NNPC’s Gas Infrastructure Threatened

Fri, Jan 24, 2014

By publisher

7 MIN READ

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The Nigerian National Petroleum Corporation has aggressively expanded the gas infrastructure in the country but it stands to lose the gains it recorded in the last three years if nothing is done to stop vandals and crude oil thieves from wrecking the pipelines

|  By Maureen Chigbo  |  Feb. 3, 2014 @ 01:00 GMT

THE Nigerian National Petroleum Corporation is aggressively expanding the nation’s gas infrastructure since the construction of the ELPS system about 25 years ago. As of today, all Power plants are connected with permanent gas supply pipelines, according the NNPC. At a press briefing on Monday, January 20, during which NNPC gave the status of gas supply to the power sector, David Ige, group executive director, gas, said as part of efforts to support the federal government’s, FGN, aspiration for power, the Diezani Alison-Madueke, minister of petroleum resources initiated an accelerated implementation of the gas master-plan about three years ago. This effort comprised a complete revamp of the commercial framework for gas, an acceleration of gas infrastructure development and accelerated gas supply development in the form of the emergency gas initiative of 2012.

The objective of these reforms was to set the basis for a sustainable growth in domestic gas supply, notably to power, but also for industrialisation. These efforts have yielded some results. Today, gas to power price is more sustainable at $1/Mscf from $0.1/Mscf a few years ago and it is expected to rise to $1.50/Mscf by mid-year.  Similarly, in the last three years, over 300km of gas pipelines have been completed and commissioned, a further 450km is funded and under construction, whilst 1400km is in project development phase.  “This is the most aggressive expansion of the nation’s gas infrastructure since the construction of the ELPS system about 25years ago.  As of today, all power plants are connected with permanent gas supply pipelines”, Ige said.

According to him, “these interventions have resulted in an increased supply capacity, now 1500mmcf/d from less than 500mmcf/d three years ago.  A significant portion of this supply is directed at the Power sector.  In addition, supply to non-power sector such as cement etc. has more than doubled in the time period”.

Despite these efforts, he said that the gas sector has been faced with a major challenge in pipeline vandalism and this has significantly eroded available gas supply to the power plants.  The consequence of this is the current situation of sub-optimal supply of electricity to Nigerians.  As at the last weekend, over 30 percent (480MMsf/d) of the installed gas supply capacity was out due mainly to vandalism. This is equivalent to the gas requirement to generate about 1,600MW of electricity.

The pipelines involved are the Escravos-Warri ELPS A pipeline (190mmcf/d), the Trans-Forcados crude pipeline (230mmcf/d).  The remaining supply shortfall is due to maintenance issues at Utorogu gas plant (60mmcf/d). The outage of the ELPS A pipeline has been on for over six months due to a willful act of vandalism at various locations between Escravos and Egwa location.

“Specifically on the 25^th of June 2013, an explosion rocked the pipeline.  Investigation revealed dynamite had been used and 4 ruptured points were identified.  NGC mobilised immediately to commence repair works.  As repairs progressed, more points of rupture emerged.  At the last count, 20 ruptured points have been identified, all due to deliberate dynamite explosion. NGC completed repairs in November and on commissioning in December, rapid pressure loss was experienced indicating further rupture in weakened locations.  We have since effected repair of these new points and re-commenced commissioning activities.  It is expected that, all things being equal, gas supply will be reinstated in the next three weeks.

“It is important to explain to Nigerians the complexity of effecting repairs when a pipeline is ruptured in the swamp.  It is a complex, expensive and time consuming process”, he said.

According to him, in addition to ELPS A, NNPC has suffered repeated outages on the vital Trans Forcados crude oil Pipeline (TFP), the latest being about two weeks ago.  Although this is not a gas pipeline, it is used to evacuate condensate from Oben, Sapele, Oredo and Pan Ocean’s Ovade gas field.  With a disruption of condensate evacuation, gas production has to stop.  This has resulted in a further outage of about 230MMscf/d.  Repairs of the TFP should be completed today or tomorrow, and as we speak the affected gas plants are sequentially being recommissioned. The frequency of attack on this crude pipeline has been a major challenge.”

Ige said that the crude theft related outage of crude pipelines is also a challenge in the East with recurrent breach of the Trans Niger Pipeline, TNP, almost on a weekly basis.  The result of this is major disruption of gas supply in the East impacting on three power plants at Afam belonging to NNPC/SPDC JV, PHCN and RVSG as well as other industrial users in the East such as Notore and ALSCON.

He added that an additional outage of 60mmcf/d is attributable to temporary maintenance challenges with the Utorogu gas plant.  However, this is being rectified and should be completed within four weeks. “The cumulative effect of the above interruptions is a real degradation of power supply to Nigerians. The Ministry of Petroleum and NNPC continue to make effort to assure gas supply in a difficult environment.  It is expected that a major improvement in power supply should be achieved within two or four weeks as the various repairs are completed.

“As you are aware, there is a heightened effort by the FGN to address the challenge of pipeline vandalism and crude oil theft. We believe these efforts are yielding results gradually, nonetheless, for as long as some crude theft persists, the gas supply situation remains vulnerable. You will recall that attack on gas pipelines was most severe in 2007/9 at the peak of the Niger Delta militancy. However, following the FGN’s Amnesty programme, we saw a significant improvement, testament to the effectiveness of the programme.

“The recent direct attack on the ELPS A gas pipeline therefore came as a surprise. Unlike crude line attacks which is driven by theft of crude, gas pipeline attack is simply an act of sabotage.  We hope that this remains a one-off event,” Ige said.

Beyond the ongoing repair works, many projects are ongoing to bring in additional supply to bridge the growing demand by the power sector. By the end of Q2/Q3 2014, additional 200mmcf/d of gas is expected from two NPDC projects at Utorogu and Oredo.  In addition, with the planned completion of the Omoku and Alaoji NIPP power plants, further boost in generation is expected as both plants have gas supply available awaiting completion of the power plants.

In 2015, many other projects are expected to mature progressively and by 2016 when the East-West pipeline is completed, a major boost in supply will be attained as more than  250mmcf/d of gas stranded in the East will be diverted to meet the growing Power demand.

“If the occurrence of pipeline attacks is arrested, we expect nothing but a continuous and steady upward growth in gas supply to power from the end of this month, with a noticeable increase in electricity seen by Nigerians,” Ige said.