Information is beginning to surface about the start-up later this year of the second phase of Chevron Nigeria Ltd.'s Escravos Gas Project in Delta State about 125 miles east of Lagos.
A political aim of this project was to reduce the flaring of gas produced in association with crude oil in the western Niger Delta. It is obvious that partners Nigeria National Petroleum Corp. and Chevron long wished to extract some value from the gas that had been flared into the skies for decades by the oil-producing joint venture.
The government and Chevron also must have desired to profit from the investment by selling NGL, raw gas, and perhaps other products, such as methanol, that could be manufactured from the gas.
As monumental as the Escravos project is and despite its positive outcomes, much of the gas it was designed to utilize is still being flared, at least for now. Like many things that happen in Nigeria, it is a lesson in persistence.
Escravos project scope
A Chevron official discussed the project's scope and goals in a 1998 article in these pages (OGJ, Apr. 20, 1998, p. 78).
He wrote that Nigeria has an estimated 110 tcf of natural gas in place, of which 17 tcf is on NNPC-Chevron joint-venture acreage around Escravos. Working interests in the producing fields are operator Chevron, 40%, and NNPC, 60%. The facilities began processing gas in November 1997 in the first phase of the gas utilization project.
The first phase was to process 165 MMcfd of inlet gas mainly from Okan and Mefa oil fields to obtain 8,000 b/d of NGL and 2,000 b/d of condensate.
Due on stream this year, Phase 2 involves extraction of an additional 6,700 b/d of NGL.
With Phases 1 and 2 on stream, Chevron noted, the processed gas output will reach 285 MMcfd. Gas sales total 110 MMcfd, including Chevron's share of about 40 MMcfd.
Phase 3, which could be submitted in fourth quarter 2000 into the company's capital spending consideration process, involves the gathering and processing of a further 120 MMcfd of associated gas from Olero Creek, Dibi, and Abiteye offshore fields.
Chevron said it would have cut its own flaring 60% with start-up of the second phase and eliminated it when it activated the third phase in 2007. Nigeria wants all flaring halted by 2008.
How it's going
In the 1998 article, the Chevron author wrote, "Often, the major stumbling block to gas utilization has been disposal of residue gas from processing; it makes no sense to build a gas plant and end up flaring much of the gas."
That is still happening with a large volume of gas, but this is part of Chevron's phased approach to eliminate flaring.
Chevron began shipping LPG from Nigeria in 1997 and still has only one customer, a Nigerian government entity. Chevron said the price it receives for the processed gas is "almost equivalent to production costs."
No market exists in Nigeria for any more of the gas for the foreseeable future.
The unused gas is now being flared from a central point rather than in the individual fields from which it is produced.
Gas utilization options
One use for gas was to be repressuring some of the oil reservoirs, but this has not come to pass. Chevron said it is not currently reinjecting any significant volume of gas but that Phase 3 calls for about 50 MMcfd for this purpose.
Another use was to be a methanol plant near Escravos, but markets are not favorable for such a project.
Another use was to be a pipeline to ship around 120 MMcfd of gas westward to Benin, Togo, and Ghana. Chevron has taken the lead in a project to accomplish that. The company said legal and commercial structuring of the pipeline project is under way and that commercial operations could start by late 2002.
Still another use was gas liquefaction. Chevron said feasibility engineering and technical evaluations are nearing completion for a gas-to-liquids (GTL) plant proposed for construction at Escravos in conjunction with Sasol of South Africa.
The proposed 30,000 b/d Escravos GTL plant would consume 300 MMcfd of gas, Chevron said. Construction of the GTL plant would take about 4 years following receipt of government approvals. The company said the project will likely go to front-end engineering and design in fourth quarter 2000.