M a r k e t N e w s

FG looks to marginal fields for gas to feed NIPP plants

Posted on : Saturday, 22nd November 2014

 The Federal Government is looking up to the operators of marginal fields for gas supply to power a number of completed power projects currently bogged down by gas supply challenges.

 
Last month, the Presidency met with investors in the National Integrated Power Projects, the Niger Delta Power Holding Company, Bureau of Public Enterprises and gas companies over what it described as “a stalled state” of the NIPP plants after their privatisation.
 
Our correspondent gathered then that the Presidency’s worries had been heightened by the fact that seven months after the Joint Transaction Board comprising the Boards of the National Council on Privatisation and the NDPHC approved the preferred and reserved bidders for seven out of the 10 NIPP plants, the operational model appeared to be failing.
 
A source at the Presidency told our correspondent in a telephone conversation on Wednesday that inputs from traditional gas sources had not been impressive.
 
The source noted that with the realities on the ground, it was obvious that marginal field operators could help to salvage the situation.
 
“Involving the marginal field operators at this juncture is one model that will bring a lot to hope to the power sector in the area of gas supply. The government will not like to disregard this because almost everything has been tried to ensure adequate gas supply,” the source explained.
 
Marginal Field refers to an oil field that may not produce enough net income to make it worth developing at a given time. However, should technical or economic conditions change, such a field may become a commercial field.
 
A document from the Ministry of Power made available to our correspondent quoted the minister, Prof. Chinedu Nebo, as saying, “Historically, gas produced from the Niger Delta region has been associated with the exploitation of oil, otherwise known as associated gas. This supply source is currently providing some 880 million standard cubic feet per day of gas to fuel the generation of some 3,100MW of power per day.
 
“This is against an available capacity of about 7,800MW of thermal power, for which some 1.9 Bcf/d of gas will be required. This represents a deficit of about 1 Bcf/d per day. Evidently, addressing this shortfall in gas supply and growing it to meet the anticipated demand call for different approaches to the exploitation of available gas resources.”
 
According to Nebo, the recent announcement of a new pricing regime for domestic gas to power has opened up a new vista for the production of gas for domestic consumption.
 
He said the country needed to look more at the exploitation of non-associated gas.
 
“This means that in addition to our traditional sources in the Niger Delta region, we need to look farther afield at marginal fields and the inland basins including the Anambra and Bida basins and the Benue Trough,” he said.
 
The minister added, “In other words, our gas growth needs for power have to be met through dedicated gas developments, targeted at producing gas for power. The advantages of doing this are many and include the diversification of the sources of gas supply for domestic use, with its strategic benefits in security of supply; and the creation of inland industrial hubs with ancillary industries sprouting around the gas production and thermal power generation facilities.”
 
Existing power firms have continued to complain of inadequate gas supply.

Source : energy mix report
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