Nigeria group to use flare gas for electricity

Nov. 10, 2006
The Kwale partners' flaring-reduction project will be the first in Nigeria to put associated natural gas to work generating electricity, officials of the International Finance Corp. and World Bank announced Nov. 10. Nigeria currently leads the world in reported flared gas.

Nick Snow
Washington Correspondent

WASHINGTON, Nov. 10 -- The Kwale partners' flaring-reduction project will be the first in Nigeria to put associated natural gas to work generating electricity, officials of the International Finance Corp. and World Bank announced Nov. 10. Nigeria currently leads the world in reported flared gas.
They said Kwale also would be the first effort supported by Global Gas Flaring Reduction (GGFR), a public-private partnership to be registered as a Clean Development Mechanism (CDM) under the Kyoto global warming reduction accords.
The partnership was launched at the World Summit on Sustainable Development in Johannesburg in 2002 to bring public and private sector participants together to reduce gas flaring and venting. The group will host a forum on flaring reduction and gas utilization Dec. 13-15 in Paris to discuss opportunities and technology.
Fewer than 20 countries account for more than 85% of flared and vented gas worldwide, according to GGFR estimates. Most gas is flared because it can't be produced or transported economically. Some is disposed of in this manner for safety reasons at production sites.
"This doesn't just involve developing countries," said Rashad Kaldany, director of IFC and World Bank's oil, gas, mining, and chemicals department in Washington, DC. "Wells are being flared in Canada and the US too." Most US flaring is at small, state-regulated onshore wells, he said.
"There also are legislative or regulatory reasons why gas is flared or, worse, vented in some countries," he said.
He said that GGFR hopes that the Kwale project, which is 40% owned by Nigerian Agip, an affiliate of Italy's Eni SPA, and 60% owned by Nigerian National Petroleum Corp., will stimulate other producing companies and countries' interest in using associated gas to generate electricity or for other purposes. Kwale's captured gas will be used at a combined-cycle power plant in Okpi.

World leader
Nigeria led with 24.1 billion cu m (851.08 bcf) of the 107.5 billion cu m (3.796 tcf) of flared or vented gas reported worldwide in 2004, the most recent year for which figures are available, according to GGFR. Russia, which was second at 14.7 billion cu m (519.1 bcf), could be bigger because its figure may not be reliable.
Two other projects—a Royal Dutch Shell PLC gas-to-power venture and a reinjection effort supported by Eni—are being considered there as alternatives to flaring, said GGFR Partnership Manager Bent Svensson.
Nigeria's national power company hopes more gas-to-power projects will help its total annual generation ultimately grow to 15 Gw from 2-3 Gw currently, Svensson said.
But it's the reduction of global climate change contributing emissions, as much as additional available gas, that could make more flaring-reduction projects work economically, Svensson suggested. "This mechanism creates an additional revenue flow from the sale of [pollution reduction] credits," he explained.
The Kwale project will eliminate a projected 1.5 million tons of carbon dioxide annually, making it the 10th largest of the 2,160 projects in the CDM pipeline under the Kyoto accords.
"There's major potential in Africa because so much gas is being flared there," said Svensson. He noted that GGFR held a flare reduction workshop in Algeria this week, where it is supporting efforts by Sonatrach, the national energy company, and private partners. The partnership soon will send officials to Libya for the first time, he added.

LNG's impact
The LNG market's growth has made a big difference in reducing gas flaring and venting globally, the two officials said. Kaldany said it has had a major impact in Nigeria, while Svensson noted that much of the gas now being flared in Angola will be used for an LNG project backed by Chevron Corp., which will consolidate production from 20 locations for export.
But Kaldany added that LNG is not always a solution because it requires large volumes. "In other cases, local uses are more practical. Most of these are gas-to-power projects, but some also are petrochemical plants," he said.
"LNG plants need to be big to be commercial. Gas-to-liquids plants are promising for smaller amounts. It's possible we'll have a good discussion about these technologies at our conference in December," said Svensson.
GGFR members include multinational oil companies BP PLC, Chevron, Eni, Exxon Mobil Corp., Marathon Oil Corp, Norsk Hydro AS, Shell, Statoil AS and Total SA.
Member countries include Algeria, Angola, Cameroon, Chad, Ecuador, Equatorial Guinea, Indonesia, Kazakhstan, Nigeria, Qatar, and the Russian province of Khanty-Mansijsysk. Canada, Norway, the UK, the US, and members of the European Union are listed as donor countries.
GGFR also gets support from the Organization of Petroleum Exporting Countries' secretariat and the World Bank Group.
The members represent countries with about 75% of the world's total flared gas. GGFR would like Mexico, Venezuela, Brazil, Egypt, Iraq, Iran, and the rest of the Russian federation to join.

Contact Nick Snow at [email protected].