The Managing Director and Chief Executive Officer of Nigeria Liquefied Natural Gas (NLNG) Limited, Mr. Babs Omotowa, was quoted as having said that Shale gas competition, as well as new mega LNG plants in Australia and East Africa are a threat. It is this writer’s opinion that the declining price of crude oil on the international market and the emergence of shale gas may provide the opportunity or incentive for Nigeria as a nation to change the way we think about energy, market our crude oil, commercialise our gas as it’s possible that refining it before sale should increase our earnings.
It may be time to change our energy mix
It may be time to change our energy mix, we are a gas nation with a drop of oil, yet our focus is on crude oil, and we when talk about gas utilisation we limit it to gas to power, gas for export and gas based industries. LNG, CNG and LPG have multiple uses in other countries, I think it may be time for us to become a little creative in the way we optimise our oil and gas resources.
Is The Emergence Of Shale Gas A Game Changer?
The age long reliance the United States and other Western nations have placed on Africa and the Middle East for Oil and Gas is being threatened OR PERHAPS HAS ENDED with the shift to shale gas by these countries. It’s time to up our game, we need an energy policy and fast at that! The then Group Managing Director of the NNPC, Engr. Andrew Yakubu, was quoted as having said that “There is no doubt that shale gas has come and is with us, we also know that it is posing a challenge to the oil and gas activities in Nigeria. With the coming up of shale gas there has been a drop of pipeline imports from 16 to 12 per cent while shale gas has grown from 8 to 32 per cent, and LNG import has dropped from 3 to 1 per cent, which is mainly Nigerian LNG.” Reports have it that the United States plans to start export of LNG by 2015.
What Is Shale Gas and Why Is It Important?
Shale gas refers to natural gas that is trapped within shale formations. These are fine-grained sedimentary rocks that can be rich resources of petroleum and natural gas. Sedimentary rocks are rocks formed by the accumulation of sediments at the Earth’s surface and within bodies of water.
Shale Gas and Hydraulic Fracturing
Over the past decade, the combination of horizontal drilling and hydraulic fracturing has allowed access to large volumes of shale gas that were previously uneconomical to produce. The production of natural gas from shale formations has rejuvenated the natural gas industry in the United States and other western countries. (Courtesy of EIA)
We also have plenty of Gas
A lot of the gas we flare is associated gas that is gas that comes out while we drill for crude oil. We also have wells being drilled specifically for gas. The key advantage we may have as a nation is that we do not necessarily need horizontal drilling or hydraulic fracturing to access our gas… Although these two technologies will aid us in brown field rejuvenation.
Hydraulic Fracturing in Nigeria?
The debate over hydraulic fracturing should commence sometime soon and should not be silenced, but it should remain based on fact, it should be focused on the protection that is already in place and what actually is being done to increase that protection or it will have failed to serve the public interests of energy security and environmental sustainability.
Gas Contracts Are Stories…
Gas Contracts are not different from “novels” in the sense that they tell a story about the agreement that the private parties entered into with an energy company within the ambits of applicable laws. The regulatory framework for the use of natural gas is probably still evolving so model contracts might lie somewhere in the future.
THE PIB and Gas Utilization
The PIB if passed into law will probably continue with the use of DSO’S. Before the passage of the PIB government has tried to promote the utilization of LPG and CNG as cleaner alternatives to diesel and petrol.
THE PIB And The Need for Fiscal Terms for GAS…
Fiscal terms in any oil and gas contract enumerate the objectives of the host government, guide and help ensure profitability for all the parties involved from the host government to the IOC’S.
Domestic Gas Supply Obligations
In an attempt to jump start the Nigeria Domestic Gas Market, the Federal Government of Nigeria (FGN) introduced the DSO volumes through its National Gas Supply & Pricing Policy 2008. The National Gas Supply & Pricing Policy 2008 mandates all gas (Associated Gas & Non Associated Gas) producers to dedicate a specific portion of their gas reserves and production for supply to the Nigerian domestic market. These DSO Volumes are assigned by the FGN through the DPR.
Are “Domestic Gas Supply Obligations and Pricing Policies” sufficient?
The seeming imbalance in the supply of gas in relation to the growing demand for gas has revealed the inadequacy of DSO’S alone. For effective gas utilization we need demand, we already have that, long term supply, a distribution network (pipeline, trucks and perhaps ships), technical ability for pro gas conversion, and the legal regulatory frame work that should include the DSO, incentive and model contracts covering all the facets of the proposed Gas revolution.
Fuel-Intensive Fleets Have Been Using Natural Gas For Years.
Fuel-intensive fleets travel far and wide each day and have been using natural gas for years. Examples include taxicabs, transit (like the ones in Benin) and school buses, airport shuttles, construction vehicles, garbage trucks, delivery trucks, keke napep and public works vehicles. Large volume of vehicles makes it more economical to convert vehicles or to purchase them outright. Fleet vehicles are also centrally maintained, making the refueling process convenient and reliable.
Gas to Liquids Technology in Gas
Research and operations in the gas industry have thrown up “gas to liquids” as a possible model for the use of renewable energy sources. Research has thrown up new ideas, procedures, software and equipment that have succeeded in turning gas into a state (compressed/liquid) in which it can be easily stored, transported and used.
LNG can power Nigeria
LNG can power Nigeria as a country, no law says we cant use some of the LNG or other gas we produce, its a fact that a lot of our power plants are complaining of lack of gas, I know we have turbines that run on natural gas. It interesting and probably worth a second thought that most of gas we produce is either flared, frozen for shipment or piped to our neighbouring countries. Other countries have storage tanks for LNG, that’s right they are saving gas away for a rainy day.
Gas distribution is a Complex Mix…
LPG and CNG distribution might involve distribution by pipeline, bicycles, canoes, trucks and if need be ships. The major goal is uninterrupted supply of cleaner fuels. The possibility of mobile gas processing units is a huge game changer.
After years of not really talking about it, Nigeria needs to control its own energy future, (exporting all we produce is far from effective control). We need to produce and refine more oil and gas at home. We need to double the distance our cars will go on a litre of petrol while shifting our focus to renewable energy, we need to double/increase the amount of renewable energy we generate from the elements. The world is shifting its focus to renewable energy sources; we would do well to restructure our energy industry to begin to take advantage of the season of plenty by preparing and providing for future generations of Nigerians.
Olufola Wusu is a Commercial, Oil and Gas and I.P. Lawyer based in Lagos
Olufola Wusu Esq. © 2014
Olufola Wusu is noted for his “dynamic practice” and “commercial acumen”. He is praised for his “first-rate skills” in assisting clients…