Flaring is a waste of resources as well as revenue for the government, Nigerians and for SPDC. Shell Nigeria has a plan to eliminate routine gas flaring in its operations. This is a huge undertaking that requires the company to gather and bring to market the gas produced from more than 1,000 wells.
SPDC has been a pioneer in harnessing natural gas in Nigeria since the 1960s when it was the first Nigerian company to supply gas to the domestic market. More recently, SPDC has undertaken a huge multi-year programme to install equipment to gather associated gas from its facilities across the Niger Delta.
Since 2000, SPDC and its joint venture partners have spent more than $3 billion on associated gas gathering infrastructure. SPDC’s total flaring dropped by around 65% between 2002 and 2009 (from about 0.6 bcf/d to about 0.2 bcf/d, representing a drop from about 14.4 mtpa to about 5.2 mtpa in CO2 emissions) - although recent production losses in SPDC have contributed to this.
The gas gathering programme has been delayed by funding shortfalls from the major government shareholder and security concerns which meant it was not safe for staff to work in large parts of the delta for long periods of time. However, SPDC and its partners continue to invest in reducing flares and have resumed work on many delayed projects and started new ones. SPDC is currently improving or installing associated gas gathering (AGG) facilities at 19 flowstations.
In late 2009, projects were sanctioned to install AGG facilities at a further seven flowstations. When all this work is completed it will cover more than 90% of SPDC’s production potential. In total these projects represent an investment of over $2 billion.
As part of the Nigerian government and Shell’s desire to improve funding for gas projects, SPDC agreed arrangements with the Nigerian National Petroleum Corporation (NNPC) in 2008 that would allow progress on some projects through the use of bridge loans and modified carry agreements. These agreements make funds available from SPDC to NNPC.
One project that is currently benefiting from this is the Gbaran-Ubie integrated oil & gas project in Bayelsa State. When fully operational next year, it will be capable of producing 1 billion standard cubic feet of gas a day (scf/d), equivalent to about a quarter of the gas currently produced for export and domestic use in Nigeria. It will also produce as much as 70,000 barrels of oil per day. The project’s gas processing plant is now producing 200 million scf/d from the first two wells out of a planned total of 33.
The project, which incorporates five oil and gas fields spread over a 650 square kilometre area of Bayelsa and Rivers states, has taken five years to build. Most of the gas will go to the Nigeria Liquefied Natural Gas plant in Bonny to support existing export contracts. Power will be generated with gas from Gbaran-Ubie at the Bayelsa State power plant at Imiringi, as well as a new 225-megawatt power plant being built in Gbaran by the federal government.
