Wednesday 31 October 2012

Nigeria may close oil fields to curb gas flaring

The federal government may have resolved to shut down oil fields as it tries to clamp down on gas flaring, even if it means a loss of revenue, an industry official said yesterday in Abuja. 
Currently, Nigeria, unarguably Africa’s top oil producer and holder of the world’s seventh largest natural gas reserves, is considered to be among the top two gas flarers in the world, burning off unwanted gas, after Russia.
“One of the things we are doing is to do some analysis for government, to such an extent that it will even mean a proposal to shut down fields to avert huge gas flaring,” Mr. Osten Olorunsola, director of the Department of Petroleum Resources, told Reuters.
“We will probably make that position known to government very soon,” said the man appointed last year by President Goodluck Jonathan.
Despite a noticeable dip in flaring of associated petroleum gas, produced as a by-product of crude extraction, Olorunsula said the government was unhappy with the pace of decline.
He said Nigeria currently routinely flared between 1.3 and 1.4 billion cubic feet (bcf) of gas a day, down from roughly 2.5 bcf about one and a half years ago.
Russia flares around 20 billion cubic metres of associated gas each year, or approximately one-third of the total amount extracted at the country’s oilfields.”Over the last few years, we have seen some bit of reduction, but the quantum is not as expected. We want a lot more to come down as low as possible,” Olorunsola said.
A long-delayed Petroleum Industry Bill, currently at parliament, proposes that gas flaring be banned at a date to be decided by the oil minister.
Oil majors such as Shell and Total are among the top global operators that dominate the Nigerian oil sector, although smaller companies including Afren and Oando are expanding their presence in the West African state.
While the issue of flaring was an industry-wide phenomenon, Olorunsola said the worst culprits were older fields found onshore, which were not fitted with “gas solutions” when built decades ago.”
So, operationally it is difficult to retrofit solutions after, but if you consider recent developments, they all had gas solution as part of their development concepts,” he said.
Adding to the desire to capture this wasted gas was the ongoing development of a viable local gas market for Africa’s most populous nation, something which was not there previously.”Today gas is of value so there is a lot of appetite and hunger to actually mop them up,” he said.

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