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SPDC Joint Venture Awards Pipeline Contract for Flares Reduction

The Shell Petroleum Development Company (SPDC) of Nigeria Limited has signed a contract with Saipem Contracting Nigeria Limited for a pipeline system that will gather associated gas currently being flared for use in the domestic gas market. Some 30MMscf/d of gas from Otumara and Saghara fields in Western Niger Delta will be gathered, processed and channeled through the Escravos - Lagos Pipeline System (ELPS).

“This is an extremely important project for SPDC in terms of our commitment to ending routine gas flaring, and consolidating our leadership position in the domestic gas market”, said SPDC MD, Mutiu Sunmonu, at the signing ceremony in Port Harcourt on April 8. “Security and funding permitting, we will continue to make good progress in bringing on the projects that will reduce flares and boost gas supply to the domestic market.”

The project costs $101mln.

Deputy Managing Director Saipem Contracting Nigeria Limited, Davide Rossi, said “We are committed to executing the contract job and ensure timely delivery of the project.” The 42-km pipeline is of various sizes ranging from 2” to 12” passing through a swampy terrain with a major river crossing.

SPDC Joint Venture had awarded a contract for engineering, procurement and construction of the gas compression and processing plant to Daewoo Nigeria Ltd in October last year, and this work is progressing.

SPDC Joint Venture has already invested some $3bln in Associated Gas Gathering (AGG) facilities which helped reduce flaring significantly between 2002 and 2010. Militant activity and funding issues brought many projects to a halt, but SPDC Joint Venture is now investing more than $2bln in completing these projects, repairing damaged equipment and building new AGG facilities. When complete, these projects will extend AGG coverage to more than 90% of the associated gas produced in the Joint Venture operations. The remaining 10% will be covered by Nigerian investors that would collect associated gas from flare sites for small-scale local projects.