Shell okays $4 billion to further cut Nigeria gas flaring

By OGJ editors

Royal Dutch Shell PLC has taken final investment decisions on two further projects to reduce associated gas flaring in the Niger Delta.

The Forcados Yokri integrated project and the Southern Swamp associated gas gathering project will be in addition to the $2 billion flare reduction program that the Shell Petroleum Development Co. of Nigeria Ltd. joint venture has installed since 2000.

The two new projects are expected to produce 100,000 b/d of oil equivalent and 85,000 boe/d, respectively, at peak production and reduce flaring intensity per barrel of oil produced. SPDC has a 30% interest in both projects, the cost of which totals $4 billion.

The two new projects will bring new production of gas and oil and will also capture gas now flared.

Shell said it had already reduced flaring 20% in 2011 compared with 2010 with roughly similar production volumes.

Before that flaring dropped more than 60% between 2002 and 2011 to about 200 MMcfd from more than 600 MMcfd. In the same period, flaring intensity dropped to .45 Mscf/bbl of oil produced from .80 Mscf/bbl, Shell said.

The company said the new projects will extend associated gas gathering coverage to more than 90% of the associated gas produced in SPDC operations. The other 10% is to be dealt with via local gas offtake agreements with third parties for small-scale local projects. More than 40 Nigerian investors have indicated interest in the scheme.

Shell said it supplies more than 70% of Nigeria’s domestic gas market and continues to increase its contribution and that the country needs a comprehensive and flexible gas distribution infrastructure. SPDC said it is working with the government and other operators to develop a commercial framework to make such a distribution system profitable for investors.

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