According to him, SEPLAT has also embarked on a new project which will further raise its total gas processing capacity to 540MMscfd. The ANOH Gas Processing Company (AGPC) Limited is a midstream gas company committed to the processing of gas from OML 53 for distribution to the local market. In August 2018, the Group entered into a shareholder agreement with Nigerian Gas Processing and Transportation Company (NGPTC) to subscribe for equal ownership of AGPC.
He said SEPLAT is the leading supplier of natural gas to the domestic market and is helping to address a major obstacle facing the Nigerian economy today – access to reliable, affordable power.
Brown affirmed that the “Environment, Social and Governance (ESG) principles are now key drivers in how companies plan for long term growth; thus the responsibility of companies to undertake gap analyses and ensure that sustainability thinking is embedded across the organization is very critical at this time.”
According to him, Seplat is also improving profitability, maintaining strict cost control and implementing the most appropriate technologies whilst creating value for all stakeholders; of which SEPLAT remains committed to its mission of sustainably delivering profitable, diversified energy solutions through operational excellence, skilled workforce and effective partnership.
According to Brown, the new approaches to future of hydrocarbons involve the development of robust policies and regulations to address and remedy existing challenges in the oil and gas industry; digital technology/innovations; cost efficiency initiatives; sustained social investments and continued support for Nigerian Content Development.
He said: “We have invested US$64m since 2010 towards healthcare, education, economic empowerment/capacity building, infrastructure development and environmental stewardship initiatives.
“Seplat’s commitment to creating shared value and achieving positive social and economic outcomes for its host communities is further embodied in the Company’s local content policy.
“Seplat seeks to ensure there is a positive multiplier effect on the local economy through significant local content spend, enhancing the Company’s local supply chain and contributing to a thriving and competitive local market. Seeking to use local business partners can simultaneously reduce operating costs and project risks by developing a mutually-beneficial relationship with the Company’s local partners.”
What Nigeria should do
Brown said that the Covid-19 pandemic has become a catalyst for change in the oil and gas sector. Stressing that the pandemic has led to flexibility and innovation in the industry, which ensured the implementation of high caliber remote working technologies , New systems, new habits and new patterns which have emerged and there is need to embrace the changes in how we work.
He said that new technology trends have led to pursuit of strategic new opportunities and streamlining operations Portfolios have been reshaped and capital reallocated to the highest-return opportunities, i.e., those best aligned with future value creation and sources of distinctiveness.
He said Seplat is addressing $8.90/boe opex cost In line with the governments drive to reduce oil production cost below $10.
Brown urged Nigeria to reduce operational costs, aim to be lowest quartile producer, drive technological development using Artificial Intelligence; ensure lower costs to market, promote free market pricing for domestic gas with the right fiscal or other incentives, and balance LNG development with Domestic Gas – developing both.
On electricity, he advised that the country move away from off grid diesel generation, improve electricity supply chain and develop on grid gas as a catalyst for on-grid renewable energy.
While for biomass, Roger called for the development of the LPG and CNG markets, and reduction of reliance on biomass, that is, arresting deforestation. He also advocated for a balance of Environmental and Social development whilst delivering the 17 Sustainable Development Goals (SDG).
In embracing changes and controlling its future, he said Seplat was investing in its people and motivating them by providing a safe working environment and career development opportunities.