SOUTHERN AFRICA DRIVING TO TAP GAS RESOURCES

Gas Reserves, Selected Southern African Nations

Southern Africa's natural gas resources are vastly underused.

Some countries are lightly explored and have only small reserves. In other countries, large volumes of associated are flared.

But there is increasing emphasis on developing gas markets and stepping up gas exploration efforts.

A unit of Chevron Corp. has a $500 million gas utilization project under way in Nigeria, and there is growing optimism that the Nigerian LNG project may finally be progressing. Other countries in southern Africa are looking hard at their natural gas prospects and trying to attract foreign capital and technology to help develop markets and resources.

This growing emphasis on developing southern Africa's natural gas resources was evident at the second Sub-Saharan Oil & Minerals Conference late last March in Johannesburg.

Ministers and energy executives from throughout southern Africa attended the conference and focused much of their attention on natural gas and how it can help expand industrial investment and electricity supply.

Power generation is the most critical need-and most promising gas market-in much of southern Africa. Growing economies also will boost demand for fertilizers, petrochemical feedstock, and industrial fuel.

But while some economies in southern Africa are growing, that growth is erratic in individual countries and not uniform throughout the region. Lack of energy supply is keeping a lid on economic growth in some countries.

The need is there. But markets large enough to absorb a significant share of the natural gas that is already available in southern Africa will be slow to develop.

THE BIGGEST PLAYER

There definitely is progress, however, especially in Nigeria.

With reserves of 120 tcf, it has most of southern Africa's natural gas. It also has the region's two biggest utilization projects-one long planned, one under construction. Gas utilization has a high priority because about 75% of Nigeria's associated gas production is flared.

Chevron Nigeria Ltd.'s Escravos gas project is the biggest gas utilization project under way in southern Africa. First production from Phase 1 of the $569 million project is set for May, 1997. Of Nigeria's proved gas resources, about 17 tcf are in the Escravos area under acreage operated by the Nigerian National Petroleum Co. (NNPC)-Chevron joint venture.

In this first phase, associated gas from Okan and Mefa fields in Oil Mining Lease 49 will be gathered, compressed, and moved by pipeline to an onshore processing plant where LPG and heavier liquids will be removed.

LPG will be exported by pipeline to an offshore floating storage and offloading vessel. Heavier liquids will be blended with the Escravos crude stream. Dry gas will be sold to Nigerian Gas Co. for resale to local end users.

Okan and Mefa fields, about 8 km off Escravos, hold combined gas reserves of 5.3 tcf.

Chevron predicts the first phase of the project will reduce gas flaring from NNPC-Chevron operations by 40%.

Okan offshore facilities will include a new gas gathering and compression platform holding liquid separation and gas dehydration equipment and three 14,000 hp gas turbine compressors. Gas will come to this new platform from the Okan production platform and two production satellites. About 67 km of 8, 16, and 20 in. pipeline will be installed to link the facilities.

A new onshore gas processing plant will be adjacent to the Escravos tank farm, Chevron's operations base on the Niger Delta. The plant, to include a deethanizer and debutanizer, will produce a butane/propane mix and a pentane-and-heavier stream. Sand filling of the plant site was finished late last year in preparation for plant construction.

LPG from the onshore plant will move by pipeline to a floating storage and offloading vessel moored with a single point mooring system about 32 km offshore. Chevron said it is the first installation of a purpose built LPG storage vessel built of steel. And it is the first application of low temperature, floating, offloading hose.

Major contractors for the project include Escravos FSO Inc., a subsidiary of Mitsui & Co. Ltd., for the FSO; and a combine of Saipem Spa. and ABB Lummus Crest Inc. for the offshore facilities. A combine of ABB Randall Corp. and Entrepose Montalev SA is prime contractor for the onshore facilities. Kawasaki Heavy Industries Ltd. is prime contractor for the compressors, and Solar Turbines Inc. is a major subcontractor for compressor equipment.

William D. Edman, managing director of Chevron Nigeria, said a long term objective of the Escravos gas project is completion of the West African Gas Pipeline.

Edman told attendees at the Johannesburg conference the pipeline will permit gas from eastern Nigeria to reach potential customers in Nigeria, Benin, Togo, Ghana, and other countries.

"It is the kind of project that will allow us to strengthen the entire West African economy...," Edman said.

AMBITIOUS PLANS

Nigeria has placed a high priority on gas utilization.

In addition to discussions to build the West African line to move gas to other countries for power generation, plans are afoot to develop a national gas grid, said Abdullahi Hashim, director general, Ministry of Petroleum Resources for Nigeria. A national gas policy is "being put in place," Hashim. said.

Full utilization of Nigeria's natural gas resource, though, will depend heavily on exports. An LNG export scheme has long been in the works, the market and the financing never quite coming together (OGJ, May 16, 1994, p. 74). But officials attending the sub-Saharan conference showed renewed optimism that the project will finally move forward.

Chief G. T. Grant, NNPC group executive director of operations, said in Johannesburg the LNG project is "the closest to realization it has been in over 20 years."

Estimated to cost $4.6 billion, initial delivery is scheduled about the end of the century, Hashim said, "as markets for the entire volume of 7 billion cu m/year has been committed to companies largely in Europe and America."

A two train plant is planned at first. Three more plants could be added "if market opportunities present themselves, and if funding is available." NNPC, Shell, Elf, and Agip are partners in the project.

In discussing incentives for gas development in Nigeria, Grant told the conference, "The gas environment in Nigeria is very fertile and holds opportunities for investment."

TANZANIA

Although its reserves are only a fraction of the size of Nigeria's, Tanzania's approximately 4 tcf is a resource typical of several other countries in southern Africa. Other characteristics of Tanzania's energy supply and consumption patterns are like those in other countries of southern Africa.

Even at only 4 tcf, Tanzania's reserves are larger than those of many countries. And it is eager to make more use of natural gas.

Of total energy consumption, wood accounts for more than 90% electricity 1%, and petroleum 7%. Energy available from hydroelectric dams has dropped sharply in the past 2 years due to low rainfall and aging plant equipment, prompting a search for other energy sources.

Programs to stimulate economic growth have been effective, but "economic stimulation is being hampered by inadequate energy supply," says Y.S.M. Killagane, managing director of Tanzania Petroleum Development Corp. (TPDC).

"The problem is so acute that (the power utility company) has had to resort to severe power shedding which is ...detrimental to the country's economy in general," Killagane told the Johannesburg conference.

Tanesco, Tanzania's power utility company, forecasts power demand will grow steadily, increasing by about 50% between 1994 and 2002.

To help meet demand, two gas-to-electricity projects are planned. Although relatively small, they symbolize efforts to develop gas resources and involve international firms in development projects.

The Songo-Songo project will produce 100,000 kw at first. A planned second phase will produce an additional 100,000 kw for export to neighboring countries. Project cost is estimated at $215 million.

Ocelot and TransCanada PipeLines Ltd. are foreign equity investors and will build and operate the project. They will furnish $50 million in equity financing, Killagane said, while World Bank will provide financing of $125 million.

Songas, a joint company of TPDC and Tanesco, will own the facilities.

Tanzania's Songo-Songo field has five producing wells-two onshore and three offshore. Gas reserves are estimated at I tcf.

The gas plant will process as much as 35 MMcfd, but initial power production will require only about 26 MMcfd. Two 20,000 kw dual fired gas turbines at Ubungo are running on liquid fuel. They will be converted to gas fuel. More units are being acquired to reach the 100,000 kw capacity.

Mnazi Bay gas field will fuel another planned gas-to-electricity project that will generate about 15,000 kw. Reserves are estimated at 1 tcf. Gas from the field, close to the border with Mozambique, will move by pipeline to Mtwara, 45 km to the north, to fuel two generators.

Cost of this project is $15 million. TPDC's Killagane said World Bank will provide $12 million, and the rest will come from private investors. He told the Johannesburg conference the government will soon invite tenders for selection of a private foreign investor for the project.

SOUTH AFRICA

Conventional natural gas reserves in South Africa are small. But coalbed methane reserves in the country-and in some other countries in southern Africa-are larger. One estimate (OGJ, Dec. 5, 1992, p. 49) places coalbed methane reserves in South Africa, Zimbabwe, and Botswana at 30 tcf.

To make up for a lack of conventional oil and gas reserves, South Africa's Sasol has long been a leader in converting coal to oil and chemicals. It also has developed a process to convert natural gas to distillate fuels.

Now, the Sasol Slurry Phase process, said Paul du P. Kruger, deputy chairman and managing director of Sasol, offers a new option: production of high quality diesel fuels from natural gas.

Kruger described development and commercialization of the process at the Johannesburg conference and said increased demand for low sulfur, low aromatic diesel fuel makes the process an attractive option for development of remote gas fields.